[2018-01-03] Bitcoin Fees Are Falling Amidst Greater Segwit Adoption

[Terraformer]

Transaction fees, a bugbear for many in the bitcoin community, are on their way down. Spiraling fees were a contentious issue that reached fever pitch in the twilight of 2017. But with the dawn of a new year, bitcoin has been blessed with reduced fees, set against a backdrop of increased Segwit adoption.

Fees Have Halved from Their December Peak

After spending the final quarter of 2017 ramping up, transaction fees on the bitcoin network have finally begun to decline. Bitcoinfees.info indicates an average fee of $15.79 to have a transaction mined within the next six blocks, rising slightly to $16.54 for the next three blocks and $17.29 for the next block. The median withdrawal fee from exchanges such as Bitfinex this week has been closer to $14 however.

While $14-$16 is still more than many people would like to spend, it’s an improvement at least over the $30 bitcoin fees that were reached during December. Estimatefee.com quotes an average of 358 satoshis/byte to move a transaction within the next six blocks. The number of transactions in the mempool waiting to be confirmed is now below 90,000, from a peak of over 115,000 on December 30.

More Bitcoin Wallets Add Segwit Support

In the last 24 hours, Localbitcoins.com and BTC.com have added Segwit support to their wallets. In a blogpost, mining pool and bitcoin wallet provider BTC.com wrote: “As a BTC.com wallet user, you will experience a drop in the transaction fees and faster transaction times when you send bitcoin to another address.” It has now added this functionality to both its mobile and desktop wallets.

Peer-to-peer exchange and online wallet Localbitcoins.com has also followed suit. The site is used extensively in countries as diverse as the Dominican Republic and Poland, and has reached record weekly trading volume of almost $140 million in the US. It will be a while before recent Segwit adoption by wallet providers filters through and impacts upon average bitcoin fees across the network. Segwit adoption is only around 11%, showing there is still a long way to go before the scaling technology nears universal adoption.

As always, the greatest absentee from Segwit is Coinbase, which has yet to formalize plans for introducing the Segregated Witness technology. CEO Brian Armstrong appears to be more interested in experimenting with ethereum Dapp browsers, much to the chagrin of many Coinbase users. Bitcoin pioneer Nick Szabo, meanwhile, has been urging the community to favor Segwit, endorsing a Whalepool tweet listing Segwit wallets.

2018: The Year of Cheaper Fees?

Bitcoin fees are likely to remain a hot topic throughout 2018 as efforts to lower the median cost of transacting the decentralized currency intensify. With the Lightning Network now having been successfully tested live, there are hopes that the off-chain scaling solution could be introduced sooner than initially expected, bringing with it the prospect of lower fees for all.

The high cost of sending bitcoin has forced many to look elsewhere, either to bitcoin cash, with its famously low fees, or to other altcoins which can be sent for less than a cent in many cases. In bitcoin’s earliest days, when blocks were empty, it was equally easy to complete low-cost transactions. The cryptocurrency markets are no exception to Metcalfe’s law, however, and should any altcoin start to approach the size of the bitcoin network, it will succumb to the same problem: a growing number of users trying to use a resource that can only process a finite number of transactions per second.

Speaking of laws, prominent bitcoin thinker Tuur Demeester cited Kleiber’s law, which governs the size of the world’s largest cities. Applying it to cryptocurrencies, he tweeted:

"If “Bitcoin City” remains the largest of cryptocurrencies, Kleiber’s law suggests that over the long run it will be the ecosystem where resources are allocated in the most efficient way."

Fees and transaction times are still higher than desired, but if Kleiber’s law applies, it’s only a matter of time until the bitcoin metropolis becomes a model in city planning.

https://news.bitcoin.com/bitcoin-fees-are-falling-amidst-greater-segwit-adoption/

[veleten]

the fees are falling not because of Segwit adoption,well in part yes
but the main culprit is ... bitcoin cash,whenever its price rises
or bitcoin price dips,so it becomes less profitable to mine,shit hits the fan
miners switch their machines to BCC,the time between bitcoin blocks increases
it causes the spiralling war of fees,we have been through several cycles already

[hatshepsut93]

SegWit adoption is still as low as it was in last month, the real reason why fees are lowering is because trading activity lowered during holidays and New Years Eve, and since trading generates almost all Bitcoin's transaction traffic, the fees reached as low as 30sat/byte during January 1. But now the trading became very active again, with volumes spiking to 20 billions, so fees are growing again and reached 200-300 sat/byte as of now. So, if you are waiting for cheaper fees, you should look for periods of lower trading volumes, like weekends and holidays. Even with 100% SegWit adoption the fees will be quite high, because for people who do five or six figure transactions, $15 fee is nothing, and they create pretty high amounts of traffic at the moment.

[aso118]

In the last couple of weeks, the price of Bitcoin has more or less stagnated, while those of altcoins has taken off. Maybe, the action has shifted to the altcoin space. With fewer people queuing up to send bitcoins, the fees would obviously fall. But that is not something to be celebrated.

[richardsNY]

Fees are falling because people are not transacting as much as in the peak moment having resulted in +0.002 BTC fees. SegWit still isn't being used by the far far majority, which is why I find it quite weird that it gets pointed out to be the reason. SegWit adoption if picking up will definitely help in lowering the fees, but for that to happen we need to see much more SegWit adoption, and as long as that isn't the case, nothing will change. Just wait for it, when there is another usage peak we'll see the fees rocket up again to near peak levels of 0.002 BTC, which is just a matter of time.

[iamTom123]

Fees are falling because people are not transacting as much as in the peak moment having resulted in +0.002 BTC fees. SegWit still isn't being used by the far far majority, which is why I find it quite weird that it gets pointed out to be the reason. SegWit adoption if picking up will definitely help in lowering the fees, but for that to happen we need to see much more SegWit adoption, and as long as that isn't the case, nothing will change. Just wait for it, when there is another usage peak we'll see the fees rocket up again to near peak levels of 0.002 BTC, which is just a matter of time.

Maybe they are just looking forward for the full and network-wide adoption of SegWit which is partly promoting the said upgrade so more and more will adopt. Anyway, the most important thing here is that there is a reduction from the highly ridiculous transaction fees which is a kind of an insult to Bitcoin and its supporters actually (especially the small holders). All of us would want to see a Bitcoin that is really working for its many users and not against them as this can be a major turn off and can affect its future viability. Many are expecting that Lightning Network can be a game-changer but there are also those who doubt its viability. SegWit and Lightning Network can be what we are looking for and adoption has to pick up for this to happen.

[Carlton Banks]

Anyway, the most important thing here is that there is a reduction from the highly ridiculous transaction fees which is a kind of an insult to Bitcoin and its supporters actually (especially the small holders).

Who's insulting who?


Answer: other users. Other users are choosing to pay higher fees, which pushes fees higher for everyone.

The way you're explaining it is very, very confusing. Because you're making it seem like 1 person is choosing high fees for everyone else, when in fact, it's the users who are choosing to pay high fees.