Bitcoin Forum

Good day my fellow-bitcoiners! Took some time to study this topic (https://bitcointalk.org/index.php?topic=5449062.msg62296537#msg62296537) about good advices given to novice investor into bitcoin field I came to conclusion that everyone gives advice to each and everyone to follow DCA strategy. Being not so advanced investor with less than 2 years term in the field I came to one strange experience that bothers me nevertheless. Whenever one is trying to follow DCA path it could affect potential investor into collision course with necessity to pay fee which is regulated by increased demand. To put it simple: with increase in bitcoin price the value of gas fee rises. Could it decline the profit in bitcoin investment to the extent when we are not able to pay the gas anymore? Let me explain it by my own experience on latest attempt to have business with CEX (I don't want to give it an add or spoil the impression so I will avoid to give the exact name for them). From the very beginning I knew absolutely nothing about how and what is bitcoin. So to give it a try I've put not more than 20USD into CEX and made several transactions with newly created account. That was the case when I saw the fee going up to 8-10$ to complete transactions by moving out assets or transferring them. So I had an idea that moving huge amount of assets on the blockchain could potentially solve the issue. As anyone could see there were quite big transactions made by US authorities recently. It even affected bitcoin rate for a short period and everyone has seen it at the market. Suppose I accumulate enough assets in bitcoin so that a need will occur to spend or transfer it for some reason will it be independent on the fee amount to save the earned or we have to feed miners with fee that will rise along with bitcoin value? More is the price - more fee you have to pay?

The Bitcoin network is not the same as Ethereum or other networks that charge a gas fee for their transactions. Bitcoin charges are by SATs, which are called transaction fees and not gas fees. When fees are high, I think sometimes it's just a benefit to the miners, which makes them a little richer, but that doesn't in any way reduce investment profit. Although there might be a price decline because of the high fee to execute transactions, most people might not want to transact, and a few might want to sell out of panic.

I think you make a mistake here. If bitcoin prices do rise, then the fee in USD will also rise, because the fee is not calculated in USD but it is calculated in Bitcoin. Since the value of your bitcoin holdings will also rise this will not affect you at all.

What you can also check is the transaction prices and how they changed in the past. There were already several halvings and still the transaction price is pretty low. This is also because the bitcoin payment system is constantly improved. So in my opinion you should not worry about that.

It is only true if fee size is the same. If technically Bitcoin developers can reduce size of transaction, with a same fee rate, transaction fee will become lower or the same even if Bitcoin price is higher.

It is always a problem if you have too small bitcoin capital. If you have a big capital enough, transaction fee will not be what you care. Like if you have $1000 in bitcoin, $1 or $5 will be transaction fee you can afford to spend. It is not a good transaction fee with many people, I know.

If you care about transaction fee, want to save it as most as possible. Use Segwit address (Bech32m, bc1q). Consolidate inputs when fee is cheap because later with less inputs as 1 input, your transaction will have smaller size that is helpful to save transaction fee ^[1]. Make your transactions in weekends when fees are cheapest compare to other days each week.

^[1] Transaction size calculators
https://jlopp.github.io/bitcoin-transaction-size-calculator/
https://bitcoinops.org/en/tools/calc-size/

If a can decode the real question OP is trying to ask, I think it's about if the increase in bitcoin price after halving can cause an increase in the gas fee otherwise known as transaction fee, the miners are the ones that determines the transaction fee for each payment we made and this depends on the difficulty rate and which is determined by the hashrates, the order of transactions confirmations every 10minutes and how the mempool is being congested, which will now determines the fee rate each transaction will need to get confirmed before others but increase in bitcoin price is bot the direct determinant for the increase in gas fee.

In order for the link a coin to an assest, there must be forces that guarantee the value of that link and ensure that it is not tampered with.

Blockchain aims to ensure that no tampering occurs by removing the authority to confirm the transaction from one individual or a trusted entity to several entities, so that it becomes trustworthy.

Global demand and limited supply that there is value for that currency.

When you link a cryptocurrency to a commodity such as electricity you have turned into a central system and you do not need bookchain here. There are platforms that provide you with the possibility of trading in exchange for food prices, medicine and perhaps even electricity, but all that happens is that they manage central data leaders and give you profit and loss according to that data.

The OP is confusing two things, because the fees he is talking about in relation to CEX are not only fees for miners, but something that can be called a service fee. When you withdraw coins from CEX, the usage service is charged, and that's why people always think that the fees are too expensive.

That is why it is not very desirable to withdraw funds from CEX often, especially after you have bought crypto for only a few tens of dollars. What has been happening with transactions in recent weeks is the result of human greed and stupidity to use the Bitcoin blockchain for what it is not intended for - and I would call it ordinal madness. But like all stupidity, this one will come to an end, and I only hope that all those who participate in it will feel stupid for everything they have caused.

Service fee includes fee for many operational tasks: consolidate inputs from user deposits, maintain and secure hot wallets and cold wallets, approve and proceed withdrawals for users, costs for security of their exchange etc.

Exchanges combine it all in user withdrawal fee and they charge that fee very expensively. They save transaction fees by proceed many withdrawals for multiple users in one transaction but they don't give each user any discount in withdrawal fee. They charge a same expensive withdrawal fee (service fee is more correct) on all users.

No, it's not true in any case!

The fees depend only on network congestion. We have been at the same price levels 6 months ago and the fees were in the 1-2 satoshi per byte range, now it's 20x times more.
Even if OP is talking about CEX fees, there is no longer a thing of size since no exchange is charging by the size a withdrawal.

Also, there is no "gas" in Bitcoin!

Exactly the price of bitcoin does not in anyway increases the transaction fee. Only thing that does that is congestion on the mempool like we have seen in the last few weeks. Transaction fees are only high during halving or after it, because of the bull run and this means many investors would have met there profit limit and the massive withdrawal of funds then leads to congestion which in turn leads to higher transaction fee. Apart from that the transaction fee remains unaffected.

OP first of all you should learn to arrange your post with enough spaces for easy reading. I had a difficult time reading you post to the end, I'm pretty sure I skipped a few things.

Now back to your question, yes it's true as the price of bitcoin increases, gas fees increases too. There's no avoiding that.

Although you can always consider customizing your fee or batching multiple transactions into a single transaction or timing your transactions during periods of lower network.

Transaction fees on blockchain networks, such as that of Bitcoin, are determined by the amount of data a transaction occupies and the demand for space on the blockchain.  When demand is high, such as during periods of rising Bitcoin prices, fees tend to rise.  This can lead to a decrease in your profit if you have to pay high fees for each transaction.

 In your example, you mentioned the gas fee, which is usually associated with transactions on the Ethereum blockchain, not Bitcoin.  However, the concept remains similar.  The higher the value of Bitcoin, the more a higher fee may be required to transfer or spend your assets

If the price of Bitcoin increases and transaction fees increase proportionally, the overall value of your Bitcoin assets will also increase, offsetting the higher fees. Additionally, historical data shows that despite previous halvings and Bitcoin price increases, transaction fees are still relatively low, especially when compared to some other blockchain networks. The development and adoption of new technologies, along with the continued growth of the Bitcoin ecosystem, are expected to further improve the efficiency and cost-effectiveness of transactions. So you shouldn't worry too much about the impact of fee increases on the profitability of your Bitcoin investments.

There's a misconception here. Just because the price of gas fees increases, doesn't necessarily mean that bitcoin's price will increase too. Let's just take the Ordinals debacle last month, where bitcoin's transaction fees skyrocketed while the price of a bitcoin remained relatively similar. There's a variation, but bitcoin is the one that really decides whether a transaction fees would rise, not the other way around. And there are other reasons why transaction fees increase too, just like what I said about the Ordinals, it could increase due to high volume of transactions brought about by network congestions, among others (I forgot the other reasons lmao), this I think is a little token of gratitude we pay for these miners who helped bitcoin. If you want to time out your buys and sells that's fine too. But I've never heard of a scenario where a guy lost all of his bitcoins over a transaction fee, not unless your bitcoin's are dirt low in amount that is.

That is not correct, it is transaction fee and not gas fee, BTC network uses transaction fee, while the Ethereum network uses gas fee. TX fee isn't affected by the price of BTC, the exact transaction fee you'll pay depends on the size of the transaction, and if the network is congested, you have to pay a higher fee to outbid others and get your transaction confirmed fast.
Customizing your fee rate to a lower one in a situation of network congestion is not a solution because you will wait for days, weeks or most nodes will even purge it out of their mempool, it is best to check https://mempool.space/ before making a transaction to choose the priority you want, either low, medium or high.

Even if the tx fees increased in the future, let's say in the next bull run, I think you can still make profits for it. Specially if you are doing DCA and using this strategy to buy BTC and fatten your wallets. Of course, you can set all the fees if you have in a wallet that you have total control of and that is one thing. But if you are in a CEX (Centralized Exchanges), then you can't set up the fees for your self.

So if we are talking about Bitcoin here then you should save it to a non-custodian wallet like Electrum and then adjust the fees as you please.

I knew but perhaps I did not write it comprehensively enough.

I implied that if fee size is the same, fee rate is the same, transaction fee will have a positive correlation with Bitcoin price.

Centralized exchanges are always late to adjust their withdrawal fees on users because they earn from it. A longer they delay to adjust their withdrawal fee to lower value in BTC, a more earning they will get from users.
Old story. Exchanges get profits from users' withdrawal fees. (https://bitcointalk.org/index.php?topic=5306935.0)

I know, who call it as gas actually comes from altcoins. Knowing about altcoins and using altcoins before Bitcoin.

Two points that may help to answer your question:
- Gas is not the term used for Bitcoin. The concept is similar, though it's not the same. Bitcoin charges satoshi (sats) per byte for network fees that are incurred on transactions. You do not need to pay a higher fee for the transaction to be confirmed, and the transaction will not be dropped if the fee is low. It will stay in the mempool until the network will confirm it.
- The fees will not nullify your Bitcoin unless you choose to pay a high network fee while network fees are high. This usually happens when the price spikes. So, the best way to mitigate this is to keep a small portion (1/20 of your holdings) in a CEX or 10-20% in a P2P exchange so that you can still take advantage of high prices without having to pay for high network fees to move coins there during price peaks.

Bitcoin fees have never really effected anyone with more than 0.1 BTC, who are trying to sell during peaks. If you have a significant amount you should not need to worry. What you should worry about is keeping your coins secure in a self-custodial wallet.

When you transfer Bitcoins, a transaction fee will be required to process your transaction on the blockchain network. Transaction fees do not depend on the amount you transfer, but on the network load and how competitive the transaction is. So if there are many transactions being done on the Bitcoin network at the same time, your transaction processing may take longer or pay higher fees to be processed faster. Therefore, the calculation of transaction fees should be considered to ensure that your transactions are processed in the fastest and most efficient way, and at the same time do not have to pay excessive fees. If the value of Bitcoin increases and transactions on the network increase significantly, then the price of transaction fees can increase to meet the demand for transaction processing.

This depends on the specific blockchain network your assets have invested in. However, in most cases, when gas fees are halved, it becomes cheaper to execute transactions on the network and records are confirmed faster. This can help reduce the risk of assets being disabled by progressive gas fees. However, if the blockchain network becomes overloaded or has capacity level issues, it can affect the speed at which transactions are confirmed and cause delays or inability to process your transactions, resulting in your assets being disabled.

Yes, that is exactly true! But nevertheless such screaming header could cause your attention.

That's what I did recently and the transaction fee for transferring 20$ cost me 4,5$ to finish it. However next transaction way too bigger than first one have cost me twice less!

Not to offend, you call ordinal madness. the stupidity or greed, let me ask? How does it contradict the idea of Bitcoin or any other asset? And last but not the least: could you please widen your fears for causes that we ordinary people commit from time to time? They are not exactly clear from your post and I really interested in your point of view.

Bitcoin and fiat are work different.

Bitcoin is decentralized, the price will keep rising and it charge you some fee to pay the miner. While fiat is centralized, the value will always declining and it do charge some fee if you broke the limit. Stock and gold also charge some fee when you trade and withdraw it in fiat.

So choose wisely, do you want to get charge some fee when you know in the future the profit you get will cover up the fee or you choose fiat where the value will always declining?

I believe it refers to the hype people have for ordinal that makes them spam the network with ridiculous fees while they don't have any guarantee that their NTF will sell as much as their paid fee. As far as I'm aware, it has died down since people realize that they gamble too much without thinking about the feasibility. Some still try to mint their NFT but fees have become way cheaper. I believe they'll likely move on to layer 2 or other networks if they want to continue doing their thing sooner or later.

In any case, it's wise to store the investment in a non-custodial wallet (so, not on a centralized exchange), and that allows avoiding the exchange's own fees and other limitations it might put forth. But as for the Bitcoin fees, stompix is completely right that it's just a network congestion, and that doesn't really correlate with the price. Sometimes it happens when the price is high, sometimes it happens when it's low.
But, also, you can always pay a smaller fee if your transaction isn't of urgent nature and you're willing to wait for it to get confirmed. Of course, you should be careful because paying too little can make a transaction get stuck for days, weeks, perhaps even longer. But if you use websites that estimate the fees, and you pay a fee that's not many times lower than average, you should be fine.
Overall, with a $20 investment in BTC, the fee is a very valid concern.

What do you mean by way bigger?
The size of the tx in which you received your funds?
Unfortunately with CEX that doesn't matter, they will always charge you a flat fee even if they save a ton while batching, it would be far more interesting if you could tell us the fee in sat/b they've paid for each tx to get confirmed!

Also, since I'm revisiting this topic, there is another thing some do tend to overlook, not the fees from the exchanges.

Let's assume you do your daily DCA for small sums from a good exchange that doesn't really fleece you on withdraws so you pay in the cents range, but you end up with a ton of inputs each worth $10-20, you really need to consolidate all those because if a pump happens and the price goes 3x and you want to take advantage of it you're going to look at a flooded mempool in which you're going to have to spend 100$ to move 30 inputs worth $300. Change 30 inputs with a year for daily DCA so 300+ and it gets way worse!