Bitcoin Forum

Everywhere Bitcoin is pimped as the one cure of "transactin fees".

Today, I wanted to send 0.4BTC to a friend. Seems I need to pay 0.03 BTC transaction fee.
Isn't that a little steep?

Just to understand:

Who (by which mechanism) decides the size of fees?
Who gets those fees? (I'm guessing some mining pool operator)
Is there a way to NOT pay 10% when sending smallish amounts of BTC?

I pay 0.0005 BTC for small transactions.

nice!
why's that?

download the newest version of the client, I guess you still run an old version since your fees are so high

0.3.25 still asks for a 0.0005 BTC fee

have 0.3.22 installed and set to 0.0005
still...


0.03 is a LITTLE steep, isnt it?

dude upgrade! That's what they were trying to tell you.
make sure you make a copy of your wallet.dat just in case.

I think many people use ewallets to avoid fees.
http://www.flexcoin.com/?page_id=103

AND

Transactions to a Bitcoin address from the same wallet provider are usually completed internally and, if so, will not be processed on the Bitcoin P2P network. Auditing tools such as the Block Explorer will not show any activity for this transaction.
https://en.bitcoin.it/wiki/EWallet

To put the 0.0005 in perspective..

At current rates of just under $14/BTC - It equates to about a 2.7% fee if you want to throw someone a US quarter.


or..  for those who heard about bitcoins 'low fees' and are just getting started with bitcoin  and to try it out, get their free 0.001 BTC from the bitcoin faucet..
it's half their wallet. 


Clearly the fees are high for small transactions - and as miners are currently well rewarded by the 50 BTC block payout, it's not for that.

Apparently the fees help stop someone spamming the network..  although.. I don't see why a 'proof of recent work' can't be required in each transaction to help prevent this.
(something based on the current difficulty level which will take some 'average' computer about a second or two to compute)

For those who think about that flexcoin stuff:

Be aware that this is just a central site with a database that stores all ewallets and transfers.

With bringing in some solutions for 'bitcoin problems', it also totally take out the sense of bitcoin. Its centralized, located in one country and has one owner who have to follow the authority of his country. If the owner shut the site down tomorrow (or is forced to), all BTC on this accounts will be lost.

Maybe its useful for some low bitcoins amounts you dont really care if you lose them, but not more!

Greetings
Mike

Mike there are benefits to have a central location... IE: 200 machines each with bitcoin balances is not manageable...  the other fact is transfer fees would be free if transferred from flexcoin to flexcoin as compared to bitcoin to bitcoin... which is what this thread is about.

I'm not saying your wrong, because you're not wrong..  I'm just stating that there are some extreme benefits to running flexcoins.

Yea I thought the fees were too high too. I think a fee of around 1 US cent is, "fair."

Check your math please.  The OP was sending 0.4BTC and, if he had the new client installed, would have paid a 0.0005BTC fee.

0.0005BTC * $14/BTC = $0.007 = 7/10 of a cent.

Nothing wrong with that fee.

When you compare it to 3% from Paypal or a bank wire that costs $40 from the senders bank $30 from a bank they didn't tell  you is in the middle and $15 to receive for a total of $85 ...
For what Bitcoin does it is unreal how cheap it is.

Jered

I think the fees should be around .05% or MABY 1%. if you think about it, if bitcoin does ever take off and houses a trillion dollar economy, think of how much as little as .05% would give you. right now at USD14.00 you make about USD700. if only USD10,000 where done in 1 block, you would make USD500. I would have to guess more than 10,000 are done per 10 minutes. and to insure that we get as many transactions as possible, we should avoid internal bitcoin swapping. don't skip the network, you need to help secure it.

I think the fees should be voluntary and market-based. I like the idea that transactions are prioritized based on the fees attached to them. I'd imagine it will evolve to where you'll be able to see how long a transaction is likely to take given a certain fee, and you can pay fees according to your time preferences.

This has the double benefit of signalling to payment processors (miners) whether capacity needs to increase or decrease. If the network is getting clogged with transactions, and people are paying increasing fees to get their transaction done faster, then the profit for miners rises and new miners enter. Same if the market slows down, fees will drop and miners can withdraw capacity.

It's all very elegant  :)

EXACTLY.  The beauty of the free market is that the prices will work out.  People who wish to not provide a transaction fee, or provide a very low fee, will end up waiting much longer than those who voluntarily provide a fee.

Having some fee amount or % determined by some central authority or organization is contrary to the purpose of bitcoin.

Since removing the fee is not possible out of security. To protect the network.

Why not have a fee based on percent ? Is that not possible?

If bitcoin is supposed to make microtransactions the fee cant eat up that transaction.

Unless its somehow possible to solve with open transactions software.

that's my point, the lower the transaction the higher as a percentage is the fee... hence why people need to move to ewallets...  so wallet to wallet transfers are free as it doesn't have to wait till the next block, the miner isn't involved hence doesn't require a transaction fee....   in a perfect world an ewallet would have clients such as bitcoin exchanges, restaurants, coffeeshops, etc... and literally you could have fluid transactions that would not incur transfer fees.

If one of the ewallets caught critical mass this topic would be ALMOST moot, as you would still need miners to generate new bitcoins.. and in all actuality some people would still want the client on their desktop even though they have trouble reaching it from their phone..

Ewallets are a horrible idea and throw away the most important aspect of Bitcoin, that it is decentralized.  All so that you can, what, avoid a .0005 BTC fee on some transactions?  You realize that's less than a USD cent right now?

Ewallets are not a horrible idea. They are a necessary part of the Bitcoin economy. As secure, trusted ewallet services spring up, more "normal" people can get involved with Bitcoin. The fact that Bitcoin allows decentralization and true ownership of your own money is fantastic, but that doesn't mean that it's efficient or proper for every single user to keep his coins on his own computer. Surely you can appreciate a diversity in storage options, right?

I think we need secure devices instead of secure online wallets.

It should be the sender (you), but with the standard client it isn't, and will probably remain like that until somebody implements a more decent way to avoid transaction spam propagation.

Until then, the client has some hardcoded fee policy that will take into account both the transaction value and the size of your transactions in bytes. Large transactions (in bytes) and small amounts tend to pay.


The miner which includes your transaction in a block.


You don't get to choose with the standard client. And if you happen to find a client that allows you to choose, beware that standard clients won't even propagate your transaction if it doesn't abide to the hard coded fee policy. So be sure to at least try to connect directly to mining pools which don't follow the standard fee policy.

0.4BTC is too high to be caught by the spam filter; the other situation when tx fees are imposed are when you try to send coins that haven't been verified yet ( <=6 confirmations i think)

ummmm I'm running 0.3.24 beta and if I open the options, by default, it's set at "pay transaction fee 0.00" and it says above that that 0.01 is recommended to make it get processed more quickly.  Am I the only one who had it default to that?  How badly delayed are transactions that you tack 0 BTC onto?  Is it to the point where it's delayed indefinitely or are there so many miners and so little transactions that you're going to get picked up by them regardless or the transaction percentage/flat fee you tack on?

by the way, if I want to pay someone 10.00000000 BTC and I say add a transaction fee of 0.1 BTC cuz I want it done really, really quickly, do I have to do some math and send a modified amount manually myself so it's not less than 10BTC when it gets there or will the software send 10BTC to the target and automatically take the extra 0.1 out of my wallet for me?

It's 0 in the options but if you try to send a satoshi the client will refuse

A zero transaction fee is the default for the client.  You can leave it at zero, if you try to send coin you should receive a prompt stating you need to add a transaction fee and the amount.  You can then choose to continue or not.  Some have stated that the actual transaction fee has been different than what the client prompts you, but I haven't found that to be the case.  (although I haven't done many outgoing transfers)

On my TODO list, and on several other peoples' too.