Topic: Transaction fees (Read 3816 times)

the difficult increase only if there is more revenue, or only if some big miners want to "steal" coins from the other by increasing his hash

because he can still make more profit, so that drop is not for everybody but only for the slowest farm out there

The cost of mining is the same regardless of the difficulty because the amount of electricity a miner uses doesn't change. The revenue changes with the difficulty. If the difficulty goes up by 10%, then the revenue drops by 10%.

Min tx fee is 0, but from amount of fee depends on where in queue will be your transaction. In the first instance are carried out transactions with a higher fee.

With fee = 0 you can wait few days or even can come back to wallet like "not realized"

Thanks,

the more difficulty increase, the more miner have to use electricity to get the same value as before the increase in difficulty. Thus one can say the mining cost increase with difficulty.

am I wrong?

You're welcome.


No, I did not, because the question I was answering was about fees, not mining costs.


The main components in the cost of mining are:

• The cost to acquire the mining equipment
• The cost to store and maintain the mining equipment
• The cost of electricity to run the mining equipment
• The cost to cool the mining equipment
• The cost to maintain a good internet connection to peers

If any of these costs change, then the cost of mining changes.  For example, if the cost of your electricity increases, then your cost for mining increases.  If you need to replace your equipment, then there are costs to purchase new equipment.

Probably not.  If the cost of mining increases, then some miners will find it is no longer profitable to mine and will stop mining.  This will increase the revenue that the remaining miners receive. When the remaining miners revenue increases enough to cover the costs of mining, then the remaining miners won't stop anymore and an equilibrium will have been reached.

A miner can't force all the other miners to reject low fees. As long as the revenue can cover the risk of orphaning, and the block isn't full, miners will need to accept the transactions or else their competitors will make higher profits and drive them out of business. So, no matter how high the mining costs are, the choice for the miner is to either confirm every revenue generating transaction or to just shut off their equipment.

thanks for this very interesting reply from DannyHamilton.

Did you include the cost of mining? is the cost of mining stable or does it increase over time or over difficulty or over else?
because if cost of mining increase, transaction fee will increase, isn't it?

Min Tx fee is 5500

I agree. I'm pointing out that the marginal cost of the orphan risk could be very low. The result would be low miner revenue and thus insufficient deterrence of a 51% attack.

Also, note that artificially limiting the size of the blocks does not eliminate this risk because transactions can move to cheaper off-chain systems such as LN with the same result.

True.

Before we can have a real discussion about future transaction fees we must first decide what we believe about the future.

My assumption in this particular discussion (even if I'm not yet convinced that it is necessarily true) is that:

• Even if there were no limit at all on block size, creating larger blocks means that it takes longer to transfer those blocks to peers
• This communication delay increases the risk of a solved block being orphaned
• Solving a block that is orphaned costs the miner (or pool) money, and generates no revenue
• Therefore, miners (or pools) have an incentive to limit the size of their blocks in such a way that they maximize the number of fee paying transactions they accept while minimizing the orphan risk
• There exists an equilibrium where the orphan risk of creating a larger block outweighs the fee benefit of including more transactions
• This equilibrium is an economic incentive for miners to limit the number of transactions in their blocks

Nobody controls the transaction fee amounts. It is up to each individual miner to decide whether they want to include a transaction or not, and up to each node whether they want to relay a transaction or not.

So, there are no arguments to discuss.

Are you instead looking for predictions on the future of transaction fees? I think DannyHamilton provided a decent analysis. However, it is not clear that assumption #1 is a good assumption.


It is possible that economic incentive for miners to limit the number of transactions in their blocks is very low, and that could mean very low transaction fees if there is no artificial limit to the block size. As a result, mining revenue may not be sufficient to pay for maintaining the integrity of the block chain as the subsidy decreases.

Assumption 1:
There will either continue to be limited space for transactions in the blocks, or miners will have an economic incentive for miners to limit the number of transactions in their blocks.

Assumption 2:
Either bitcoin users will understand that the fee they voluntarily provide is an incentive for the miner to include the transaction in a block, or bitcoin wallet software will be designed to build transactions that will eventually get confirmed.

Argument:

• As long as the value of using bitcoin exceeds the cost of using bitcoin, the number of bitcoin transactions will continue to grow over time.
• Eventually, due to that growth and assumption 1, there will be more transactions created between blocks than will fit into the blocks.
• Due to assumption 2, users that want faster confirmation will pay a higher fee. Those that pay too small of a fee will never get confirmed.
• Eventually, these fees will be high enough that the cost of using bitcoin exceeds the value of using bitcoin.
• As long as the cost of using bitcoin exceeds the value of using bitcoin, the number of bitcoin transactions will continue to shrink over time
• Eventually, there will be less transactions created between blocks than will fit into the blocks.
• Users will discover that they can save money by paying a smaller transaction fee, and since there is room in the blocks their transactions will still be confirmed.
• Eventually, these fees will be low enough that the value of using bitcoin exceeds the cost of using bitcoin
• The above cycle will repeat itself until an equilibrium between fees, block space, and quantity of transactions is reached.

If bitcoin becomes more popular, fees will go up as more transactions are competing for the same amount of block space.
If bitcoin becomes less popular, fees will go down as there will be space in the blocks for cheaper transactions.
If the block space limit increases, fees will go down as there will be space in the blocks for cheaper transactions.
If the block space limit decreases, fees will go up as the same number of transactions are competing for less block space.

Since it is impossible to know if the block size limit will change at all in the future, and it is impossible to know if bitcoin will be more popular or less popular in the future, it is impossible to know if transaction fees will actually go up.

However, if bitcoin isn't popular enough, or fees aren't high enough, then there will be no incentive for miners to participate and bitcoin will fail to maintain adequate security.

I (and many others) believe that bitcoin will grow in popularity over the next few decades, and therefore believe that fees will remain high enough to keep enough miners participating.

Some people may believe that bitcoin will never be popular enough, and therefore they may believe that bitcoin will eventually collapse.

You are welcome to make your own guess.

The only way to know for sure is to continue to run this experiment that we call "bitcoin" and see what happens.

Do you mean arguments for "should tx fees go up/down in the future?" or "how likely will tx fees go up/down in the future?".

What specifically do you want to know?

Thanks for your answer but this doesn't give me any information on the arguments FOR or AGAINST transaction fee going up in the future...

Can anyone give some argument for or against transaction fees going up or down in next years, decades...?

Miners are free to include or exclude any transactions for any reason (as long as the included transactions are valid).

Sorry I am new to understanding this.  How can you pick a transaction to choose to mine based on the fee?  How many transactions are in one block?  Can you solo mine one block picking all the transactions so that you will get the full reward?

Off course as the price go up and fee goes up but its not that really alarming as long you are earning enough money. and yes for now the transaction fee is .0001 and thats not even close to half penny. The most worry is if there are errors but this whats good in btc, it is solved after a day and no money is lost unless u did some error in writing ur own info.

I think fee adjusted for rate USD, but we could be setting fee of 0.0001 / transaction

thanks,

Fear is that transaction fee will go up and up. What are the arguments for and against fees going up?

I ever set up my fees manually on blockchain,info
and guess what my bitcoin was too long to confirmed, so i agree with you  i dont recommend using a manual fee,i recommend 0.0001 BTC as a minimum fee. With low or maybe zero transaction fees,it tend to be validated more slowly, or it will get rejected.

Yes it is, but if you are truly in a hurry to send the bitcoin very fast, you can pay a higher fee, usually by doing this you will have a lot more confirmations in very short amount of time, as miners process firstly transaction with higher fees and then those with smaller fees (not sure about this though).