Bitcoin Forum

Lately, with Bitcoin's price rising, fees are definitely increasing. Not (only) because of the sat/b, but as every satoshi gets worth more and more, the usage for smaller denominations (say, $10) becomes less and less worth it.

So any ideas on dynamic fees, based on price? I've seen some stuff here and there about ETH's own efforts to combat this, but with Bitcoin the need isn't a future one but a current one.

Note: this is not a topic of whether BTC fees are too high in general based on usage, so please no block size shills or "go use something else for micro-transactions", because I'm just curious on how this could work within Bitcoin.

There's no decentralized way to code fees into the protocol based on interfacing with an external service (like pinging an exchange to get the current price). If a protocol did this, it would only take that service being compromised to disrupt the entire network. I don't think there is a way to do this with a native blockchain currency. The idea suffers from the same problems as "pegged" cryptocurrencies. At some point, centralization is required.

so far fees are only set based on block size and how full the mempool is! not the price.
actually this is one of the things that is not discussed at all as far as i can tell. for example back in 2011 the default fee was 0.01BTC back in the bitcoin core version ~0.3 and it was reduced by the passage of time and as price went up from 2 digits up to $1000+ and eventually fees were set to 10K satoshi fixed and then the dust limit was introduced and fees were around that amount at 56XX satoshi.
it was never automatic though, it was done through releasing the new version of the wallet software. and note that nobody paid any fees back in 2011 anyways. it was almost all 0 fee txs.

https://i.imgur.com/7o2zFHc.jpg


logically speaking with the price rise to $2000+ fees should have been reduced but because of fullness of blocks it is an impossible thing to do!

Bitcoin fees are lower than during the scaling debate, just check the blocks. Also by design one day the transaction fees will be the only thing supporting the network and Bitcoin was designed for big translations and mimicking gold, that is, not for the poor. If you can use for smaller transactions it is a profit and not guaranteed to happen in the future.

If bitcoin is designed for big transactions only,this means that bitcoin mass adoption is compromised from the start.What about all the small businesses that are trying to adopt bitcoin payments?
I can`t agree with the idea of bitcoin being a "digital gold" and nothing more.
I don`t think that this was the main Satoshi Nakamoto`s idea when creating btc.
Anyway,about the OP question.Bigger blocks mean lower transaction fees.I`m not an expert,but Segwit2x will bring some positive change. ;D

I think in future it will be possible with lightening network in bitcoin after segwit will be activated. Learn more about lightening network here https://lightning.network/

It is highly improbable to peg bitcoin's tx fee to the USD since miners rely on the tx fee they receive on top of the block rewards to compensate them for what they're doing. Creating a static tx fee in USD would not be accepted by miners as it will lose profitability on their end. Besides, you can still send money by choosing your own fee.

It would not only be nice but necessary for Bitcoin to make micro transactions possible without having to pay a fee that is almost as high as the whole transaction. So let's hope for the best as every single Satoshi gets more and more valuable as Bitcoin prises raises to the moon.

Hi,

for sure very interesting because I have also doubts about BTC continiung to be the "number one" without being able to be used by the whole world...And being used by the whole world means micropayments, easily and cheap...

We can't believe BTC will go "to the moon" just being a store value like gold !...

So I also started reading about "Lightning" but any expert to confirm it could be possible with this implementation ?

Yes, in addition to requiring some form of centralization to peg fees to USD within the client, it doesn't fit with miner incentives. Like investors, miners are investing into bitcoins, and transaction fees are increasingly important to miners as block subsidy continues to drop. Based on network effect, if you expect the price of BTC to rise, you can expect the cost of fees to rise as well. That's baked into the protocol, and it's great incentive for miners to secure our transactions.

Bitcoins is becoming famous days by day and people of all backgrounds are now grabbing it. If this digital gold cannot be used by such people in small transactions, it’s pretty obvious it will lose all of its fame sooner or later and number of users will decrease, causing decrease in its demand and value. As far as the transactions fee is considered, it must be very low. I hope this matter will be sorted out soon.

Micropayments definitely have a huge role to play in the future, but how things will change because of this transition is not clear. In any case, in order for micropayments to prevail, adoption of cryptocurrencies needs to increase and that is only going to happen when people understand the possible applications and prospect that this technology offers. But I think with 120 satoshi per byte, its is quite cheap as compare to other payment method we have right now like Paypal and Western Union.

That is true. If bitcoins can't use for smaller transactions then slowly it will lose its value over the time. I understood that blockchain depends only on fee generated from each transaction. If that is true then fees should be dynamically readjusted when prices go up or down to more reasonable amount. But not sure whether it can be done or not.

The bitcoin value is so high right now, I think the transaction fee should be cheaper and not burden the bitcoin value of the miner .. this is one problem if not quickly resolved because it will decrease bitcoin enthusiasts if transaction costs continue to increase.

Monero has a dynamic fee solution implemented, im not sure how good it is, but what I've heard is, the blockchain is becoming pretty bloated, to the point it's becoming annoying to run a full node.

Im not sure what % of this size is just due ring signatures and not due the dynamic blocksize approach, and I don't know if the same could be applied to BTC, but from what the smart people are saying, it's not feasible and dynamic blocksize solutions proposed thus far would end up in pretty exploitable game theoreticals.

not at all!
i keep hearing people repeat this "number one" thing a lot. but you always forget that in order to lose the "number one" position, one has to have a competition first. and bitcoin so far has no competition.
the thing you need to have in mind is that you should never compare bitcoin which is processing nearly 300,000 transactions every day with an altcoin which barely has a couple of thousands. the circumstances need to be equal for comparison. and many of the have already proved that they will fail under half the transactions.

Your concern is very much valid that is if we are expecting that Bitcoin should be reaching the mainstream soon. Reaching the mainstream means that we should give way to small transactions just like what is happening with PayPal. While big transactions are important it does not mean that we should just let small transactions get higher fees because as you said this can run counter with promoting Bitcoin for the masses. Right from the very start, this concern should have been given more focus and space.

Well this is one problem we are facing with higher price of bitcoin, but we can't really fix this. I liked bitcoin better when it was only 500 USD, the transaction fees where lower and people made micro transactions all the time. Now it is the total opposite.

We need the transaction fees for bitcoin be become lower for it to be a viable mainstream currency, otherwise now we have no chance of it becoming mainstream as we hope so. Maybe a new hard fork is needed.

You could relatively easy implement it on wallet level (but this would be kinda useless), by simply not allowing user to choose higher/lower fees in GUI and updating prices from some remote server, but implementing this on node level would be very problematic, because nodes should always agree on rules, so this new fee parameter would require all nodes to be in sync with some single server, which would be a huge security weakness.

When Bitcoin Unlimited attempted to do this, everyone worth listening to in the field opposed to the idea. The technicals are just not there, on paper dynamic fees sound great, in practice it's a mess.

Peter Rizun already basically admitted that for Bitcoin Unlimited's dynamic blocksize to work, the limit of the coins would need to be increased from 21 million for it would need a certain inflation after all coins are mined.

It's simply impossible to implement from a decentralized perspective. If we want to transition to a decentralized cryptocurrency, we need to drop this mindset where fiat has any relevance. From a protocol perspective, it simply can't.


That's what small blockers have been saying from the start. Either a fee market develops based on limited capacity, or inflation needs to increase. Otherwise there is no incentive to secure it from a mining perspective past a certain point...