Bitcoin Forum

In terms of USD value are transaction fees going to get more expensive over time? At ~13 cents USD they're pretty high for transactions under $10. Now this doesn't affect me personally. But we see a lot of talk about bitcoin helping out the unbanked, and bringing bitcoin to Africa and such, and higher transaction fees are really going to limit bitcoin's potential in certain markets.

Do you think at some point we'll see miners voluntarily reduce transaction fees? Or perhaps the opposite, more and more miners not including low fee transactions thus driving the price up.

As the market is now, are we heading towards increases? Or do you think the transaction fee issue is one that will be resolved on it's own? I think some people might underestimate how much of a limiting factor it could be.

Stop thinking in terms of USD. Soon the USD will have no value to speak of. Thinking in terms of BTC will be far more fruitful.

The fee can and will be adjusted accordingly.

But the utility of Bitcoin will continue increasing.

Currently , if you decide to buy a mug , you will pay transaction fees of around 2.5%
What happens when the cost of that mug in Bitcoin is lesser , but the transaction fees are the same ?

At the current rate , Bitcoin may exceed Paypal in transaction fees for microtransactions. That would go directly against what Bitcoin is for.

So , rephrasing his question against your nitpicking , "Will the value of transaction fees be expected to increase over time in comparison to the goods we buy with them ?"

Miners are overwhelmingly paid by the automatic block reward, and not from transaction fees. This is a form of inflation in the bitcoin economy.

Sooner or later , people will stop offering such high fees and miners will be forced to accept these lower fees.
This may not happen in the short term , but when the fees exceed around 25c , it will hit a hard cap and fees will definitely reduce.

I've wondered the same thing about the fees. To send very small amounts it's not very practical. Maybe something will have to be done about this.

What do you mean by inflation ?

The block reward continuously halves to prevent inflation. The fees are in place to ensure that the incentive to maintain the network remains even after the block reward is negligible.

i think fees should be even lower
transaction speed is aproblem that needs to be solved

Transaction fees are utilmately decided by the pools and miners. They can choose to accept or reject transactions with lower than standard fees. We have little say in this, but we can try to force them to accept lowers fees if we all use a lower fee. If bitcoin price continue to rise, we can expect them to accept 0.00001 as standard fee.

That's some wild speculation. Even so, transaction fees will have to be compared to something. Whether that's gold, rice, or litecoin, bitcoin will always have a value. And a transaction fee will also have a corresponding value. The USD part isn't important here at all.


The fee can be anything miners want it to be, but the question is what will it be and when. And who is going to take steps to ensure that it doesn't price out 2 billion or more people.

25c fees would be a disaster really. Bitcoin will go on and people will still invest and use it for large purchases when it's convenient but it will seriously lose a lot of competitive edge.

As I said before , miners will reduce fees when they notice that lesser people are offering those fees.
The propogation of a transaction should be treated like any service , whose price is decided by demand.

If there are too high fees , with nobody willing to accept the fees , they will reduce over time as miners realise that they would earn more with more transactions.

many people do not factor in the number of transactions per second which is a key variable in this discussion, today bitcoin has it capped to 7 but in future that limit could be removed and if there are 5000 tps like visa and mastercard, then even very little transaction fees can support the miners...

At this point though will most miners even notice, or care? The transaction fees are minimal compared to the block reward. I could see it being ignored even if transaction volume was dropping.

The problem is that miners might not even know what they are potentially missing. For example if miners agreed to cap fees at one penny and that helped spread adoption worldwide(and thus raising the price of bitcoin) they might actually make more money. But if miners are only focused on the short term optimization of profits via supply and demand with transaction fees then they might miss a long term opportunity to grow bitcoin.

Now is the time to forgo minor profits for potential growth. The block reward is still very large and nickeling and diming people in the early stages of bitcoin can't possibly have more benefit than maximising the chance for people around the world to adopt bitcoin. And the only way it's going to happen is if miners decide as a group that it's in their best interest to charge less fees.

Lowering transaction fees doesn't automatically guarantee that bitcoin is going to be adopted by groups that are resistant to using bitcoin because of the standard transaction fee. But we do know that for certain people and for certain sizes of transactions the fees are a barrier and they are a problem that can be solved. Removing the barrier is just one step in increasing the probability that more people can use bitcoin.

Of course people can try to send their transactions with any fee they want but in the current market very few miners will bother processing those transactions which makes bitcoin not worth using for those attempting to circumvent fees.

Fees are useful to prevent spam on the blockchain. Without fees, or with very low fees, blockchain would be too big for most people. 

I think a fraction of a cent is probably enough to deter spammers from sending too much dust.

As far as the blockchain goes, it's already quite big and at this point most people are going to be better served using Electrum for a number of reasons. Of course the community should still try to have as many full nodes as they can going, but the average user is not going to be running a full node.

Transaction fees will have to go up. But honestly, current transaction fees are very high already, much higher than credit cards--but they are hidden in the block rewards and shared via inflation.

Imagine that the US Mint printed lots of extra cash and gave it to VISA in return for visa charging no fees.
So if the transaction fees replace block rewards, the difference may be more about marketing than economics (though who actually pays for the network changes too).

FTFY. The answer is yes, incidentally. ;)

Where do you get $0.13 from?  The average tx is <1KB and the min fee to relay for v0.8+ is 0.1 mBTC which is ~$0.06.  That is falling to 0.01 mBTC in v0.9+ which is more like $0.006.


Fees are even higher for the unbanked.  mPesa which is probably the most successful private payment network is Africa is about 5x the cost of Bitcoin to transaction $10l.

I think it will rise more, it is already pretty high, electrum and other clients are charging 20k satoshis for every transaction, no matter how much you're sending.

Not really.
Multitransactions still allow spammers , but they usually need a database of addresses , I'd guess they find them on the forums  :(

10k satoshis too is sufficient for "high priority" status on blockchain.info

It is just that 20k satoshi is the default fee and not many people change it.

In the long run, when block rewards approach ( and eventually reach) 0, fees will have to be sufficient to support mining energy costs.  However that should not be an issue because at that point bitcoin will be either huge or extinct.  Even with 1 billion $ in daily transactions, that would mean 1 million in fees with a 0.1% fee.

Please be a bit careful about who you speak for.  I've 'always' felt that Bitcoin should be 'free' to those who strengthen the system.  Alas, the designer (or post design maintainers) didn't see fit to reward transfer and/or verification nodes so that idea is out the window.

Under Bitcoin's current design I'm happy to pay $10/transaction and that is what I set my local bitcoind to do.  It's a screaming deal compared to doing international wires, and it has proven both vastly more reliable and vastly more quick.

Hopefully sidechains (or better yet, treechains) will come along to take the penny-ante bullshit load of the main system and allow it to remain lightweight (and thus semi-distributed and reliable) while simultaneously the actual multibit-class users will be able to pay fair support fees (pennies) rather than groveling for subsidies on the main chain and whining when they don't get them.

Let your bitcoins age/use older inputs and you will pay 0 tx fees ;)

I think you are confused at what PayPal fees are.  Bitcoin tx fees (average of $0.06 per tx) is nowhere near what PayPal charges ($0.40 plus 2.99%).

PayPal can even be closer to 4% when sending to foreign countries depending on the situation.

That and they often freeze your funds and raid your bank account.

I'm getting the fee from Electrum which is currently 0.0002. Electrum is the best option for most use cases in my opinion. Although, the higher mandated fee does make it less attractive.

It can be much higher. Once I received a payment from the UK, in Pound Sterling. Immediately they deducted close to 3% on fees and another 2% on currency conversion (UKP to USD). When I withdrew the money to my bank account, they deducted another 2% (USD to local currency).

Electrum shouldn't be charging a higher fee than other clients.  Bitcoin fees are per KB so if you have a tx which is 2x as large (size not value) then it is going to be 2x the fee of one under a 1KB.

That's funny, I've been doing BTC transactions for years now and haven't paid a single satoshi in fees.

I guess you must be using bitcoins that haven't moved around a lot prior to you sending them. I'm not entirely sure how it works but I think something along those lines applies, something to do with the number of inputs impacting on the size of the block.

PS. Loving the avatar - brings back memories!

You can override electrum suggested fee both on the transaction level and the default settings.
I usually send with 0 fees with electrum unless amount is tiny.

I was curious how this is done so I started a new topic regarding this in the Electrum subforum: https://bitcointalk.org/index.php?topic=644533.msg7199730#msg7199730 (https://bitcointalk.org/index.php?topic=644533.msg7199730#msg7199730)

Feel free to explain if you have the time. Thanks.

I can almost guarantee the tx fees are going to rise. As bitcoin grows it will only be natural for the fees to rise. It also depends on how you look at it.. Technically the fees are changing every day with the value of bitcoin fluctuating, however in terms of will the tx fee ever rise above .0001? The simple answer is yes.

Yeah the value of the fees goes up as the value of the currency rises. The market will take care of the rest. You can all ready get a transaction through faster by sending with a higher fee.

I think there will actually be downward pressure in the price as the transaction volume increases due to economies of scale.

Recently I have heard reports about miners refusing to confirm those transactions where the fee is not paid. There were multiple threads here, in the Economics sub-section.  >:(

Why do you expect downward pressure on the transaction fee? As the block rewards continue to be cut in half, miners will be expecting to get more and more of their profits through the collection of fees.

Fees may rise marginally in USD terms but a rising exchange rate means they will fall in BTC terms.  Fees today (measured as BTC per KB) are 1% of what they were initially and the block reward is half as much (in BTC terms).  Will fees rise on a USD basis?  Maybe but maybe not.  Miners have very little pricing power.   The block reward prior (including avg fees per block) prior to the last halving was ~50.00 BTC and today it is ~25.01 to 25.10.  The rise in fees per block has more to do with the 10x increase in tx volume than miners exerting any pricing pressure.

I think miners should collectively act to keep fees as low as possible in USD value to maximise potential adoption while it's still early in the life of bitcoin. Fees will go down in btc, but I don't think it's in anyones interest for fees to ever go up in USD. Not for a long time anyway. If miners processed low fee transactions it would lessen the barrier of entry for some people.

Even if we see another 10x rise in transaction volume by the next reward halving, I still think it's more profitable in the long run for bitcoin to charge the lowest fees possible.

IOW, continue the strategy of bait-n-switch, and without even a twinge of recognition.  One can hardly blame those who harbor some suspicions of the ethics of the Bitcoin community.

If one doesn't want fees, just open up the transaction rate.  That will rather quickly achieve the vision of there being about 6 copies of the blockchain held by organizations who can handle the load.  These types will probably pay a person to use Bitcoin or at least offer a zillion valuable perks for doing so.  The value of the information stream coming from the userbase makes it an economically viable business model.  Just like modern e-mail.

In the mean time, if one patronizes outfits which use authentication systems supplied by the large American internet organizations then said organizations can enjoy some of the benefits of mining the info stream without even undergoing the relatively minor hassle and expense of operating clusters of Bitcoin supernodes.

  Miners can't collectively force fees higher any more than they can collectively force fees lower.   Miners have almost no pricing power when it comes to fees.   Once v 0.9 becomes the majority of the network the cost to relay will be 0.01 mBTC per KB (~0.6 cents).  Will miners require a higher fee to include a tx in the next block?  Maybe but the history has shown they have just gone with the flow.  Right now I don't know a single miner which requires more than 0.1 mBTC per KB (the min to relay imposed by v0.8x) to include a tx in a block.   

In terms of BTC, TX fees per transaction/KB will decrease over time. In terms of TX fees per block they are expected to rise as more people accept BTC and thus send TXs.