Transaction fees

[BitBoyDonny]

Hey guys, wanted to know whether there is any point in considering a transaction fee to decide which transaction to mine?

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[VirosaGITS]

Hey guys, wanted to know whether there is any point in considering a transaction fee to decide which transaction to mine?

If you're asking whether you can pick which transaction to include in a block you mine based on what the fee is per kB, the answer is yes and that is why low TX fee transaction wont get confirmed fast, normally.

[fred21]

Hello VirosaGITS,

Is there a risk that transaction fee won't decrease as BITCOIN get more and more value compare to fiat currencies?

thanks

[VirosaGITS]

Hello VirosaGITS,

Is there a risk that transaction fee won't decrease as BITCOIN get more and more value compare to fiat currencies?

thanks

Yes, the fee per TX would go down if "we" increased the block size. Or up if not as people compete for the same limit size per blocks. I particularly do not see a problem with this however.

Anyhow, the TX fee is more tied to available space than BTC's value.

[philipma1957]

Hello VirosaGITS,

Is there a risk that transaction fee won't decrease as BITCOIN get more and more value compare to fiat currencies?

thanks

Yes, the fee per TX would go down if "we" increased the block size. Or up if not as people compete for the same limit size per blocks. I particularly do not see a problem with this however.

Anyhow, the TX fee is more tied to available space than BTC's value.

To follow up if you have 20 .01 transactions = .20 btc you need a big fee like 0.0005 to .0010. Because the .20 btc is made of 20 small pieces .

If you have 25 coins from a solo block it is made of 1 piece and a fee of .0001 should be okay.

Block size needs to grow we can sit and fight over this but if it never grows btc will not grow.

Simple reasons are would you pay 20 used to send 100 used no you will not.

So transactions are capped as of today.
Now if you can figure a way to compress a transaction so that a 1mb block stays the same size but can hold far more transactions. You would be pretty good dev and maybe people would do that.

[fred21]

Hello VirosaGITS,

Is there a risk that transaction fee won't decrease as BITCOIN get more and more value compare to fiat currencies?

thanks

Yes, the fee per TX would go down if "we" increased the block size. Or up if not as people compete for the same limit size per blocks. I particularly do not see a problem with this however.

Anyhow, the TX fee is more tied to available space than BTC's value.

thanks for your answer.

if I understand well, transaction fees are decided by miners and there is a market place of transaction fee with competition between miners which own blocks.

if a miner decide to set the fee too high, he will not receive transactions in his blocks and will be obliged to lower his fee to get transaction in his block.

So the more transaction there will be, the more competitions there will be between miners and the lower the transaction fee will be. is this right?

It is reasonable to say that the more BTC gets high compare to fiat currencies, the more transaction in BTC there will be.

this is unless miners agree together to set high transaction fee. Is this likely?

[pawel7777]

thanks for your answer.

if I understand well, transaction fees are decided by miners and there is a market place of transaction fee with competition between miners which own blocks.

if a miner decide to set the fee too high, he will not receive transactions in his blocks and will be obliged to lower his fee to get transaction in his block.

So the more transaction there will be, the more competitions there will be between miners and the lower the transaction fee will be. is this right?

It is reasonable to say that the more BTC gets high compare to fiat currencies, the more transaction in BTC there will be.

this is unless miners agree together to set high transaction fee. Is this likely?

You got it a bit backwards. When number of transactions exceeds network capacity, then you have something called "fee market" (don't be confused with 'free market'). In such scenario it's the users (not miners) who compete for their transactions to be processed, miners would just pick txs with highest fees.

That's the general, simplified picture.

[ranochigo]

thanks for your answer.

if I understand well, transaction fees are decided by miners and there is a market place of transaction fee with competition between miners which own blocks.

When the miner hashes the block repeatedly, they have to use the hash of all the transactions that they are planning to include into the block. This is called the merkle root. The coinbase transaction which distributes the Bitcoins is mandatory. The miner then has to hash the transaction to try to meet the target.

During this step, the miner can effectively filter out transactions that they don't like or don't fit their criteria.

if a miner decide to set the fee too high, he will not receive transactions in his blocks and will be obliged to lower his fee to get transaction in his block.

Basically yes. However, if the entire network of miners decides to rise their fees threshold, they can effectively force users to pay a higher fee to get their transaction in a block.

So the more transaction there will be, the more competitions there will be between miners and the lower the transaction fee will be. is this right?

No. The transaction fees would actually rise. Since the maximum amount of transaction that can be included is 1kb, users have to try to add a higher fee to get to the top of the ranking and have a higher chance of getting included in a block.

It is reasonable to say that the more BTC gets high compare to fiat currencies, the more transaction in BTC there will be.

this is unless miners agree together to set high transaction fee. Is this likely?

I'm not sure what you mean by that. Please elaborate.

[RealPhotoshoper]

Hey guys, wanted to know whether there is any point in considering a transaction fee to decide which transaction to mine?

imagine if you will shipping goods,you will put fee in different class,more fee will faster that goods shipped. its also like transacton fee,decide transactions fee by speed,faster transaction will take bigger fees. i think that's the point.

[fred21]

So the more transaction there will be, the more competitions there will be between miners and the lower the transaction fee will be. is this right?

No. The transaction fees would actually rise. Since the maximum amount of transaction that can be included is 1kb, users have to try to add a higher fee to get to the top of the ranking and have a higher chance of getting included in a block.

If transaction fee increases when number of transaction increases in BTC network, this is a big problem for the bitcoin system as this will slow the BTC developpement to be used by "normal people" in their daily spending (which is the ultimate goal). what do you think?

[odolvlobo]

So the more transaction there will be, the more competitions there will be between miners and the lower the transaction fee will be. is this right?

No. The transaction fees would actually rise. Since the maximum amount of transaction that can be included is 1kb, users have to try to add a higher fee to get to the top of the ranking and have a higher chance of getting included in a block.

If transaction fee increases when number of transaction increases in BTC network, this is a big problem for the bitcoin system as this will slow the BTC developpement to be used by "normal people" in their daily spending (which is the ultimate goal). what do you think?

Some people, primarily the 1 MB crowd, don't believe that use of the Bitcoin block chain by normal people in their daily spending is the ultimate goal.

[defcon23]

just have a look at this website:  http://bitcoinfees.21.co/  , That's a good point of start to understand/lurn how transactions fees could be calculate.

[fred21]

Thanks for your replies.

Does anyone can start mining and accepting transaction in his blocks without having solved the mathematical problem which result in earning 25 BTC reward OR do you need to have solved mathematical problem which result in earning 25 BTC reward in order to start accepting BTC transaction as miner?

thanks

[ranochigo]

Thanks for your replies.

Does anyone can start mining and accepting transaction in his blocks without having solved the mathematical problem which result in earning 25 BTC reward OR do you need to have solved mathematical problem which result in earning 25 BTC reward in order to start accepting BTC transaction as miner?

thanks

You can choose to include transactions into a block as long as you get a block hash that is of the correct target. You can include transactions and claim the transaction fees on the first block you mined. The full node on Bitcoin network enforces these rules. Only if the block is of the correct size, target and follows rules, it is considered valid.

If you choose to mine a block that has the incorrect target, nodes would just reject it.

[odolvlobo]

Does anyone can start mining and accepting transaction in his blocks without having solved the mathematical problem which result in earning 25 BTC reward OR do you need to have solved mathematical problem which result in earning 25 BTC reward in order to start accepting BTC transaction as miner?

No. In order to add a block to the block chain you have to be the first to have "solved the mathematical problem".

[defcon23]

Does anyone can start mining and accepting transaction in his blocks without having solved the mathematical problem which result in earning 25 BTC reward OR do you need to have solved mathematical problem which result in earning 25 BTC reward in order to start accepting BTC transaction as miner?

No. In order to add a block to the block chain you have to be the first to have "solved the mathematical problem".

yes , exactly, and that's call the golden nonce 

[fred21]

Thanks for your replies.

Does anyone can start mining and accepting transaction in his blocks without having solved the mathematical problem which result in earning 25 BTC reward OR do you need to have solved mathematical problem which result in earning 25 BTC reward in order to start accepting BTC transaction as miner?

thanks

You can choose to include transactions into a block as long as you get a block hash that is of the correct target. You can include transactions and claim the transaction fees on the first block you mined. The full node on Bitcoin network enforces these rules. Only if the block is of the correct size, target and follows rules, it is considered valid.

If you choose to mine a block that has the incorrect target, nodes would just reject it.

Does this mean that only people that have "solved mathematical problems" (and got block attributed to them as well as 25 BTC reward) can accept transaction into their block and get the transaction fee?

thanks

[ranochigo]

Thanks for your replies.

Does anyone can start mining and accepting transaction in his blocks without having solved the mathematical problem which result in earning 25 BTC reward OR do you need to have solved mathematical problem which result in earning 25 BTC reward in order to start accepting BTC transaction as miner?

thanks

You can choose to include transactions into a block as long as you get a block hash that is of the correct target. You can include transactions and claim the transaction fees on the first block you mined. The full node on Bitcoin network enforces these rules. Only if the block is of the correct size, target and follows rules, it is considered valid.

If you choose to mine a block that has the incorrect target, nodes would just reject it.

Does this mean that only people that have "solved mathematical problems" (and got block attributed to them as well as 25 BTC reward) can accept transaction into their block and get the transaction fee?

thanks

During the part where the user is solving the mathematical problem, the 25BTC is already hashed in the block, together with the transactions. Solving the mathematical problem means that the block must match a specific target for it to be accepted as valid. If the block target is not reached or "the math problem is not solved", nodes would not see it as valid and the coins/transactions would remain non-existent or unconfirmed. It is more of like a lottery but generally, the more hashrates you have, the better chance you would have.

[jrpatking]

Still, I'm just confused to understand your question. All transactions are processed with or without fee. However, the transaction which pays higher fee than the other transactions will be processed first.

[n0ne]

All transactions were made with a minimal fees. I mostly prefer the transaction fees of 0.0002btc. Everytime I too have experienced lot confirmations in a short time.

[BitMaxz]

All transactions were made with a minimal fees. I mostly prefer the transaction fees of 0.0002btc. Everytime I too have experienced lot confirmations in a short time.

For now i think its if you are in default fee you can pay a fee depends if how much you will send.. just like on free fee like coinbase you are just send 0.005 to other address with fee 10k sat or below but the result is low fee and medium priority in the block chain but they are the same speed as 0.0002 fee transaction..  for now bitcoin has a problem in speed transactions..

[fred21]

During the part where the user is solving the mathematical problem, the 25BTC is already hashed in the block, together with the transactions. Solving the mathematical problem means that the block must match a specific target for it to be accepted as valid. If the block target is not reached or "the math problem is not solved", nodes would not see it as valid and the coins/transactions would remain non-existent or unconfirmed. It is more of like a lottery but generally, the more hashrates you have, the better chance you would have.

so, transaction are accepted and validated only in blocks that are owned by miner having met the target ?

[fred21]

I personally think that when you start mining bitcoin with soiftware "bitcoin core" (for example), you earn a tiny amount of bitcoin every month.

This tiny amount of bitcoin that you earn every month is the result of transaction fees that you earn.

So according to me, you don't need to solve and meet the target in order to accept transaction and earn transaction fees as a miner.

[mrcash02]

To pay less fees (at least on Blockchain.info that i use) move high transactions only. If you move many small amounts like 20.000, 30.000 satoshi you will pay highest fees later (very common between faucet users). I try to move min 100.000 satoshi. This way i pay lowest fees.

To do it on FaucetBox, set a highest threshold there, on your address statistics page.

[michietn94]

I'm using blockchain online wallet.
What If I'm accidentally set custom fee from 0.0002 into 0.02 , does it means that I donate the miner very generously ?
Is it possible for refunding ?

[--Encrypted--]

I'm using blockchain online wallet.
What If I'm accidentally set custom fee from 0.0002 into 0.02 , does it means that I donate the miner very generously ?
Is it possible for refunding ?

first question, yes.
second question, no unless you contact the miner (or pool owner) and get them to agree to return the money.

[fred21]

To pay less fees (at least on Blockchain.info that i use) move high transactions only. If you move many small amounts like 20.000, 30.000 satoshi you will pay highest fees later (very common between faucet users). I try to move min 100.000 satoshi. This way i pay lowest fees.

To do it on FaucetBox, set a highest threshold there, on your address statistics page.

Thanks for your reply.

However this was not what I was asking.

What I would like to understand is :

when you mine bitcoin, you earn small amount of bitcoin (without earning the 25 BTC reward to meet mathematical target). This small amount of BTC you earn is the result of transaction fee earned because you are accepting transaction into your block.

Is what I assume above right? or am I misunderstanding something?

[GreenMatrix]

Hello VirosaGITS,

Is there a risk that transaction fee won't decrease as BITCOIN get more and more value compare to fiat currencies?

thanks

Yes, the fee per TX would go down if "we" increased the block size. Or up if not as people compete for the same limit size per blocks. I particularly do not see a problem with this however.

Anyhow, the TX fee is more tied to available space than BTC's value.

Great to know

[odolvlobo]

What I would like to understand is :

when you mine bitcoin, you earn small amount of bitcoin (without earning the 25 BTC reward to meet mathematical target). This small amount of BTC you earn is the result of transaction fee earned because you are accepting transaction into your block.

Is what I assume above right? or am I misunderstanding something?

Your understanding is not complete. A miner validates transactions, gathers those transactions into a block, and attempts to add that block to the block chain. A successfully added block earns the miner all the transaction fees in the block plus the 25 BTC "subsidy".

[romero121]

I'm using blockchain online wallet.
What If I'm accidentally set custom fee from 0.0002 into 0.02 , does it means that I donate the miner very generously ?
Is it possible for refunding ?

first question, yes.
second question, no unless you contact the miner (or pool owner) and get them to agree to return the money.

Well only it depends upon the miner who gets the transaction fee. I believe return of bitcoin is highly impossible if you were not able to get contact with the miner or pool owner.

[fred21]

Your understanding is not complete. A miner validates transactions, gathers those transactions into a block, and attempts to add that block to the block chain. A successfully added block earns the miner all the transaction fees in the block plus the 25 BTC "subsidy".

thanks for your reply.

What happens if the miner doesn't succeed in adding the block into the blockchain : are the transactions that the miner gathered into the block "unvalidated"?

[unholycactus]

Your understanding is not complete. A miner validates transactions, gathers those transactions into a block, and attempts to add that block to the block chain. A successfully added block earns the miner all the transaction fees in the block plus the 25 BTC "subsidy".

thanks for your reply.

What happens if the miner doesn't succeed in adding the block into the blockchain : are the transactions that the miner gathered into the block "unvalidated"?

You should view it like this, everyone is competing to solve a block.
If you aren't the first to do so, everything starts over and you move on to the next one.

[fred21]

Is the number of block infinite or eventually it will stop generating new blocks?

[alyssa85]

Is the number of block infinite or eventually it will stop generating new blocks?

The number of bitcoins is fixed, but the number of blocks is not. Theoretically once the maximum bitcoins are produced, the blocks should continue to be mined, confirming new transactions, and the miners should be paid with transaction fees. In theory, the number of blocks will continue to be made as long as people use bitcoin, keep sending transactions and the miners still think its profitable to mine. Of course if the price of BTC went to zero, i expect the miners will abandon it- when the last miner stops, it's over!

[Amph]

Is the number of block infinite or eventually it will stop generating new blocks?

no the number of blocks is around 7M, and the last block should end around 2140 probably early due to the diff retarget, that can not keep with the suddenly hash increase

[fred21]

thanks for your reply.

your answers are contradictory. Who is right between Amph and alyssa85? Even if the number of BTC is finite is the number of blocks infinite?

[pawel7777]

thanks for your reply.

your answers are contradictory. Who is right between Amph and alyssa85? Even if the number of BTC is finite is the number of blocks infinite?

Alyssa85 is right, not sure where Amph got the idea of finite number of blocks. ~2140 is an estimate of last block with fixed reward.

[fred21]

So until approximately year 2140, every new block generated will be with fixed reward (x BTCs per block generated reward). But after this date, block will be generated but with no reward at all. however, those blocks will still collect transaction fee.

Am I missing something? 

[pawel7777]

So until approximately year 2140, every new block generated will be with fixed reward (x BTCs per block generated reward). But after this date, block will be generated but with no reward at all. however, those blocks will still collect transaction fee.

Am I missing something? 

Correct.

Although 'fixed' block rewards will likely become irrelevant long before year 2140. 90% of the 21m total supply will be mined in ~2021-2022. See this for reference:

https://en.bitcoin.it/wiki/Controlled_supply

The initial idea was the hope that Bitcoin usage will grow significantly to the point when transaction fees will become sufficient incentive for miners to carry on.

Although, with currently dominating vision of keeping small blocks and pushing users off the blockchain, I don't know what's the long term plan (if there's any).

[odolvlobo]

So until approximately year 2140, every new block generated will be with fixed reward (x BTCs per block generated reward). But after this date, block will be generated but with no reward at all. however, those blocks will still collect transaction fee.

Am I missing something?  

That is basically it, but also: the subsidy (block reward is subsidy + fees) is halved every 216000210000 blocks (approximately 4 years), until around 2140 when it goes from 1 satoshi to 0 satoshis and the block reward is just fees.

[DannyHamilton]

That is basically it, but also: the subsidy (block reward is subsidy + fees) is halved every 216000 210000 blocks (approximately 4 years), until around 2140 when it goes from 1 satoshi to 0 satoshis and the block reward is just fees.

Fixed that for you  

[fred21]

infinite blocks is better because this will prevent historical miners to impose their fees to traders. If fees get to high, there always be new miners getting new blocks competing for a fair transaction fee price.

[fred21]

is transaction fee only based on the size of the transaction?

[pawel7777]

is transaction fee only based on the size of the transaction?

Short answer - yes.

But you can manually set the fee yourself (most of wallets give such choice), therefore you could send your txs even with zero fees, but those would unlikely ever be confirmed.

Historically there was something like 'priority of transaction', a formula based both on size and input age, so it was possible to successfully send even zero-fee txs, but I think that's no longer a case.

[luciann]

is transaction fee only based on the size of the transaction?

Short answer - yes.

But you can manually set the fee yourself (most of wallets give such choice), therefore you could send your txs even with zero fees, but those would unlikely ever be confirmed.

Historically there was something like 'priority of transaction', a formula based both on size and input age, so it was possible to successfully send even zero-fee txs, but I think that's no longer a case.

Just to add on this.

I dont recommend using a manual fee, since what youre saying to the network is "find my block" whenever you feel like it.

So it can take up a few days now, if you dont add on the right amount of fees given or recommended as it suggest.

[longbob72]

is transaction fee only based on the size of the transaction?

Short answer - yes.

But you can manually set the fee yourself (most of wallets give such choice), therefore you could send your txs even with zero fees, but those would unlikely ever be confirmed.

Historically there was something like 'priority of transaction', a formula based both on size and input age, so it was possible to successfully send even zero-fee txs, but I think that's no longer a case.

it is still the case. only that when the mempool is full of transactions many other transactions will use high fees, making the transaction take quite a long time to confirm.
and the recommended transaction fee also depends on the number of transactions in the mempool.

[Amph]

is transaction fee only based on the size of the transaction?

yeah and block now seems more heavy in size(miners fault), in fact the average recommended transaction has increase a lot

now to send a certain transaction, i need to pay like 70k satoshi, this in the future will surely go against the whole idea of bitcoin being almsto withotu fees

[BitcoinSupremo]

is transaction fee only based on the size of the transaction?

Yes it is, but if you are truly in a hurry to send the bitcoin very fast, you can pay a higher fee, usually by doing this you will have a lot more confirmations in very short amount of time, as miners process firstly transaction with higher fees and then those with smaller fees (not sure about this though).

[dollarneed]

is transaction fee only based on the size of the transaction?

Short answer - yes.

But you can manually set the fee yourself (most of wallets give such choice), therefore you could send your txs even with zero fees, but those would unlikely ever be confirmed.

Historically there was something like 'priority of transaction', a formula based both on size and input age, so it was possible to successfully send even zero-fee txs, but I think that's no longer a case.

Just to add on this.

I dont recommend using a manual fee, since what youre saying to the network is "find my block" whenever you feel like it.

So it can take up a few days now, if you dont add on the right amount of fees given or recommended as it suggest.

I ever set up my fees manually on blockchain,info
and guess what my bitcoin was too long to confirmed, so i agree with you  i dont recommend using a manual fee,i recommend 0.0001 BTC as a minimum fee. With low or maybe zero transaction fees,it tend to be validated more slowly, or it will get rejected.

[fred21]

thanks,

Fear is that transaction fee will go up and up. What are the arguments for and against fees going up?

[sulec70]

thanks,

Fear is that transaction fee will go up and up. What are the arguments for and against fees going up?

I think fee adjusted for rate USD, but we could be setting fee of 0.0001 / transaction

[JesusHadAegis]

thanks,

Fear is that transaction fee will go up and up. What are the arguments for and against fees going up?

I think fee adjusted for rate USD, but we could be setting fee of 0.0001 / transaction

Off course as the price go up and fee goes up but its not that really alarming as long you are earning enough money. and yes for now the transaction fee is .0001 and thats not even close to half penny. The most worry is if there are errors but this whats good in btc, it is solved after a day and no money is lost unless u did some error in writing ur own info.

[shanerc563]

Hey guys, wanted to know whether there is any point in considering a transaction fee to decide which transaction to mine?

If you're asking whether you can pick which transaction to include in a block you mine based on what the fee is per kB, the answer is yes and that is why low TX fee transaction wont get confirmed fast, normally.

Sorry I am new to understanding this.  How can you pick a transaction to choose to mine based on the fee?  How many transactions are in one block?  Can you solo mine one block picking all the transactions so that you will get the full reward?

[odolvlobo]

Hey guys, wanted to know whether there is any point in considering a transaction fee to decide which transaction to mine?

If you're asking whether you can pick which transaction to include in a block you mine based on what the fee is per kB, the answer is yes and that is why low TX fee transaction wont get confirmed fast, normally.

Sorry I am new to understanding this.  How can you pick a transaction to choose to mine based on the fee?  How many transactions are in one block?  Can you solo mine one block picking all the transactions so that you will get the full reward?

Miners are free to include or exclude any transactions for any reason (as long as the included transactions are valid).

[fred21]

Thanks for your answer but this doesn't give me any information on the arguments FOR or AGAINST transaction fee going up in the future...

Can anyone give some argument for or against transaction fees going up or down in next years, decades...?

[pawel7777]

Thanks for your answer but this doesn't give me any information on the arguments FOR or AGAINST transaction fee going up in the future...

Can anyone give some argument for or against transaction fees going up or down in next years, decades...?

Do you mean arguments for "should tx fees go up/down in the future?" or "how likely will tx fees go up/down in the future?".

What specifically do you want to know?

[DannyHamilton]

Thanks for your answer but this doesn't give me any information on the arguments FOR or AGAINST transaction fee going up in the future...

Can anyone give some argument for or against transaction fees going up or down in next years, decades...?

Assumption 1:
There will either continue to be limited space for transactions in the blocks, or miners will have an economic incentive for miners to limit the number of transactions in their blocks.

Assumption 2:
Either bitcoin users will understand that the fee they voluntarily provide is an incentive for the miner to include the transaction in a block, or bitcoin wallet software will be designed to build transactions that will eventually get confirmed.

Argument:

• As long as the value of using bitcoin exceeds the cost of using bitcoin, the number of bitcoin transactions will continue to grow over time.
• Eventually, due to that growth and assumption 1, there will be more transactions created between blocks than will fit into the blocks.
• Due to assumption 2, users that want faster confirmation will pay a higher fee. Those that pay too small of a fee will never get confirmed.
• Eventually, these fees will be high enough that the cost of using bitcoin exceeds the value of using bitcoin.
• As long as the cost of using bitcoin exceeds the value of using bitcoin, the number of bitcoin transactions will continue to shrink over time
• Eventually, there will be less transactions created between blocks than will fit into the blocks.
• Users will discover that they can save money by paying a smaller transaction fee, and since there is room in the blocks their transactions will still be confirmed.
• Eventually, these fees will be low enough that the value of using bitcoin exceeds the cost of using bitcoin
• The above cycle will repeat itself until an equilibrium between fees, block space, and quantity of transactions is reached.

If bitcoin becomes more popular, fees will go up as more transactions are competing for the same amount of block space.
If bitcoin becomes less popular, fees will go down as there will be space in the blocks for cheaper transactions.
If the block space limit increases, fees will go down as there will be space in the blocks for cheaper transactions.
If the block space limit decreases, fees will go up as the same number of transactions are competing for less block space.

Since it is impossible to know if the block size limit will change at all in the future, and it is impossible to know if bitcoin will be more popular or less popular in the future, it is impossible to know if transaction fees will actually go up.

However, if bitcoin isn't popular enough, or fees aren't high enough, then there will be no incentive for miners to participate and bitcoin will fail to maintain adequate security.

I (and many others) believe that bitcoin will grow in popularity over the next few decades, and therefore believe that fees will remain high enough to keep enough miners participating.

Some people may believe that bitcoin will never be popular enough, and therefore they may believe that bitcoin will eventually collapse.

You are welcome to make your own guess.

The only way to know for sure is to continue to run this experiment that we call "bitcoin" and see what happens.

[odolvlobo]

Thanks for your answer but this doesn't give me any information on the arguments FOR or AGAINST transaction fee going up in the future...

Can anyone give some argument for or against transaction fees going up or down in next years, decades...?

Nobody controls the transaction fee amounts. It is up to each individual miner to decide whether they want to include a transaction or not, and up to each node whether they want to relay a transaction or not.

So, there are no arguments to discuss.

Are you instead looking for predictions on the future of transaction fees? I think DannyHamilton provided a decent analysis. However, it is not clear that assumption #1 is a good assumption.

Assumption 1:
There will either continue to be limited space for transactions in the blocks, or miners will have an economic incentive for miners to limit the number of transactions in their blocks.

It is possible that economic incentive for miners to limit the number of transactions in their blocks is very low, and that could mean very low transaction fees if there is no artificial limit to the block size. As a result, mining revenue may not be sufficient to pay for maintaining the integrity of the block chain as the subsidy decreases.

[DannyHamilton]

Are you instead looking for predictions on the future of transaction fees? I think DannyHamilton provided a decent analysis. However, it is not clear that assumption #1 is a good assumption.

Assumption 1:
There will either continue to be limited space for transactions in the blocks, or miners will have an economic incentive for miners to limit the number of transactions in their blocks.

It is possible that economic incentive for miners to limit the number of transactions in their blocks is very low, and that could mean very low transaction fees if there is no artificial limit to the block size. As a result, mining revenue may not be sufficient to pay for maintaining the integrity of the block chain as the subsidy decreases.

True.

Before we can have a real discussion about future transaction fees we must first decide what we believe about the future.

My assumption in this particular discussion (even if I'm not yet convinced that it is necessarily true) is that:

• Even if there were no limit at all on block size, creating larger blocks means that it takes longer to transfer those blocks to peers
• This communication delay increases the risk of a solved block being orphaned
• Solving a block that is orphaned costs the miner (or pool) money, and generates no revenue
• Therefore, miners (or pools) have an incentive to limit the size of their blocks in such a way that they maximize the number of fee paying transactions they accept while minimizing the orphan risk
• There exists an equilibrium where the orphan risk of creating a larger block outweighs the fee benefit of including more transactions
• This equilibrium is an economic incentive for miners to limit the number of transactions in their blocks

[odolvlobo]

Are you instead looking for predictions on the future of transaction fees? I think DannyHamilton provided a decent analysis. However, it is not clear that assumption #1 is a good assumption.

Assumption 1:
There will either continue to be limited space for transactions in the blocks, or miners will have an economic incentive for miners to limit the number of transactions in their blocks.

It is possible that economic incentive for miners to limit the number of transactions in their blocks is very low, and that could mean very low transaction fees if there is no artificial limit to the block size. As a result, mining revenue may not be sufficient to pay for maintaining the integrity of the block chain as the subsidy decreases.

True.

Before we can have a real discussion about future transaction fees we must first decide what we believe about the future.

My assumption in this particular discussion (even if I'm not yet convinced that it is necessarily true) is that:

• Even if there were no limit at all on block size, creating larger blocks means that it takes longer to transfer those blocks to peers
• This communication delay increases the risk of a solved block being orphaned
• Solving a block that is orphaned costs the miner (or pool) money, and generates no revenue
• Therefore, miners (or pools) have an incentive to limit the size of their blocks in such a way that they maximize the number of fee paying transactions they accept while minimizing the orphan risk
• There exists an equilibrium where the orphan risk of creating a larger block outweighs the fee benefit of including more transactions
• This equilibrium is an economic incentive for miners to limit the number of transactions in their blocks

I agree. I'm pointing out that the marginal cost of the orphan risk could be very low. The result would be low miner revenue and thus insufficient deterrence of a 51% attack.

Also, note that artificially limiting the size of the blocks does not eliminate this risk because transactions can move to cheaper off-chain systems such as LN with the same result.

[Oralmat]

is transaction fee only based on the size of the transaction?

Min Tx fee is 5500

[fred21]

thanks for this very interesting reply from DannyHamilton.

Did you include the cost of mining? is the cost of mining stable or does it increase over time or over difficulty or over else?
because if cost of mining increase, transaction fee will increase, isn't it?

[DannyHamilton]

thanks for this very interesting reply from DannyHamilton.

You're welcome.

Did you include the cost of mining?

No, I did not, because the question I was answering was about fees, not mining costs.

is the cost of mining stable or does it increase over time or over difficulty or over else?

The main components in the cost of mining are:

• The cost to acquire the mining equipment
• The cost to store and maintain the mining equipment
• The cost of electricity to run the mining equipment
• The cost to cool the mining equipment
• The cost to maintain a good internet connection to peers

If any of these costs change, then the cost of mining changes.  For example, if the cost of your electricity increases, then your cost for mining increases.  If you need to replace your equipment, then there are costs to purchase new equipment.

because if cost of mining increase, transaction fee will increase, isn't it?

Probably not.  If the cost of mining increases, then some miners will find it is no longer profitable to mine and will stop mining.  This will increase the revenue that the remaining miners receive. When the remaining miners revenue increases enough to cover the costs of mining, then the remaining miners won't stop anymore and an equilibrium will have been reached.

A miner can't force all the other miners to reject low fees. As long as the revenue can cover the risk of orphaning, and the block isn't full, miners will need to accept the transactions or else their competitors will make higher profits and drive them out of business. So, no matter how high the mining costs are, the choice for the miner is to either confirm every revenue generating transaction or to just shut off their equipment.

[fred21]

Thanks,

the more difficulty increase, the more miner have to use electricity to get the same value as before the increase in difficulty. Thus one can say the mining cost increase with difficulty.

am I wrong?

[aleandromagno]

is transaction fee only based on the size of the transaction?

Min Tx fee is 5500

Min tx fee is 0, but from amount of fee depends on where in queue will be your transaction. In the first instance are carried out transactions with a higher fee.

With fee = 0 you can wait few days or even can come back to wallet like "not realized"

[odolvlobo]

the more difficulty increase, the more miner have to use electricity to get the same value as before the increase in difficulty. Thus one can say the mining cost increase with difficulty.

The cost of mining is the same regardless of the difficulty because the amount of electricity a miner uses doesn't change. The revenue changes with the difficulty. If the difficulty goes up by 10%, then the revenue drops by 10%.

[Amph]

the more difficulty increase, the more miner have to use electricity to get the same value as before the increase in difficulty. Thus one can say the mining cost increase with difficulty.

The cost of mining is the same regardless of the difficulty because the amount of electricity a miner uses doesn't change. The revenue changes with the difficulty. If the difficulty goes up by 10%, then the revenue drops by 10%.

the difficult increase only if there is more revenue, or only if some big miners want to "steal" coins from the other by increasing his hash

because he can still make more profit, so that drop is not for everybody but only for the slowest farm out there