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Title: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: CryptoCurrencyInc.com on May 17, 2014, 11:59:21 AM Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin
"Transaction fees could “rise and rise to the point where only rich people can transact” if block sizes aren’t increased, according to Gavin Andresen, Chief Scientist of the Bitcoin Foundation." http://www.coindesk.com/gavin-andresen-rising-transaction-fees-price-poor-bitcoin/ Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: CoinRocka on May 17, 2014, 05:46:16 PM Define poor. Do most poor folks have cell phones?
My take is the poor is already priced out of bitcoin, the middle class is already priced out of bitcoin because people think in whole numbers. I can't tell you how many of my friends/coworkers have said, "I'll let you create a wallet for me but I want one bitcoin". Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: devphp on May 17, 2014, 06:38:46 PM Fortunately, there is always Dogecoin to transact micro payments.
Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: Nagle on May 17, 2014, 07:06:38 PM Block chain transaction volume is no higher than it was 2 years ago. (http://blockchain.info/charts/estimated-transaction-volume?timespan=2year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=) This is a non-problem unless Bitcoin use increases, which doesn't seem to be happening.
Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: waxwing on May 17, 2014, 08:48:31 PM Block chain transaction volume is no higher than it was 2 years ago. (http://blockchain.info/charts/estimated-transaction-volume?timespan=2year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=) This is a non-problem unless Bitcoin use increases, which doesn't seem to be happening. That's transaction volume in Bitcoin. If anything, it has gone down in two years. Do you think it might be, you know, because the value of 1 Bitcoin has increased thousands of percent, maybe? Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: shawshankinmate37927 on May 17, 2014, 09:56:06 PM Define poor. Do most poor folks have cell phones? My take is the poor is already priced out of bitcoin, the middle class is already priced out of bitcoin because people think in whole numbers. I can't tell you how many of my friends/coworkers have said, "I'll let you create a wallet for me but I want one bitcoin". Perhaps you can help your friends understand the math that's involved. There are currently about 7 billion people in the world and a little less than 13 million bitcoins have been mined so far. There just aren't enough whole bitcoins for everyone to have one. Fortunately, each bitcoin can be divided into 100 million "whole" satoshis and your friends could each buy one million of those "whole" satoshis for about $4.50 at current prices. Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: GhanaGamboy on May 17, 2014, 10:43:01 PM Low transaction fees is in miners long term interest for Bitcoin having value. If no one will want use Bitcoin because of high fees, Bitcoin will become much less valuable.
And damn sure with limited block size and more transactions required than can be included fees will be much higher. Also those not willing pay those fees have no choice but stop using Bitcoin :( (hopefully the fees will not become as high as western union fees one day) Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: DeathAndTaxes on May 17, 2014, 10:51:06 PM Code: [quote author=curlyginger link=topic=612652.msg6781840#msg6781840 date=1400336909] http://www.hapakenya.com/new-mpesa-tariffs-released/ Bitcoin already beats mPesa on tx fees. However mPesa has a superior on the ground network when it comes to "cashing in and out". With fees as low as 1% when withdrawing from an ATM exchangers would really need to cut fees to be competitive. So it really comes down to what you mean by micropayments? Do poor users really benefit from the ability to transaction in subcent values? Even in Kenya with median income being about $800 annually a centralized network without the cost of blockchain imposed a min tx amount of $0.10 (and with a staggering 30% fee) and it became the most successful virtual currency outside of Bitcoin.[/code] Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: bryant.coleman on May 18, 2014, 08:32:49 AM People who collect very small amounts of Bitcoin, mostly from faucets are disproportionately affected by the rise in the transaction fees. I have seen people paying as much as BTC0.05 in transaction fees, for transferring just BTC0.1. Their transaction size (in KB) is quite large, therefore they will have to pay a higher transaction fee.
Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: DeathAndTaxes on May 18, 2014, 08:35:53 AM People who collect very small amounts of Bitcoin, mostly from faucets are disproportionately affected by the rise in the transaction fees. I have seen people paying as much as BTC0.05 in transaction fees, for transferring just BTC0.1. Their transaction size (in KB) is quite large, therefore they will have to pay a higher transaction fee. Imagine how much worse it was if the dust limit hadn't been put in place. Prior to the dust limit most "free coins" sites were paying out even smaller values sometimes as little as 100 sat. It is always better to opt for larger payments if possible. In pool mining, to reduce fees paid, you should set the payout threshold as high as possible but no higher than an amount you would be willing to lose if the pool fails or defrauds you. So if you are willing to risk a max loss of 0.05 BTC then payout in 0.05 BTC increments because a single 0.05 BTC output will require less fees to spend than fifty 0.001 BTC outputs. Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: jubalix on May 18, 2014, 09:38:15 AM Define poor. Do most poor folks have cell phones? My take is the poor is already priced out of bitcoin, the middle class is already priced out of bitcoin because people think in whole numbers. I can't tell you how many of my friends/coworkers have said, "I'll let you create a wallet for me but I want one bitcoin". Perhaps you can help your friends understand the math that's involved. There are currently about 7 billion people in the world and a little less than 13 million bitcoins have been mined so far. There just aren't enough whole bitcoins for everyone to have one. Fortunately, each bitcoin can be divided into 100 million "whole" satoshis and your friends could each buy one million of those "whole" satoshis for about $4.50 at current prices. but people don't think like that. They want at least 1 bitcoin and the sell is there are 21 Million. this seems to be a limiting factor atm. Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: IIOII on May 18, 2014, 06:25:05 PM I'm not an expert, but increasing blocksize is not without problems, because as a result blockchain size and bandwidth requirements will grow. This will lead to a reduced number of full nodes in the network and therefore more centralization around high bandwidth, high storage capacity nodes.
Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: Nagle on May 18, 2014, 07:03:43 PM Block chain transaction volume is no higher than it was 2 years ago. (http://blockchain.info/charts/estimated-transaction-volume?timespan=2year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=) This is a non-problem unless Bitcoin use increases, which doesn't seem to be happening. That's transaction volume in Bitcoin. If anything, it has gone down in two years. Do you think it might be, you know, because the value of 1 Bitcoin has increased thousands of percent, maybe? Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: DeathAndTaxes on May 18, 2014, 07:23:46 PM Block chain transaction volume is no higher than it was 2 years ago. (http://blockchain.info/charts/estimated-transaction-volume?timespan=2year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=) This is a non-problem unless Bitcoin use increases, which doesn't seem to be happening. That's transaction volume in Bitcoin. If anything, it has gone down in two years. Do you think it might be, you know, because the value of 1 Bitcoin has increased thousands of percent, maybe? The daily tx volume chart is very volatile so looking at daily amounts can hide the underlying trend. By my math in the last 180 days there were 11.7M txs, the six months prior it was 8.8M txs, the six month prior to that was ~8M txs. On a year over year basis tx volume (trailing twelve months) tx volume has almost doubled (from 40K per day to 57K per day). Blockchain's chart has moving averages which make the trend a little more clear. The 7 day can be changed to any value although the they way they compute it means the first x days are not averaged so that is why the chart looks a little weird. A 180 day moving average of transaction volume: https://blockchain.info/charts/n-transactions?timespan=2year&showDataPoints=false&daysAverageString=180&show_header=true&scale=0&address= As for the network supporting 500K tx per day that is not true. The network is capped by block size not tx volume. To support 500K tx per day on 1MB blocks would require the average tx to be only 288 bytes. While many txs are there are tx which are many magnitudes larger and that drags the average tx size is closer to 800 bytes. In theory if all miners produces exactly 1MB blocks that would be 180,000 tx per day. Fees may rise long before we reach 180K tx per day because that assumes all blocks are 1MB, however most miners do leave some tx out of the next block either due to arbitrary block sizes (250KB cap still appears to be rather common) or due to low/no fee. Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: DeathAndTaxes on May 18, 2014, 07:32:10 PM Do most poor folks have cell phones? Yes. More people in Africa have cellphones than have indoor plumbing. Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: jbrnt on May 18, 2014, 09:49:45 PM About a year ago, you can send a transaction with 0.0001 fee and you can nearly almost expect it to confirm within 20 minutes. Now, you send a transaction with 0.0001 fee, there are times you need to wait for 45 minutes. For free transactions, it varied from half an hour a year ago, to over 10 hours these days.
I know, it depends on transaction size and priority, but I am comparing similar transactions I made over the past year. Overall, I do feel that the network is more "crowded" now. If the current block size do not increase, we may see longer and longer confirmation times at the standard 0.0001 fee in another year's time, and we may be forced to include a higher fee if we need the transaction urgently. I think increasing the block size will help to solve this, and standard fee may not fall at all due to increased demand for quicker transactions. Bitcoin will need quicker transaction confirmations for it to expand adoption. Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: DeathAndTaxes on May 18, 2014, 10:19:22 PM Increase the max block size isn't going to do much if most miners aren't already using that max. A significant portion of the blocks created today are 250KB or less in size. It is like you have a car which only goes 60 mph, raising the speed limit from 90 mph to 120 mph isn't going to get you there any faster.
Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: jbrnt on May 18, 2014, 10:31:03 PM Increase the max block size isn't going to do much if most miners aren't already using that max. A significant portion of the blocks created today are 250KB or less in size. It is like you have a car which only goes 60 mph, raising the speed limit from 90 mph to 120 mph isn't going to get you there any faster. Yes, I noticed that. Some pools are constantly making smallest blocks possible. Is there a "minimum blocksize" setting which can be raised to force pools to include more transactions into their blocks? It will not be popular, but will do the community some good. Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: DeathAndTaxes on May 18, 2014, 10:34:53 PM Is there a "minimum blocksize" setting which can be raised to force pools to include more transactions into their blocks? No. Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: Malin Keshar on May 19, 2014, 12:03:03 AM there are altcoins with lower transactions fees, for exemple, litecoin
also bitcoin can be change to mBTC or uBTC, and taxes adjusted to follow it Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: Foxpup on May 19, 2014, 01:16:40 AM Increase the max block size isn't going to do much if most miners aren't already using that max. A significant portion of the blocks created today are 250KB or less in size. Increasing the max block size especially isn't going to do much if most miners don't upgrade. Bitcoin 0.9 no longer produces such blocks (I think).Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: DeathAndTaxes on May 19, 2014, 02:03:27 AM Increase the max block size isn't going to do much if most miners aren't already using that max. A significant portion of the blocks created today are 250KB or less in size. Increasing the max block size especially isn't going to do much if most miners don't upgrade. Bitcoin 0.9 no longer produces such blocks (I think).I think you are misunderstanding, the cap has been 1MB for a long time now. Most blocks are less than 250KB. So raising the cap isn't going to make those blocks larger. For one reason or another miners are producing smaller blocks. Now if the block size was consistently close to 1MB and paying tx were having to wait multiple blocks then yes raising the cap is going to help but we aren't there yet. If miner X is choosing to produce a block that is 87KB why would raising the cap from 1MB to 20MB change anything? Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: Foxpup on May 19, 2014, 02:20:06 AM Most blocks are less than 250KB. So raising the cap isn't going to make those blocks larger. For one reason or another miners are producing smaller blocks. Specifically, the reason is that Bitcoin versions prior to 0.9 do not produce blocks larger than 250kB unless there are transactions paying more than double the minimum required fee (which is almost never the case). Some pools (notably Eligius) removed this restriction, but most kept the default policy. Miners using Bitcoin 0.9 should only be producing small blocks if there are absolutely no more fee-paying transactions in the memory pool (unless they've modified their clients to restore the old behaviour).Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: DeathAndTaxes on May 19, 2014, 02:31:50 AM Most blocks are less than 250KB. So raising the cap isn't going to make those blocks larger. For one reason or another miners are producing smaller blocks. Specifically, the reason is that Bitcoin versions prior to 0.9 do not produce blocks larger than 250kB unless there are transactions paying more than double the minimum required fee (which is almost never the case). Some pools (notably Eligius) removed this restriction, but most kept the default policy. Miners using Bitcoin 0.9 should only be producing small blocks if there are absolutely no more fee-paying transactions in the memory pool (unless they've modified their clients to restore the old behaviour).or set a single config parameter "blockmaxsize" to 250KB. No modification of the client is required. The double fee requirement was for blocks over 500KB. v0.8.6 set the default max block size to 350KB. v0.9.0 set the default max block size to 700KB. It is very likely major miners are setting the "blockmaxsize" and other mining parameters. Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: Foxpup on May 19, 2014, 04:06:45 AM The double fee requirement was for blocks over 500KB. Source? In every version I've seen until 0.9, it's always been 250kB. It was never 500kB as far as I know.Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: tspacepilot on May 19, 2014, 07:27:20 AM Is there a possibility that a minimum block size could be implemented? Would this help the issue?
Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: btcxyzzz on May 19, 2014, 01:13:16 PM Block chain transaction volume is no higher than it was 2 years ago. (http://blockchain.info/charts/estimated-transaction-volume?timespan=2year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=) This is a non-problem unless Bitcoin use increases, which doesn't seem to be happening. I'm surprised it even have tendency to fall. Why is that? Answer is simple, the sea of altcoins... Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: nkocevar on May 19, 2014, 04:04:36 PM Fortunately, there is always Dogecoin to transact micro payments. But you have to think about the tediousness of constantly switching back and forth from DOGE to BTC whenever you want to make a micro transaction. Although you could always just keep a small amount of doge. Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: devphp on May 19, 2014, 04:17:08 PM Fortunately, there is always Dogecoin to transact micro payments. But you have to think about the tediousness of constantly switching back and forth from DOGE to BTC whenever you want to make a micro transaction. Although you could always just keep a small amount of doge. Yeah, just keep small amount of Dogecoin, like you keep small change in your physical wallet to buy a coffee for example. Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: DeathAndTaxes on May 19, 2014, 04:22:29 PM Block chain transaction volume is no higher than it was 2 years ago. (http://blockchain.info/charts/estimated-transaction-volume?timespan=2year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=) This is a non-problem unless Bitcoin use increases, which doesn't seem to be happening. I'm surprised it even have tendency to fall. Why is that? Answer is simple, the sea of altcoins... It hasn't fallen. On a day to day basis there is a lot of volatility in the number of transactions. Volume also tends to spike when the price makes major moves (highest volume days tend to be around ATHs and ATLs). If you look at transaction volume on a moving average it has steadily increased. Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: Peter R on May 19, 2014, 05:00:46 PM Block chain transaction volume is no higher than it was 2 years ago. (http://blockchain.info/charts/estimated-transaction-volume?timespan=2year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=) This is a non-problem unless Bitcoin use increases, which doesn't seem to be happening. I'm surprised it even have tendency to fall. Why is that? Answer is simple, the sea of altcoins...It's not falling. It's rising. The number of transactions per block is what affects how full the blocks are, not the total output volume. The number of transactions per day has been steadily increasing: https://i.imgur.com/OypDNTl.png The above chart is distorted by the "on-chain" gambling bubble of mid 2012 to mid 2013. Most gambling now takes place off-chain (in fact, just-dice.com processes over 100 bets per second). If we attempt to remove the "on-chain gambling" bubble to get a better sense of organic growth in the number of transactions per day in the bitcoin economy, we finds its been growing exponentially at approximately 320% per year. https://i.imgur.com/1MHBBDw.png Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: Peter R on May 19, 2014, 05:15:46 PM Most blocks are less than 250KB. So raising the cap isn't going to make those blocks larger. For one reason or another miners are producing smaller blocks. Specifically, the reason is that Bitcoin versions prior to 0.9 do not produce blocks larger than 250kB unless there are transactions paying more than double the minimum required fee (which is almost never the case). Some pools (notably Eligius) removed this restriction, but most kept the default policy. Miners using Bitcoin 0.9 should only be producing small blocks if there are absolutely no more fee-paying transactions in the memory pool (unless they've modified their clients to restore the old behaviour).This would increase the aggregate cost of orphans. Orphan costs are reduced when blocksize variance is minimized. To keep blocksize variance low, a pool of unconfirmed transactions larger than the average blocksize is required. If miners were completely cooperative, to minimize the tragedy-of-the-commons effect they would agree on informal best practices for filling up blocks (not enforced). This will probably never happen, but the fact that there is almost always a pool of unconfirmed transactions while most blocks aren't even close to full shows that miners are cooperating to a certain extent for the benefit of the network. Title: Re: Gavin Andresen: Rising Transaction Fees Could Price Poor Out of Bitcoin Post by: tspacepilot on May 19, 2014, 11:31:27 PM Is there a possibility that a minimum block size could be implemented? Would this help the issue? Death and Taxes, if I understand the discussion correctly, implementing minimum block size seems like it would be the solution. The issue would be that if you hit a period in which there were very few transactions waiting to be confirmed then perhaps they would have to wait till more transactions arrived in order to meet the minimum. However, that shouldn't ever be a problem given the graphs and predictions you're showing us about the volume of transactions. Also, perhaps this transaction minimum would be implemented as a percentage of transactions waiting to be confirmed. This would obviously mess with difficulty, but that can be adjusted, right? Can we have a little discussion about the possibility of a min_block_size parameter? |
