Bitcoin Forum

With the introduction of ordinals to the Bitcoin protocol fees have skyrocketed.  They have been as high as $190 US and currently are averaging $7 per transaction.  For the last few years fees have hovered around $1 US.  The current fees are a 700% increase.

My question is who do these high fees benefit?

In a Bitcoin transaction you have the sender and receiver of Bitcoin. The sender is the party paying the fee and they are definitely not benefiting from the fee.  The receiver does not pay the fee nor do they receive the fee so they do not benefit either.

Most Bitcoin transactions also include a third party like an exchange or the organizations that hosts third party nodes if they are not self hosted. These third parties do not benefit from higher fees either.

The final participant in a transaction is the Bitcoin miner.  Bitcoin transaction fees are paid out to miners with the block rewards.  When the fees go up miners make more money so it is clear that miners benefit.

This month the miners rewards were cut in half due to the halving. At the same time fees skyrocketed due to increased volume as a result of the introduction of Runes.  I think you would have to conclude that ordinals which include Inscriptions and Runes were introduced to increase the transaction fees to offset the loss in revenue to the miners because of the halving that just occurred. It was no accident that Runes were  launched on the day of the halving.

There are a couple of key points to consider: First, If miners can change Bitcoin to increase the fees is Bitcoin really decentralized? Second, and most importantly, do these increased fees help bitcoin to be a better form of digital cash?

The fee rate now is around 23 sat/vbyte. Having 1 input and 2 outputs in your transaction will cost you not up to $2. Just like before the halving that occurred recently.

Runes is gone for now. Maybe until the next bullrun.

There is actually a way that the receiver can also pay a fee, for a example if the sender sends a transaction with a very low fee which doesn’t get the transaction to confirm earlier then the receiver can bump that fee by using the CPFP method.


Third parties can also benefits from high transactions as they also increases their own transaction charges most of the time way higher than what they would pay for the actual transaction.


There is no denying the fact that biggest benefactors of this high fees are the miners and that’s why I say they definitely like what’s happen to the network when it is congested. But that doesn’t mean that they set the fees. It is the users that set the fee they want to pay for their transactions. When the mempool is congested those That want their transactions to get confirmed faster increases or set a very high fee and that’s how it goes. Reason been That miners prioritizes higher fees when picking transactions from their mempools.

Another weird benefit of high transaction is that it promotes more miners to come into the network and thereby increasing network decentralization and also reducing chances of problems like 51% attacks

The miners!

Honestly, the high fees of Bitcoin is not really good for anyone except the miners. It doesn't give Bitcoin any competitive advantage, rather it snatches away.

But it's not the fault of the miners. All these increases are coming from the BRC-20 token madness. Unless these tokens are fully banned from the network, the fees will remain relatively high.

Many persons would easily say miners however when you say so, it seems more like referring to solo miners which in this case aren't the main benefactors. In my opinion mining pools benefit the most during periods of high fees this is because it takes quite a lot of hash power to add transactions to the next block and in comparison, only a few solo miners are able to generate such hash power.
Sometimes higher fees can occur with significant increase in price. The truth is a typical Bitcoiner who is not a miner isn't happy about high fees as it can make transactions become extremely uneconomical like the congestion that occured in the last halving block.

As for this a receiver can also pay fees as a way of spending the coins that haven't be confirmed using a larger fee so that the parent transaction (the initial one) gets confirmed faster since the parent  has to be confirmed first before the child this is known as CPFP (child pay for parent)

First of all, understand that there is no way to tell of a truth, or be sure that ordinals, runes and so on, were introduced by miners to increase bitcoin fees, there is no way to be sure about this.
But then, even if they did, bitcoin is still decentralized because those project being launched on the bitcoin blockchain are actually independent on their own, this means that, the miners sure have to promote the project to a lot of investors, who carry out alot of transaction on the bitcoin network, to result in a clog of the mempool which brings about the high fees.

It is just same as in 2019/2020 when cryptokitties shut down the ethereum blockchain due to a lot of people participating in the game, if miners launch a project on the bitcoin network with intent to increase fees, if no body give attention to such project, fees won't increase, it's as simple as that.

Yes of course, the high fees means, mining is profitable for miners, and this encourages them to stay, and others to join, the more miners on the bitcoin network, the more decentralized the network becomes, and this also makes bitcoin a good digital cash to completely trust.

The miners are the main beneficiaries of the high bitcoin fee; that's also the reason why some people speculate that they might have a hand in this BRC-20 and rune on the Bitcoin protocol.
 
Some also said the high fee contributed to helping them hold their bitcoin rather than selling it off since the fee was way higher. It's enough of an excuse for them to hold on instead of risking paying that high fee.

No matter how we look at it, I don't see any advantage to the high fee for any Bitcoinner; it's just the miners revenue increasing.

Us i.e. Bitcoin holders.

People invest in Bitcoin due to it's decentralization and safest network right? in order to reach a complete decentralization and make the network safe, there's miners behind that. If people not willing to pay fees to the miners, it's a threat to both decentralization and security.

Bitcoin fees will always increase and it's inevitable.

Miners and nothing more, they are the direct beneficiary of the increasing nature of the transaction fee, but we must not forget that this experience too is not a long time effect, it only happened occasionally and there are times the same miners looses as they sometimes receives half the reward of their mining when the hash rate is fluctuated on the other side effect, aside the transaction fee charges they receives, base on how congested the network is.

You are right, miners and third parties like centralized exchanges are the ones making profit from the fee that a sender pays. As different centralized exchanges have different rates according to there structure. They all are making different profits from the extra fee that sender pays. Well, at the end all the fee goes into the hands of miners.

I was reading a thread on another forum where they says, miner made more than 40+ BTC in a block I think it was the halving block. And they made 40+ BTC in fee only. I mean the blockreward at that time was still 6.25 I suppose, and miners made 40+ BTC that gives me different thoughts like I thought miner might leave this passion as there will be less profit but nah with an increment in the fee more miners will join. And speaking of runes, I still think its on purpose and many things will be in front of our eyes soon on purpose just to increase the price of fee.

I would say it is beneficial for Bitcoin miners and Bitcoin mining pools. Nowadays, chance to find a Bitcoin block as a solo miner is very low, hence miners have to join Bitcoin mining pools and they will have to share part of their rewards (block subsidy and transaction fee) to mining pool operators.

It is like from 0.5 % to 4%. [1]

[1] https://en.bitcoin.it/wiki/Comparison_of_mining_pools

The transaction fee of bitcoin already decreased. If you compare it to the time after halving then you'll see the difference because the fee right now is at $2+. I dont think that anyone will benefit if bitcoin fees increased a lot because people will only pay much higher fee although it is possible that it will stop people who only have small amount of bitcoin to hold for it and of there's only few people who sell bitcoin then it could increase the price of bitcoin in that matter.

The fees on bitcoin has always been the reward to miners and not to anyone else and the increase to the fees does not make it any different. I think the increased fees are as a result of transaction congestions in the network and the need for the miners to be able to compute the solutions for every transaction has prompted the need for more sophisticated computers. All of this cost money, even though they charge more, they still need to upgrade their equipment.

the fee's are rewards to MINING POOLS

miners just work for the MINING POOL

its the mining pool that collates transactions together and offers a good 'salary' share scheme to its workers to work for the mining pool rather than another.
(if a pool didnt collate junk for high fee, the workers would find a different pool to work for)

its like buying a car. yes the manufacturers workers get paid to help build a car, but ultimately the funds benefit the car brand manufacturer

too many people want to blame the independent miners. when most beneficiaries of the whole economics of production is managed by a higher up

Having to say that, miners do set the fee which questions of Bitcoin is truly decentralized is a misconception. Supposedly you’ve ever had to initiate a Bitcoin transaction at any point, you’re sure to set your fees and not miners. You might have the illusion that, this is been predetermined by a miner in systems that requires them to set a fee limit but, no such thing exists.

Now, understand this.
We have more than one miner out there. There are lots of miners out there with their rigs, doing them computation tasks for block rewards and other benefits that follows having to discover the next block. Given that, other miners would just have to wait in line when the fees are high and then it later drops, where does that place those miners that have been waiting in line as far as benefit goes when the fee has dropped?

That’s to say, they don’t get to decide these things but, network congestion which is directly proportional to users action and inaction does.
Don’t forget, Bitcoin operates a consensus rule and as such, everyone and every Satoshi do matter on the network.

Miners and third-party service providers such as centralized exchanges and casino platform because these platforms usually charge fees higher than the usual network fees, so if the fees are high, they tend to have increased fees for withdrawals in that particular asset, in this case, Bitcoin.


Who said miners can increase the transaction fees? Miners have no other role in the network than confirming and mining blocks containing transactions. Bitcoin doesn't work on a PoS consensus where nodes with the highest stakes in the network get to govern the network and take part in certain decision-making.

About your second question, of course not, high fees would never help any asset to become a better form of digital cash because the general population would never want to use an asset that charges a lot of money in fess for making normal transactions.

I am not saying that the miners set the fees.  What I am saying is that the fees are directly related to network congestion.  By adding Runes and Inscriptions to the network there is more congestion and the fees are higher.  The miners, who just lost 50% of their revenue, know this and have been planning for this for a long time.  Their businesses have to remain profitable otherwise they will go out of business.  It is highly probable that miners and pools have influenced the developers to add ordinals to the network in order to increase its traffic and compensate for the halving. 

Miners didn't make any changes to the Bitcoin protocol, they can't even do that if they wanted, because everyone needs to install the new software. And these tokens on Bitcoin blockchain are possible because of the features that always existed in the protocol - it's an oversight, not an intentional change. It would take us a fork to kill these tokens, but the devs are very conservative and try avoiding changes as much as possible.

Higher fees mean more profits for miners and as the result more competition and more hashpower in the network - so in the end more security. But these tokens didn't raise the fees for long term, it's just a mania like with tulip bulbs, when it's over they have no effect on fees.

Well it primarily benefits the miners and that in turn can benefit the network because the more miners the more secure the network because the difficulty is higher. When difficulty is higher it’s harder to perform 51% attacks.

However the difficulty is already so high that a 51% attack is almost impossible or very expensive. So for at least the BTC network, it really shouldn’t be an issue.

So you are correct, it mostly benefits the miners. And other networks because those will get increased usage since fees on BTC are higher so people will do transactions on LTC or ETH instead.

Since mining rewards and transaction fees go to miners, ultimately, miners will be beneficial if transaction fees increase. But it doesn't mean they can increase transaction fees themselves; they can just manipulate to increase transaction fees by creating dust transactions. When the network is congested, transaction fees increase. Currently, ordinals make a lot of transactions, hence the increase in fees. I think day by day it will be normal. 

I honestly can't tell if OP is just a little idealistic and naive, or if this is something else.  Either way, there seems to be a noticeable and distinct trend of complaints from them about Bitcoin.

The question is backwards.  If Bitcoin is not secure, then no one benefits.  Why does everyone think you can have the best available security with very little cost?

Fees are driven by demand.  Clearly there are times when Bitcoin is in high demand.  Some people are seemingly still prepared to pay high fees during periods of high demand and other people believe this to be unfair.  Blame whoever you like, invent whatever conspiracies and claim whichever transactions are somehow illegitimate.  But the fact remains that none of you have come up with anything better yet.  So deal with it.     

Well one would argue that if a sender pays a higher transaction fee then their transaction would be prioritized by miners thus letting their transaction go through faster. But this system really doesn’t leave any choice for the senders. So in the end they just have to pay even if it’s out of their will.

No not at all if anything people are starting to complain about how expensive the transaction fees are. We can’t even make small transactions as the transaction fees would just be too expensive. It hinders us from actually using bitcoin as a currency.

Ordinals is NOT part of the Bitcoin protocol. It is an attack vector that is exploiting a flaw in the protocol and what they define as "Ordinals token" is just arbitrary data being injected into the transactions.

Back in 2017 some shitcoins tried to benefit from it by advertising themselves as the "better bitcoin" and getting pumped. For example ethereum started the flippening nonsense and is the biggest shitcoin that got pumped back then until its own fees skyrocketed higher than bitcoin's and the dumping began leading to a big crash that it couldn't recover from to this day.

No one benefits from the increase in fees apart from miners, because everyone except miners, in the Bitcoin ecosystem hopes that fees can be as low as possible so that it will help them complete transactions more quickly and cheaply. But the problem is that this will not happen on the Bitcoin network, because the Bitcoin network is often congested and that makes fees even more expensive. Even though the fees are now back to normal, congested problems can occur again on the network and that makes fees even more expensive.

In my opinion, the beneficiaries of the situation with high Bitcoin commissions are the miners and founders of some alternative cryptocurrencies.  It is quite possible that these are the same persons.  When users refuse to make transactions in Bitcoin due to high fees, they remember the existence of coins such as Bitcoin Cash and LiteCoin. 
The founders of stablecoin projects receive even more benefits.  At the same time, cryptocurrency users forget that stablecoins are essentially centralized projects (unlike Bitcoin). 
However, high fees are not a disaster for Bitcoin, since it is currently more of an investment financial asset than a means of payment.

I think that you are getting into a conspiracy theory here.
Can you prove that the BTC miners openly support the Runes and Ordinals? If you can't prove such connection, then you are clearly speculating. The BTC miners were doing just fine in the last few months, when the transaction fees were normal. I don't think that they would try to ruin the blockchain by adding useless stuff like the runes and ordinals. And no, the miners cannot "change Bitcoin". Lets assume that the miners are using runes and ordinals transactions to boost the transaction fees on the blockchain. Wouldn't they have to pay higher tx fees as well?

Miners are strictly the beneficials of Bitcoin fee, if I may say, this is a good advantage for hodlers to continue holding because you cant be using a high fee in transacting a small amount instead of doing such the best option is to hold to the fullest, I have checked it closely, is it that the system can not accommodate many transactions at the same, if yes, why was it not programmed in way that it can accommodate more transaction at the same time, this is more reason why some persons doubt if Bitcoin is really decentralized digital investment, if miners can wake anytime and increase fee then something needed to be done to correct the continues reoccurrence of this because this alone can discourage more investors.

First: I would not consider average transactions costing $3 US normal.  That is a 300% increase over normal from just a short time ago.  300% is a huge increase in pay for the miners.
Second: solutions to the Bitcoin speed problem have been solved by other Bitcoin forks and Bitcoin developers don't seem to interested in working to solve these problems.

The Bitcoin developers increased the block size to 4MB, a 400% increase in size, without improving the speed of the network.  They use this additional space to store inscriptions!!!????
This is obviously being driven by something other than "peer-to-peer electronic cash".  All you have to do is use the 4MB for transaction storage and you instantly increase the capacity of the network by 400% which would speed up transactions for an equivalent fee effectively lowering fees.

This is not rocket science!