Topic: Will transaction fees get in the way of the bull run? - page 2. (Read 604 times)

First of all....its very obvious the bull run has started. Bottom is gone since 5 weeks ago, bitcoin is steadily going up. It was obvious the night it shot to $5000 that the bull run has started, every passing week is just more and more confirmation of that. Bull run is on now (granted its only 5 week into probably a 2 year bull run so it is early days), which means next year things will actually start heating up, and we'll probably be in full on FOMO/mania/exponential explosion mode by in 2021. No reason to debate this, even if you don't believe it now, it will become more and more obvious to you with every passing day/week/month.


Anyway, I didn't really know what taproot does, so if it makes transactions take up less room that is very good. I guess I had read about signatures being condensed into a single one for each transaction a while back but I had forgotten what update was supposed to do that. I hope that gets implemented soon, it will certainly help somewhat.

Segwit I'm sure will be a bit more adopted in the next year or two, but after almost two years its only at what like around 40% and seems to have been holding there for the past year or so. So what maybe it's like 60% let's say in the next two years, that really doesn't do much to solve the problem. Hell even if it suddenly started jumping up and got close to 100% that doesn't do a whole lot! Segwit is a very mild tx capacity increase, only what like 2x at most.  Considering its already been around 40% usage for the past year, the gains from the final 60% is a very tiny amount when taking into account the type of usage we see during later days of a bitcoin bull run. Just sayin.


Are exchanges looking to use lightning network for deposits? I haven't really heard anything about this. If so, that is good, but honestly it doesn't seem likely that option would be heavily used. LN is made to be used with lots of small transactions, like everyday purchases. People aren't gonna be putting their entire allotment of bitcoin (assuming they seriously invest in bitcoin) on the LN, which means they aren't going to throw their bitcoin on LN just to move it to an exchange for trading.

So to get people to send to exchanges via LN you need three things to happen:
1. You need the LN to actually be ready to be used by most people
2. You need most of the community to be using LN
3. and then you need them to put all their BTC that they plan to trade with, which is probably often a lot of it, onto the LN

Number 3 is unlikely because on-chain will always be more secure. LN is more like a checking account, there is very little incentive to hold more bitcoin than you need on it, because it is inherently less secure than holding directly on-chain.

Number 1 is very unlikely because the LN still has A LOT of progress to be made before it is ready to be consumed by the vast majority of people. I think on the following bull run, like in the mid-2020s, LN will be fully ready to go, but that's unlikely in the next year or two.

Number 2 is unlikely because number 1 is unlikely. It will take YEARS for a sizeable percentage of the bitcoin community to get on the LN, especially since LN isn't close to being ready for them yet. I'd put the LN being production ready (as in ready to be used by the average nontechnical person who doesn't know much of anything technical about bitcoin but owns bitcoin) at 2-3 years from now. And then a few more years before at least half active users are on it, probably 5 years before Number 2 is a possibility.

Even after number 1 and number 2 become reality in the coming years (likely after this bull run finishes up) number 3 still seems very unlikely to me. So I think it is extremely unlikely we'll see LN associated with depositing to exchanges in any meaningful amount during the current bull run over the next couple of years, or really at any point in the future unless people start to deem the LN as super safe to store the majority of your bitcoin on, which I don't see happening. I will say I hope I'm somehow wrong! Because this would indeed go a very long way to alleviating the coming onslaught of insane fees once bitcoin goes into full on FOMO mode like in 2017, since moving to exchanges is essentially the primary purpose of bitcoin still at this point in its history. But it just seems very unlikely.

I'd love to hear an argument on why it makes sense that people would move all their bitcoin to the LN (let's pretend it'll be ready for the masses in the next year or two) just to then use the LN to move it to an exchange rather than just sending it directly to the exchange. That just doesn't seem to make sense to me, as explained above. Also if you have any links that talk about exchanges planning on adding LN as an option for deposits and exchanges saying they expect it will be a popular option, I'd love to see that too, cuz I have seen nothing on this.

Oh my gosh why do so many of you people have your heads in the sand??!? Bitcoin already is close to having full blocks. And the market is still fairly cold. The crazy fees of 2017 were caused by bitcoin not being able to handle the load of all the people coming into the network and doing transactions. That's gonna be much more people this bull run in the next year or two, and bitcoin can only handle a tiny amount more transactions now. Lightning will do nothing to help alleviate the problem. The fees will once again become THE MAJOR PROBLEM of bitcoin when the market starts going crazy again, it'll just be way worse than it was in 2017.

Sorry, but thats just plain wrong. The fees have already started going up recently, and we're at the very beginning of the bull run! The fees are going to be monstrous once the market really gets hot in the next year or two. Segwit will help some, but by some I mean a very little amount compared to the onslaught of transactions that will come as the market gets hot again. Even if segwit adoption were at 100%, and right now its only at like 40% I think, it would still only very slightly alleviate the fees as segwit only roughly doubles the amount of transactions that can be handled. That's not much when tens of millions, or maybe even hundreds of millions, of people start pouring into crypto.

The crazy fees of 2017 were largely caused by external factors such as artificial transaction inflation and the BCash split that caused miners to switch massive amounts of hashrate from one chain to the other.

Considering that we don't have these factors play a role of importance anymore, because the big blockers have their own chain now, I doubt the fees will be that much of a problem. Sure, for people doing micro transactions it won't be ideal, but that will motivate them to dig into Lightning and explore its advantages.

Regular users and businesses are somewhat used to the current lower fees and have less incentive to make the switch to Segwit and Lightning, but that will definitely change when mempools fill up rapidly and the fees bump to higher levels. People are lazy, they will only shift when they feel it in their pocket.

assuming the next bull run (which definitely hasn't started) begins in the next year, the taproot fork could be already activated

• smaller signatures (64 bytes instead of 72bytes)
• script sizes will be limited to the spending path only (so to open/close LN channels will be far smaller on-chain)
• signature aggregation

That last feature will be very important to the on-chain demand you're citing as an issue. Users scraping together every last address they have to sell will use 1 signature for the whole transaction. e.g. sending 5 addresses in 1 tx to an exchange address will be 1x64 bytes, not 5x72 bytes. Exchanges will realise even better gains, they can use far more addresses for inputs than 5 in a typical payout tx.


Exchanges are also looking into the idea of using Lightning for deposits. There's a massive incentive to get that ready in time for the next bull run, anyone running an exchange without it will be at a disadvantage in the marketplace.

And segwit will likely be far more adopted by then, segwit addresses recorded on the blokchain are steadily & constantly increasing.


So don't be upset.

I don't think they will. Speculators will always go with the flow and pay up whatever gets them a first-next block confirmation. It was like that during 2017s bull run too and we still reached insane price levels.

The only thing it will do is once again point out that we need larger blocks. People can hype up SegWit as much as they want, but it's not going to prevent the fees from reaching $10-$20 again, especially not with an ongoing spam attack.

money talks

so what you say doesn't actually matter, Lightning does what it does, and it does it using BTC, cheap.

you should stay away from anything even resembling market analysis/technical commentary, you consistently have zero clue. Stick to telling your cool-uncle jokes

We have already seen transactions as high as those high peak days, we have seen the second biggest day in bitcoin transaction history, nothing happened at all. Which means people are already buying bitcoin like crazy and they are sending/receiving bitcoin like crazy without any problems at all.

Sometimes it changes the time period which makes transactions take a bit longer than usual but the fee doesn't change at all. Thanks to developments in stuff like segwit and then lightning network the transactions are now cheaper and they are even faster as well which makes it super easy to do all of this. So no, even if bitcoin goes to a million dollars each (lol I wish) there won't be a problem because we do not have a static blockchain, we have a dynamic blockchain that runs equally no matter how small or big it gets.

I think not, because all new addresses now start with a 3, meaning they are Segwit.

Back then, most adresses were starting with 1, and Segwit adresses were only acquired through console commands.

I see some people mentioning LN. LN will not magically solve all problems. First off, the types of transactions currently done are not those that will be moved to LN. So it does absolutely nothing for helping out with near-term problems or the problems already faced.

LN will allow bitcoin to be used for everyday purchases and even micro-transactions if that becomes popular. Those are new use cases, they are not what fills the blockchain now. The blockchain is filled with people moving money between wallets and exchanges. Those will very likely stay onchain and not use the LN. In fact LN even excaberates the near-future problem by creating a new type of transaction that happens onchain: on-loading and off-loading to and from the LN. Luckily the LN will probably barely be used during this bull run so hopefully those types of transactions won't add too much to the blockchain, but still the blockchain is gonna be jammed packed more than ever before just from people moving money between exchanges or to wallets, so there is no room to spare.

So on the one hand, LN will be in very low use during this bull run. And on the other hand, LN isn't gonna help with the current blocksize problems, it just opens up new use cases in the future once LN is really ready to use by the masses.

Right now there is nothing in sight to help lower fees as this bull run heats up and that is very worrying. I am almost entirely sure it is going to severely prematurely end Bitcoin's bull run this time around when the fees rise up in the tens and hundreds of dollars in the next year or two.

Yeah. and fees are guaranteed to go wayyyyy up. Things will be a lot worse in the next couple years than they were in 2017. It's going to become a very serious problem very soon. And the whole debate from 2016/2017 was just pushed away and the community seems to have pretended it went away during the slow part of the market cycle. That reallllly worries me. 2018 would have been a great time to fork with some scaling so that the next bull run doesn't run into the fee problem of the last bull run, and instead nothing was done, guaranteeing the problem will be way worse this time around.

I think the fuss that was kicked up was because barely anything was done! The big debate never got a resolution, even a partial resolution. And because of that fees are gonna be even worse on this bull run. Fees are gonna start getting high well before bitcoin price starts going crazy.

All that was done was segwit, which helps a little but even if segwit was at 100% in 2017 the fees probably would have gotten pretty high, which means they are gonna be way worse next peak. And some exchanges did batching of transactions, which certainly helps some, but again both of these are partial solutions that don't come close to even resolving the problem for the next couple of years, let alone being long term solutions.

We talked here and there many times about using Segwit, cheap fees are one of the reason, especially if you use a bench address (1bc......) you can reduce the fee by ~50%.
Yet the percentage of people using it is very low and worst when it's about companies. They don't want to listen to.
Segwit isn't new btw and there are other solutions to reduce the fees

to be fair apart from bitcoin being mostly considered an investment, the fees haven't been high for that long to cause any actual problems so far in the entire history of bitcoin so we really don't have that much data to work with. the most serious case was in 2017 and that mostly was the result of spam attack which stopped after the scaling debate ended.
with that said i believe in the long run if the fees go up and remain up we will be facing serious problems.

Well it can't be denied that there's a small correlation. Even if you're only paying the minimum of 1 sat/byte, if Bitcoin's value skyrockets 1000%, then the fees you pay also increase by 1000%. It's going to be a long while before this potentially becomes a problem though.

Either way, it doesn't seem like fees have been a major factor in market movements thus far. That's kind of expected too, considering most people still consider Bitcoin more of an investment than actual money that can be spent daily. It's only going to matter substantially once Bitcoin's utility becomes the primary driver of its market value.

Well it's happening every day. This is not the same bitcoin as it was in 2017.


source: https://www.reddit.com/r/Bitcoin/comments/bjm2gj/btc_transactions_reach_new_highs_while_fees/?utm_source=ifttt

We already hit number of transactions from 2017 bull run and fees are low. And this chart does not include LN transactions.

People do have a misconception about high value will lead to high fees. But as mentioned the fees increase due to congestion and unconfirmed transaction. That is when high fees result in quick completion of the transfer.

If the bull run is gradually slow and rises up decently, I think the fees will be in a good position. In that ATH peak time, people in the hope that will go even higher used to trade like anything and then the fees were high at that time. Otherwise, the crypto transaction is the cheapest form of transaction.

When I buy service or digital goods from cross border stores, the fees are very cheap. If I transact using any other alts, the fees are comparably lower.

This time we may not face huge unconfirmed transaction on the blockchain network like it happened in 2017 because now most of the exchanges uses segwit address and also transacting the withdraw as a group rather than single transactions for every withdrawal.

Nah-ah, I can send $1000 or $1 using the same fee and the same confirmation time  
This is the most famous misconception in Bitcoin's transactions.

It mostly depends on the number of inputs, its address type and slightly depends on the number of outputs of the transaction.

Problem with high transaction amount is: most of the time, the user doesn't have enough huge inputs to cover the amount to be sent which will make a (for example) 10 input transaction which is about 2,000bytes multiplied by the tx fee rate which is quite high specially during mempool congestion.
People just need to learn to consolidate their inputs to be able to make a cheap 1->1 or 1->2 txs.

If you are withdrawing large amount or transacting high then it is reasonable to have bigger fees ,but ofcourse things are different when the hype hit 2017 because panic sellers are all over the place and congestions happen

But i think with lightning network around? Everything will be smooth this time (though we are not sure of we will cross the $20,000 value)