Bitcoin Forum

My latest thoughts on the Bitcoin network. This time I was inspired to look at what's actually been happening with transaction fees in light of the various arguments about the impact of block capacity scarcity.

http://hashingit.com/analysis/47-bitcoin-tx-fees

That's a great presentation, thank you for that. It's nice to see that it hasn't reached the point to where transactions really have to compete with fees to be confirmed yet so we are not now in some crisis to increase blocksize.

Also it is very good to see how the transactions per day are steadily increasing which to me means that Bitcoin is doing very well. I think it is currently very undervalued due to all the drama and squabbling over blocksize and hardforking.
 

Current fees are effectively pittance, I'm always happy to pay 3 or 4 times the average fee to ensure my transactions are confirmed in the next block.

Excellent resource!

Will help a lot of people looking for answers about the fees.

Keep up the good work!

Although a bit irrelevant for those already in Bitcoin's ecosystem, the Fees per transaction in USD graph is pretty interesting and probably a selling point for Bitcoin.

As for the transaction fees in BTC, they've been pretty much stable, pretty good :)

Very nice to see that the increase in transaction numbers didn't cause the fees to rise as well. It means the blockchain could be expanded even more without putting pressure on transaction fees.

"The last 2 months have seen particular jumps, but that may in part be explained by the dramatic increases in hash rates again. "

How is hashrate related to that? It's the speed of block transactions that matter, no?

its a really interesting read to be honest, i did not know that there was no growth in transaction fees

what is the number of the "miners reward per transaction graph" on the y axis?

When the hash rate is increasing between difficulty retargets we see blocks being solved more quickly. Instead of, say, 10 minutes on average we see blocks taking 9 minutes, so this means there's more capacity available to handle transactions. This reduces the pressure on transactions and therefore means that it's much more likely that low or zero fee transactions will get included in blocks by block makers (because they don't have anything better to do with the block space).

Oops- forgot to add a label this. I just updated the graphic. The value is in USD.

is this correct, because it would mean that they are earning $2M for the total sum of the transaction per day on average? 225k tx per day x $10

it's more than their reward from mining...

They may be pittance if you are sending considerable amounts of money but if you need to do microtransactions daily for whatever reason it will add up very quickly.

Yep, for the likes of people who do microtransactions every day and do not want to delay it, those fees were already substantial. Adding it (the fees) up is already significant to others (like me, lol).

The 28-day moving average is the red dashed line and is running at about $8 at the end of the chart, while the 28-day moving average for the number of transactions (just updated the graphic in the article to show that) is running at 200k, so that's $8x200k = $1,600,000. Here's the graph of mining rewards per day (I didn't end up using it when I wrote the article): http://hashingit.com/images/articles/20160203/rewards-per-day-usd.png

What interest me - 2MB block will be reality soon, right? So how much will fees increase by then? Will they be effectively doubled?
Will this upgrade kill faucet and some services possible now, because of low transaction fees?

Bigger blocks won't mean bigger fees.

This analysis is very interesting and a strong argument against those who detrate bitcoin protocol. It shows the network can sustain a high demand for usage and even so it can acquire productivity as the technology evolves.

So many spam attacks lately, but it's kinda funny how the average on-chain usage seems to be going down. Would it be safe to assume that bitcoin is receiving less usage today than it did a couple of years ago or is it that nowadays more transactions happen off-chain.

well my point stand, at present they essentially earn the same amount of their mining reward, in fee, this is crazy...because basically they doon't need to mine

then something comes in to my head, why on blockchain.info it say "Total Transaction Fees" 39 btc is that value per block? i don't think it is per day, too small...

The 39 BTC per day are the direct fees. The fees and the mining rewards per block are different though. The total mining reward per day depends on the number of blocks mined (currently we're at about 160ish per day rather than the nominal 144 per day) so if we say the number is actually 160 then the total mining reward would be 4039 BTC per day. The majority of the mining reward comes from the block subsidy of 25 BTC per block. Obviously in July this drops to 12.5 BTC per block.

The intent was always that as the block reward continued to halve then a fee market would arise that would compensate the miners with fees instead of compensating them with the block reward. The problem is that after 7+ years the fees per block aren't anywhere close to the block rewards.

In theory if there was a shortage of useful capacity in the blocks then we'd actually see fees increase as users paid more to ensure that their transactions got mined rather than someone else's. The fact that this isn't happening raises questions about how many of the current transactions are really things that their senders actually cared about because even with the stress tests, etc., there doesn't appear to have been a major need for people with transactions that they do care about to have had to increase their fees to get things mined quickly.

It doesn't mean double fees. It means that we can go longer without needing to compete to get included in the blocks.

What will happen if the blocks are full is that people will increase their fees to get included over a standard fee transaction. This is what is currently not wanted as it effectively kills any micro transactions.

That's an interesting graphic that you have here. It shows that our fees are quite reasonable compared that some height that happened before.

The price in usd changes a lot more than in bitcoin because the bitcoin price has changed through the years. The fees are somewhere at 0.0001-0.0002 but when the stress test was it reached 0.0003 too.

Interesting..
Are you saying that the rise in BTC transactions on the chart are mainly due to the spam attacks and that actual transactions are decreasing? I surely hope this is not the case..

I think the fees will be the most important aspect in mining bitcoins with the years specially with the changes happening and the halving happening and increasing with time leading to the fees being the main aspect in mining bitcoin.

Actually price and number of transactions are correlated, but more likely number of transactions follows a price, because people spending Bitcoins more with higher price and when there is price decline people thinks twice before spending Bitcoins.

Anyway are there any real off-chain solutions ready? Because I didnt noticed this as a option when using Bitcoins...

Hey thanks for this graph!

It's really nice to check the average fee. Seems like the rise of fees is absolutely not scaled on the rise of transactions. So their is still a very long way to go, fees might get a bit higher it won't kill us.

What's impressive though is the number of transactions, I was not aware of the fact that adoption was so strong and led to so many transactions...

It has been an excellent resource! Will help a lot of people looking for answers about the fees. When the hash rate is increasing between difficulty retargets we see blocks being solved more quickly. Instead of, say, 10 minutes on average we see blocks taking 9 minutes, so this means there's more capacity available to handle transactions. This reduces the pressure on transactions and therefore means that it's much more likely that low or zero fee transactions will get included in blocks by block makers (because they don't have anything better to do with the block space). Keep up the good work!

I think he means hashrate increased, some miners dropped out as a result, and the block times then lengthened before it could readjust again.

The transaction fees still cheap in bitcoin. But in the value pairing to usd it's expensive I think.

As for me, fee question when the first start to look inside of "what btc is"...
And for now, i usually use another crypto for transfer.

Yesterday, I had a chat with one of my friends. He was saying that in 2015, he was paying around BTC0.0001 as transaction fee, and back then the exchange rate was around $200 per coin. That means that he was paying $0.02 per transaction as fee. And the same individual was paying almost $50 per transaction in fee two years later.

Fees increase follow BTC price and it too expensive!!!