Topic: Transaction Cost Problem - page 2. (Read 883 times)

And how does that compare to the costs of operating all the banking buildings in the world?  All the banking employees?  All the vaults, safes, and armored cars?  All the payment processing systems? The production of all the currency? All the forces necessary to protect, regulate, and enforce that system?

This is my point.

People are looking at the entire cost of everything necessary to keep the bitcoin system running, and dividing it by the number of transactions in a single block.  That is not a reasonable way to do it if you want to compare to the "traditional system".

The poor guy two up has been forced to pay $40 for a transaction and anything over $0.60 in my book is high and that's much more than
what it cost on the BTC network back in Jan of this year.

I think they have a test rig for using the Lightning Network up and running but BTC for years worked just fine until recent times so I
am sure the tests might produce good results but I am not alone when I see trouble with a two tear system where one is using channels
and the other is not.

Myself being a small time gambler it does not make me nervous to see a radical re-write of the whole system from start to end
but it does a lot of people around here and lets face it something radical about these transactions fees is going have to be done and done quite soon

P2P without brokers and a real decentralized system of miners where ten big names don't control 90% of the market is needed and we must
also cover micro-transactions in a much more efficient way than putting everything on this magical thing called the block-chain because that's become
what programmers call "Blocking" due to the size of the 200gb database and having to access leaf data from hundreds of leafs to workout ownership of each part of
a coin

Okay, so you did mean in the more philosophical sense. In that case, the problem with the current system versus traditional ones is that maintaining the historical ledger has high continuous power requirements. And potentially the requirements increase over time, although they might plateau at some point.

Due to I don't want to pay 15$ or more for one transaction, I preferred to change btc into eth before sending, but of the cryptokitties this is not a good idea nowadays, so I have to look for other coins which are supported by most of the exchanges and have low fees.

All these things are reducing the daily usage of BTC I think its becoming even costly for the campaign and bounty managers to pay off their participants. Considering the lightning network what if people or miners continue to oppose it? in search of hefty fees which could earn them more money? We saw very much the same thing with segwit2x. If we want to see btc as a mode of settlement it should send small amounts with relatively less fees.

Haven't heard clear solution in process when it comes to transaction fee specially on bitcoins but what I observed transaction fee seems like pumping together with btc lol. Currently my wallet is charging me around 40$ for single transaction reagardless the amount of transaction so it really sucks but my own temporary solution so it won't be much burden in my part I always leave btc balance in my poloniex account so if I need to make btc transaction like sending fund to other wallet it only cost me 10k sats or around 1$.

I like people that question what they are told by the mejia and i fit into this group myself because I think that the block-chain solved a few
problems but created many more which as a developer I have been saying for about a year and now it looks like i am being proved right.


But when BTC was a mere $0.15 then it was more or less just a test network used by students so your theory is not valid since we are talking about prices today
were volumes and winning prizes are much, much higher

Trying to work out an actual number for the cost of producing one BTC must be a guestimated number since the number of nodes will go up or down
but i see no reason to argue with the many, many sites that put the number between $1k-2k in energy alone and not all the sites saying this
are working for green-peace or seem to have a vested interest in BTC

When a miner adds a block to the blockchain, it doesn't ONLY add 1 confirmation to the transactions in their block.  It ALSO adds 1 confirmation to every transaction in the blockchain.

New transactions are only possible because the earlier transactions are immutable.  The earlier transactions are only immutable because of the continuing proof-of-work process.  This is why empty blocks are still valuable and useful.  The electricity being used is sustaining an international permissionless trustless immutable decentralized record keeping system.  It is securing every transaction that has ever happened, and making possible all future transactions that ever may happen.

So, if you want to use:
Average transactions per block = 3000

Then to be intellectually honest about it, at a minimum, you need to also use:
Total number of blocks in the blockchain: 499273 (as I'm typing this)

Therefore the electricity used should be divided by 3000 X 499273  and not just by 3000.

https://bitcointalksearch.org/topic/split-bitcoin-2381234

You can "stand by your numbers" as much as you want.  It won't make them correct.


Yes. It did.

Perhaps you don't understand how proof-of-work works?


Did you think I wouldn't bother clicking your link?

From that same article:

Don't believe everything you read on the internet.

Learn math.  Learn how Bitcoin works. Do the calculations yourself.

You'll find that there are a lot of false reports on the internet that make outrageous and demonstrably false claims about the amount of electricity and/or cost involved in mining.

Are you here to learn?  Or are you just here to parrot nonsense that you've read without giving it any critical thought?


Perhaps Lightning Network will make that possible.  The design of Bitcoin since 2010 was always going to limit the number of people that have direct access to the blockchain.  This was explained to Satoshi when he added the 1 megabyte limit.  He didn't care.  He decided that it should be limited, and we are stuck with his decision now.  If we don't like it, our only choice is to create an altcoin with a better solution.


Nonsense.  This has nothing to do with the number of transactions a mining pool can handle. Building more pools will not make any difference.

Bitcoin is designed to limit the number of transactions per block. That limit is exactly the same regardless of whether there is 1 person mining with 1 AntMiner S9 or if there are a billion people mining with a billion AntMiner S9 units each.

Bitcoin is also designed to limit the speed of blocks to an average of 10 minutes per block. That limit is exactly the same regardless of whether there is 1 person mining with 1 AntMiner S9 or if there are a billion people mining with a billion AntMiner S9 units each.


When a miner adds a block to the blockchain, it doesn't ONLY add 1 confirmation to the transactions in their block.  It ALSO adds 1 confirmation to every transaction in the blockchain.

New transactions are only possible because the earlier transactions are immutable.  The earlier transactions are only immutable because of the continuing proof-of-work process.  This is why empty blocks are still valuable and useful.  The electricity being used is sustaining an international permissionless trustless immutable decentralized record keeping system.  It is securing every transaction that has ever happened, and making possible all future transactions that ever may happen.

So, if you want to use:
Average transactions per block = 3000

Then to be intellectually honest about it, at a minimum, you need to also use:
Total number of blocks in the blockchain: 499273 (as I'm typing this)

Therefore the electricity used should be divided by 3000 X 499273  and not just by 3000.

The current status regarding the transaction cost problem is going bad .
The current scenario is pretty bad . My last transaction took like 3 days to get confirmed .  This is all due to the raging load on the block chain and sudden increase in  the number of transactions . The transaction fees is so high and it is quite  obvious when the load too much . This is the time where there are way many transactions then the number of mining pools to handle . I hope the team is working to build some more pools to divide the mining load .           

But this way, fewer people can use it. Isn't it better allowing more people to use bitcoin?

Always a pleasure for me to read @DannyHamilton's reply on the forum!

The actual cost is way over $2000 per coin and the reason for this is the capital cost of the equipment to compete for coins that is often
forgot about when miners talk about the profit they have made.

Typical array of 8 1080 GPU rigs tend to take 2-3 years to pay back the hardware costs that go on top of the electrical costs
and that is without factoring in GPU's over heating and going wrong since many of them are over clocked to run faster and this
results in more heat being produced.

Too me mining is like getting lots of computers to count grains of sand in a cup and the first one to get the correct result wins a price
after the other computers reach a consensus on the correct number. Block-chain has solved a few problems but has created more in the process
not that i am saying that I could come up with a better plan without taking years to do so   

No i stand by my numbers and your calculation did not deal with miners who did not win a coin

See http://www.digitaljournal.com/tech-and-science/technology/op-ed-bitcoin-mining-consuming-more-and-more-power/article/509257

You will also find calculations for the estimated cost of each transaction using google (fixed search results)

yes it a problem in trisection of bitcoin

Do you mean in the philosophical sense?

If the actual, it's not too far off. Rounding some numbers:

Current network hash rate = 13.4 EH/s
13.4 EH / 14 TH per S9 = 960K units
960K * 1.4 KWatt = 1.34 GWatt
Average block time = 1/6 hours
Average transactions per block = 3000

1.34 GWh / 6 / 3000 = 74 kWh.

I assume not everyone uses the S9, so let's add 25% to get 90 kWh/tx.

No.  A transaction is checked to be "valid" by each node as the node receives it before the transaction is ever relayed to any other node.

I think what you meant to say is that a transaction must be included in a block in the blckchain to be considered "confirmed".


No. A block generally requires the amount of resources that are used.

If it takes more than an average of 10 minutes to complete blocks (due to insufficient resources being used) then the protocol automatically reduces difficulty so that future blocks will be completed in an average of 10 minutes with the available resources.

If it takes less than an average of 10 minutes to complete blocks (due to extra resources being used) then the protocol automatically increases difficulty so that future blocks will be completed in an average of 10 minutes with the available resources.


No. 


My calculations were based on a few assumptions...

1. That an intelligent miner would be mining with the most efficient equipment available.  Some people may choose to spend extra money on mining, but that isn't a requirement.
2. That there are places in the world where electricity is less than $0.09 per kWh.  Some people may choose to mine with more expensive electricity, but that isn't a requirement.

In addition, the exchange rate for bitcoins is based on supply and demand, and not based on the cost of production.  The demand for bitcoins has grown much faster in the past few years than the supply has, therefore the exchange rate has increased substantially.

Hi Danny (and all the others that are well informed)

Hope you can help spread some light on a few questions.

From what I understand of the Bitcoin and cost of transaction:
1. Any transaction has to be hashed in a new block to be considered valid.
2. The amount of resources needed to mine a new block will increase exponentially in the future.

Will this not make it really cumbersome to use bitcoin as means of payment on a larger scale?

If your calculations are accurate about the cost of mining a bitcoin aprox $90 USD, how come they are trading at approx $17000 now?
Even if we say the cost is $2000 its still alot less than $17000
Maybee Im missing something obvious but please enligthen me.

Im very new here and its not my intention to offend anyone but the topic seemed right for my question, hope you don't mind.

Blocksize is simply too small.
2nd layer solution will help, but also with LN the 1mb limit (or about 1.7 in a full-segwit scenario) is too small. Also, 2nd layer solutions will need to do some on-chain transaction to work (ex. transactions to open/close lightning channels).
If bitcoin will get 10x users then today, opening a LN channel will cost something like 100-200$....not very pratical.
Devs must be realistic, there sould be a rule like "blocksize is doubled every x years" or something similar, so only 1 hard fork will be needed.

PS not a fan of Bcash and similar, just realism and math