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What will happen when only large institutions can afford to use Bitcoin's blockchain, due to rising fees? Won't this centralize the network if most can only trade bitcoin on centralized exchanges?
Basically, in most cases we know that trading with Bitcoin is very convenient, and it is possible very fast. However, small traders face many problems due to Bitcoin's sometimes excessive transaction free. Although we are currently successful in doing transactions with very low freebies, there are times when the number of Bitcoin transactions increases significantly. This is mainly due to the pressure of Bitcoin transactions which require high transaction fees, when you deposit your funds on an exchange or transfer from there to anywhere your fees are slightly higher. However, even if it is for a temporary period, the payment system will later become accurate and complete with lower transaction fees. So no need to stress about it if you wait a BTC transaction fees will definitely come down, and currently Bitcoin transaction fees are very low. So then is the whole point of Bitcoin now trading for local currency on exchange, not p2p transactions? |
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I believe there will eventually be some solutions to increasing Bitcoin fee, bitcoin is evolving as we have the BIP, and it looking at the history there is always improvement like how the community implemented SegWit. For what I know the recent increase in transaction fee is because the Bitcoin Ordinals trend, and if the community think the fee is getting ridiculous, there will be some solution to limit or even ban Bitcoin transaction.
One of the reason why most people believe in Bitcoin is because it is decentralized, so the one who take the decision on how Bitcoin grow and evolve is the community no the Big Company.
Even though it is considered by some circles to be a new innovation in blockchain technology, what we feel is that it is just uncomfortable. That's right, as you said above, if we look closely since April 2023, there has been an increase in the cost of printing Bitcoin Ordinal which has increased by up to 700% and this is also one of the triggers for increasing costs besides network congestion. . Of course, those who make small transactions will really feel it, but even so, as task users we can only be smart, if you really want to make transactions with small fees, try setting a medium or low fee, but the risk will take a long time. process, especially when the network is busy because miners always prioritize those who charge large fees. when the transaction is made. Ordinals are just a new way of identifying individual satoshis on-chain. Using this method people self-assign special attributes to individual units of bitcoin, making NFTs. Of course, as the network caters to increasingly high-profile clientele, Bitcoin is naturally conducive maintaining this sort of 'art'. (despite the cost) |
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So this whole issue is a restatement of 'should we scale blocksize?'
My goal was to draw attention to securely scaling Bitcoin's L1 by any means possible. Otherwise, it'll just be like gold sitting in a vault. (Not very exciting)SegWit2x was shot down. BCH market price has tanked. BSV has tanked. Though I think that is market recognition. This is more of an indication that the market values general protocol consensus over force-fed bigger blocks. 2015 was a different time w/XT (see this email: https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2015-August/010238.html)I argued with LK on this - that there must be some g(x) where block size gets bigger as the internet gets faster and HD space gets cheaper, which it has since 2010.
I have a 12 TB raid10 array. Just 10TB would suffice to store nearly 2 decades of 10MB Bitcoin blocks. Mining does become more game-able as block propagation time increases, however.Satoshi's initial idea was to scale block size. Perhaps, but this approach is not an indefinite solution.It is clear that all the high TPS and super cheap coins run into L1 centralization issues, but normies don't get this; they just want to hear TPS high and cheap. PoS can be a real POSEOS is a demonstration where you could not keep up with the rate of increase of the blocks and so end up with centralization. EOS=POSDAGs may offer some solution, but I have yet to see a convincing proof.
DAGS help tremendously with transaction serialization speed,since they forego a requirement of linear order present in typical blockchains. The problem arises when determining final order over these transaction sets, as the DAG can become fragmented in widely-distributed networks. See the Crystal Whitepaper for how this can be potentially addressed with Bitcoin-NG design.The 1MB size does ensure that decentralization is high, but reaches a crunch point where miners see fees drop off. Smaller blocks do not necessarily mean greater decentralization. There are, for example, socioeconomic implications of smaller blocks which render more power to exchanges/mining pools.At some point, the block size should increase, and there is some g(x).
Where this is up for question, but when BTC does increase this, it risks losing the narrative to BCH or some other scheme, as BTC has committed to 1MB.
I struggle to believe that a technical setting entails Bitcoin's entire narrative. Bitcoin is more about overall consensus. There are things which should really never change, such as the cryptographic functions themselves (barring necessity) and the coin supply schedule.Luke Jr actually advocated for 1/2 MB blocks, which is why I said fine, but what is your g(x)? He's a real hoot |
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What will happen when only large institutions can afford to use Bitcoin's blockchain, due to rising fees? Won't this centralize the network if most can only trade bitcoin on centralized exchanges?
You are missing things together but let's de-concatenate your questions and discuss them one after the other. When large institutional investors use Bitcoin blockchain to make transactions, it will lead to more unconfirmed transaction in the mempool waiting for miners to mine them or include them into the next block and in the case where the mempool get congested, the institutional investors and everyother that make transactions will have to pay a higher fees before their transaction can get included into the next available block for transaction to be go comfirm. There is no way this makes the transaction to be centralized, transaction on blockchain can never be centralized but if the institutional investors make use of centralized exchanges to trade it still doesn't make bitcoin centralize. The bitcoin centralization and power lies between the miners, the node and the Bitcoin protocol. This is impossible and can't be done to Bitcoin. What if the exchange also runs a mining pool  |
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The most recent block averaged 60sat/vB, equating to roughly $5.50 for a single input/output transaction. If one were to DCA into self-custody at $100 intervals, they're paying (at least) 5.5% to transaction fees atm.
Tx fees spiked again, but it had been low for sometime now. I don't know if it is ordinals or fomo buying that is causing the congestion in the network, but right now tx fee is ~ 80 sats/vbyte as i type this, which is very high. During periods of high tx fee, i don't recommend that people buy through dca, you would be paying too much in fees if you are buying at different intervals, so it is better to buy less frequently and much more in amount for each purchase. But if you defer actual coin acquisition to less frequent intervals, you average less purchasing power anyhow, as price historically tends to rise over time. |
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Hello all,
Thank you for your thoughtful feedback and insights
Exciting times as we approach ATHs. However, I notice that fees always go up a lot when the price is more volatile. Naturally, people are more inclined to keep their coins on exchanges during these periods, which is obviously not a good thing.
The most recent block averaged 60sat/vB, equating to roughly $5.50 for a single input/output transaction. If one were to DCA into self-custody at $100 intervals, they're paying (at least) 5.5% to transaction fees atm.
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It's February 26, 2024, and Bitcoin fees are high again. Didn't satoshi say we should always allow a certain number of free transactions? What good is a cryptocurrency for the un-banked that costs more than a bank to use?
Why is the present status quo acceptable?
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Nonce = Number-only-used-once.
By incrementing this value during hashing, miners search the transaction space for viable blocks which satisfy the difficulty threshold.
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The main problem when sending bitcoin with difference kinds of wallet are excessive Bitcoin fees, for small transaction will get difficult choose they have paid over $3 to $5 and some time could be large amount of fees have to sent. I think sending small fund of bitcoin as transaction is not friendly for user want to sent little amount of bitcoin but worth for huge amount of bitcoin.
Get possibilities increasing large fees bitcoin transaction in the future when bitcoin raise to higher price make small fund transaction not really worth when adopting bitcoin as payment transaction. Get exceptional if have or support with lightening network without take any fees transaction yet and likely is most worth way for sending bitcoin.
I agree, I'm sorry that the bitcoin experience hasn't improved ill ask again
anyone else think that the next node release should measure fees in bumps of 1sat per 10byte(100sat/kb)
instead of 5sat per byte(5000sat/kb) bump default, especially when entering the year of the next halving cycle/ATH year
where by if a 226byte tx was
266sat(1sat/byte) then 1356sat (6sat/byte) then 2486sat(11sat/byte) defaults
but instead were starting from
23sat(1sat/10byte) 46sat(2sat/10byte) 68sat(3sat/10byte)
Sure, it sounds reasonable to me for base fee to adjust in order to reflect increasingly valuable satoshis. In fact, your account makes me think... what if devs conspire to keep base fee high in exchange for kickbacks from miners? they dont get kickback from miners, because if they could they would have in last 15 years.. their kickback is make bitcoin expensive and annoying to promote the sandbox unfinished subnetworks that facilitate middlemen fee's for routed payments between institutions that sponsor them (look into river financial hosting alot of the LN liquidity and sponsoring core devs as one of many examples, DCG previously) this sounds like it could be an equally big issue of developer incentive misalignment |
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As many of the members above have said, if Bitcoin fees go up and it happens for a very long time, the first thing the devs do is find a way out so that Bitcoin fees go down again. The ups and downs in Bitcoin fees won't happen forever, maybe only for a few days. Improvisations will continue to be made, updates will also continue to be made to improve the system in the Bitcoin Blockchain so that it is able to process more transactions and at low costs.
bitcoin devs knew of the exploit that would allow junk into the blockchain in 2016 when they were designing changes to bitcoin.. they ignored the problem bitcoin devs knew of the exploit when it started to be abused in 2023(ordinals).. they ignored the problem bitcoin since 2016 has multiplied from $1k to $70k yet they didnt put in fee bump, dust, fee rate changes to effectivelly allow fee's to even be 10x less to stay within reasonable range instead they changed fee bump from 1sat/byte(1000sat/kb) to 5sat/byte (5000sat/kb) in 2017 they should have in those years changed to 100sat/kb(1sat/10byte) so if you are waiting for devs to do something. you have already been waiting 7 years.. so.. when? ill ask again anyone else think that the next node release should measure fees in bumps of 1sat per 10byte(100sat/kb) instead of 5sat per byte(5000sat/kb) bump default, especially when entering the year of the next halving cycle/ATH year where by if a 226byte tx was 266sat(1sat/byte) then 1356sat (6sat/byte) then 2486sat(11sat/byte) defaults but instead were starting from 23sat(1sat/10byte) 46sat(2sat/10byte) 68sat(3sat/10byte) Sure, it sounds reasonable to me for base fee to adjust in order to reflect increasingly valuable satoshis. In fact, your account makes me think... what if devs conspire to keep base fee high in exchange for kickbacks from miners? |
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Indeed, no single currency unites us atm. But crypto could. Thanks for coming around mate.
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What if we wanted to give 100sat to every one of the 5.3B networked people on the planet and jumpstart a new global economy? I guess we couldn't, at least not with Bitcoin as is... that should be the goal tho
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I recall this same thing happened in 2017, so it appears to be a recurring issue. What about people with only small portions of bitcoin, that end up being stuck, because transaction fee exceeds total value?
Well, there are some people here who had this issue before who are stuck on sending BTC to other wallets or exchanges due to the fee exceeding the total amount of BTC. What they can only do is wait for the network to become less congested and fees drop suggested by mempool.space there is nothing we can do about this issue. However, if you still insist on making a transaction while the network is congested you can try to make a transaction with low fees and accelerate it using Viabtc accelerator just make sure that transaction doesn't exceed the 0.5 KB size so that you can submit it to the free accelerator. I'd argue that the blockchain is not exactly congested, but rather, it is constrained. We should be able to do better than to tell people not to use Bitcoin when others are using Bitcoin too, moving money is the whole point of the network. I have used ViaBTC in the past, but honestly, it's just a work-around...the core issue remains unaddressed. "Some large exchanges have mining pools for faster confirmation"
This is exactly the type of centralization I'm voicing concern about. Isn't there an obvious conflict of interest if CEX's use in-house mining pools to add their own txs to the blockchain? What happens when these exchanges form a consortia? This work-around doesn't seem to lead us down a sustainable path...
I bet you it won't work. Mining requires hash rate to confirm transactions and create new Bitcoins. This hash rate is usually higher depending on the computation power of the computer you are using. Because the faster the miner's node setup can find hashes that that fit in the block, the faster you can proceed to computing the next hash problem. Now of course setting this up will require large sum of money especially if you are to run a pool . Aside that if centralized exchanges should try to centralize Bitcoin, the will end of losing because the will be doing us the the people transacting good by confirming transactions with low fees for us and also be losing Because of the electrical cost of running the pool. I know how Bitcoin works, thank you. Selfish mining already grants a disproportionate advantage to miners controlling just 25% of hash-rate (they can make up to 1/3 of blocks). Imagine what happens when the exchanges and miners band together; you've just taken the scenic route to recreating the problems with our existing banking system. |
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I'm a bit confused about what you trying to say but Bitcoin will never become centralized because Satoshi made Bitcoin for decentralization.
If the fees are rising it's just temporary there is something going on that is why you see transaction fees rise just like today because the price touched above $50k that is why people right now panic to move their BTC to the exchange before it drops and make a profit.
Mining is the decentralization mechanism. My implication is that, if only big players have sufficient capital to bribe miners with transaction fees, then the peer-to-peer aspect of the network could be effectively undermined (no pun intended). I recall this same thing happened in 2017, so it appears to be a recurring issue. What about people with only small portions of bitcoin, that end up being stuck, because transaction fee exceeds total value? What will happen when only large institutions can afford to use Bitcoin's blockchain, due to rising fees? Won't this centralize the network if most can only trade bitcoin on centralized exchanges?
I guess bitcoin developers will not let it get to that point. Also there are layer 2 solutions like lightning network and liquid network. Bitcoin network to become centralized has nothing to do with the transaction fee. You can hold small amount using lightning network or liquid network and hold huge amount on the blockchain. LN is a hub-and-spoke design which inherently promotes centralization, just like a major airport. As channels grow increasingly popular, they begin to look more and more like a bank, at least in my eyes. From the look of things right now, Bitcoin is progressing when it comes to fees. During late periods of last year to very early this year, Bitcoin fees were drastically high due to conjestions caused by ordinals. However as I type, Bitcoin fees have come so low to an average of about 24sat/byte for normal fees which would arrive between periods of an hour to 30 minutes. What will happen when only large institutions can afford to use Bitcoin's blockchain, due to rising fees? Won't this centralize the network if most can only trade bitcoin on centralized exchanges?
If the network is conjested, fees on centralized exchanges will also increase. So theoretically they still can't control transaction rates since miners are the ones who confirm transactions not exchanges although some large exchanges have mining pools for faster confirmation."Some large exchanges have mining pools for faster confirmation" This is exactly the type of centralization I'm voicing concern about. Isn't there an obvious conflict of interest if CEX's use in-house mining pools to add their own txs to the blockchain? What happens when these exchanges form a consortia? This work-around doesn't seem to lead us down a sustainable path... |
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What will happen when only large institutions can afford to use Bitcoin's blockchain, due to rising fees? Won't this centralize the network if most can only trade bitcoin on centralized exchanges?
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Today: Fastest: 121sat/vByte; $8.43 Medium: 111sat/vByte; $7.81 Low: 101sat/vByte; $7.04 Non-priority: 12sat/vByte; $0.84 Mempool Purging: <5sat/vByte source: mempool.space |
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The solution to scalability.
* In increasing the block size limit and enhance transaction strength using SegWit aids in solving scalability .
When you perfect the use of blockspace SegWit reduces Bitcoin fees and the general transaction speed and the network can makes series of transaction without increasing it's growth of network,it also helps in transaction signature and transaction data separation that is allowing the creation of more space within each block.
SegWit lmproves security and the state of being trusted of Blockchain technology and increase the strength of transaction .
*. Lightning Network gives the liberty to make off-chain transaction quick and low cost, bringing congestion very low and making scalability high.
Also using Bitcoin side chain can make a way to improve scalability making transfer of asset within various chains, it also make better transaction verification .
These band-aid solutions obviously do not address the root problem; a short look at Bitcoin's mempool today shows that a basic transaction costs $11 for next-block confirmation. And the backlog will only get worse as the difficulty increases in a couple days. We're currently sitting on roughly 1GB of unconfirmed transactions. Source: mempool.space |
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The real scalability solution isn't creating a new side chain or using the other chain and re-brand it with new names.
But the real solution is how you can convince people to use the chain as there are a lot L2 and side chains out there e.g. Lightning network, Liquid network, Rootstock, Omni layer etc. Until now, only small circle is using Lightning network, while the rest, almost no one use it.
Roger that. It's important to understand, however, that Crystal is a new type of Blockchain, or L1. It's helpful to think of Crystal's shards as sub-chains, since they're included in global consensus, unlike side-chains. As for convincing, I generally don't have time for that. People are just naturally drawn to the chain with the greatest reach, and lowest usage fees. The Lightning network, as an L2, still requires an on-chain transaction to initiate a channel, thus the scalability (and cost) hurdles remain. So it's no surprise to me that L2 adoption has been slow, to be honest. |
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How does this compare to Avax/Avalanche concensus protocol ?  Great question. I appreciate the work Ava labs has been doing. Back when he was still at Cornell, Dr. Sirer provided some valuable guidance in early stages of my research, notably introducing Snow White Proof-of-Stake by Rafael Pass and Elaine Shi. The two protocols can be distinguished primarily on the basis of their security model: (Probabilistic finality vs Blockchain finality) Ava employs random sampling of a BlockDAG in order to determine what transactions were seen first. Crystal, however, ascertains linear order for the DAG by using Proof-of-Work. Both protocols utilize Proof-of-Stake to compile transactions into blocks, but take distinct approaches to compose these blocks into a cohesive chain. AVA relies upon the assumption that a super-majority (2/3) of validators are honest, whereas Crystal only requires an honest majority (51%) to achieve trust in the network. Ava's security therefore hinges heavily on the ongoing integrity of the validator pool, with few mechanisms to recover the network in the event of an attack; this is partly why the AVA foundation retains control of a large portion of protocol tokens. On the other hand, Crystal could be deployed on an existing system, like bitcoin, without a disproportionate pre-mine. By leveraging the hybrid PoW/PoS approach, our proposed system is also capable of horizontal scaling (or sharding), something which I believe they are still trying to figure out. In summary, AVA works around the notion of 'sub-nets' for scalability, but due to limitations of their present design, this data is not consensus-critical; sub-nets can be manipulated independently from the rest of the network. Crystal's shards do not have this issue, as sub-chains remain involved in global blockchain consensus. Some of these ideas are borrowed from Hybrid Consensus (also by Pass and Shi), which is summarized in the Building Blocks section of the Crystal whitepaper. Under 2/3 honest majority, both networks can achieve optimal responsiveness ('instant' tx finality). However, our design features a mechanism to sustain this performance securely across an expansive, fast-growing network using Bitcoin's original security model. |
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(this is a repost from the general bitcoin thread - we received some early feedback conflating the design with side-chains, but our proposal is more akin to `sub-chains', since it involves integrated network shards. This made me think perhaps more nuanced discussion would be available here.) ... I've been an avid bitcoin-er for some time now, and found myself quite passionate regarding the potential of blockchain technology to benefit society as a whole. In light of some of the challenges Bitcoin has faced, I've spent the past few years working on a secure path to broader scalability. Today I released a whitepaper detailing a novel approach. It can be found at https://xtal.network/wp-content/uploads/2024/01/Crystal-Whitepaper-3.pdfAbstract:
Blockchains hold great potential for connecting society, but struggle
to overcome the challenges of their ever-growing use. We propose an
enhanced design to address the present scalability hurdles. Leveraging
the fairness of fruit-chains, Crystal applies a high-performance block-type
coined ‘stems’ to harness real-time blockchain consensus. We conclude
with qualitative analysis showcasing optimal responsiveness and resilience
for the crystal blockchain protocol.Feedback on the paper is greatly appreciated. |
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