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Author Topic: What is the plan to fix slow transactions and high fees?  (Read 2744 times)
Nathan047
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February 15, 2017, 02:26:42 AM
 #1

So, currently in electrum, the recommended fee to get a transaction included in the next block, is 0.001835 BTC/kb. Thats 1.85$ PER KILOBYTE.

Now, to be fair, that is the recommended fee to get the transaction as soon as possible, but think of it this way:
I go to buy a cup of coffee and want to pay in bitcoin. I pay them but need to wait  some time for the transaction (obviously the coffee shop would want to receive a few confirmations on the transaction so they're sure I don't leave with a free coffee). Lets say I pay a high fee to get the transaction done soon, for this example lets say I paid a 1.85$ fee (and remember that is the recommended fee is per kilobyte, that's not the recommended total fee), now I've got to wait like 10 minutes and pay a dollar or two just to pay for a coffee with bitcoin (and remember that a few dollars is a high price to pay as a fee to buy something for a few dollars).

And this is in the current network. In order for me to pay for a coffee with bitcoin we'd probably need the mass adoption everybody seems convinced will happen. With mass adoption mean WAY more transactions on the network than now, and I feel mass adoption would cause the user base to grow much faster than the network (most of the people using bitcoin now are probably good with technology and would consider mining or hosting a node, if everybody joined then we probably wouldn't have a user base like that). Think of the kind of fees then.

I'd think that this should be a problem that is on the minds of the developers, and it probably is, so, what's the plan? Or perhaps there's already a plan coming to action and I'm just unaware of it. Anyway, please elaborate on this.

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February 15, 2017, 02:38:05 AM
 #2

Increasing the bitcoin blocksize .
There have planted to fixing the problem of bitcoin as you can see. SegWit, BU, 8MB blocks.
coin.dance/blocks
 Roll Eyes Roll Eyes Roll Eyes

But its competition is really strict.

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February 15, 2017, 02:47:21 AM
 #3

Transactions are almost instant. Confirmations depend on the competition to be included in the next block. That competition is what is going to have to secure the network moving forward. The sooner everyone realizes this, the better.

The days of free and ridiculously inexpensive Bitcoin transactions are slowly coming to an end. Many early adopters have turned into spoiled brats thanks to the early days of large block subsidies.

Bitcoin's unique properties allow censorship-proof transactions and a seize-proof store of value. There is going to be heavy competition to access these unique properties as authorities around the world continue the war on cash and proceed to implement increasingly strict capital controls.

People are going to have to compete to have their transaction included in the global decentralized immutable ledger. That is a good thing for everyone (as it will pay for network security) except those crybabies who think Bitcoin was designed for fast, cheap micro-payments.

Every transaction does not need to be censorship-proof as long as the option exists. Pay for your coffee with something else.

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February 15, 2017, 03:01:28 AM
 #4

@Holliday:

It is true that maximizing fees in aggregate will tend to maximize network hash power (security), but it does not follow that high fees per transaction would achieve that.  A large volume of low-fee transactions may generate more fees in aggregate than a smaller volume of high-fee transactions.  It comes down to the shape of the demand curve, many decades from now.  One thing that is clear though is that the future demand curve will be greater if bitcoin has more users then than if it has fewer. 

Erik Voorhees wrote a good article a few days ago on this topic:

http://moneyandstate.com/the-parable-of-alpha-a-lesson-in-network-effect-game-theory/

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February 15, 2017, 03:14:14 AM
 #5

One thing that is clear though is that the future demand curve will be greater if bitcoin has more users then than if it has fewer. 

If Bitcoin does not retain it's unique properties in an attempt to accommodate "mainstream" usage, it's just a cumbersome PayPal, and no one is willing to use that.

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February 15, 2017, 03:23:19 AM
 #6

One thing that is clear though is that the future demand curve will be greater if bitcoin has more users then than if it has fewer. 

If Bitcoin does not retain it's unique properties in an attempt to accommodate "mainstream" usage, it's just a cumbersome PayPal, and no one is willing to use that.

I think everyone agrees with that.  Bitcoin is a peer-to-peer electronic cash system.  If it stops being useful as that (or turns into something else completely), then less people will use it.  Ultimately, the evolution of the network is up to network participants to decide.  I'm signalling to miners that I'm ready for bigger blocks by running a node which permits up to 16 MB today.  I do this because I think the biggest problem facing Bitcoin at the moment is the unreliable confirmations and high fees.  If in the future, Bitcoin faces another problem, I'll turn my attention to that. 

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February 15, 2017, 03:28:42 AM
 #7

I'm signalling to miners that I'm ready for bigger blocks by running a node which permits up to 16 MB today

Good lord, you must pay a small fortune for internet service.

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February 15, 2017, 03:37:20 AM
 #8

So, currently in electrum, the recommended fee to get a transaction included in the next block, is 0.001835 BTC/kb. Thats 1.85$ PER KILOBYTE.

Now, to be fair, that is the recommended fee to get the transaction as soon as possible, but think of it this way:
I go to buy a cup of coffee and want to pay in bitcoin. I pay them but need to wait  some time for the transaction (obviously the coffee shop would want to receive a few confirmations on the transaction so they're sure I don't leave with a free coffee). Lets say I pay a high fee to get the transaction done soon, for this example lets say I paid a 1.85$ fee (and remember that is the recommended fee is per kilobyte, that's not the recommended total fee), now I've got to wait like 10 minutes and pay a dollar or two just to pay for a coffee with bitcoin (and remember that a few dollars is a high price to pay as a fee to buy something for a few dollars).

And this is in the current network. In order for me to pay for a coffee with bitcoin we'd probably need the mass adoption everybody seems convinced will happen. With mass adoption mean WAY more transactions on the network than now, and I feel mass adoption would cause the user base to grow much faster than the network (most of the people using bitcoin now are probably good with technology and would consider mining or hosting a node, if everybody joined then we probably wouldn't have a user base like that). Think of the kind of fees then.

I'd think that this should be a problem that is on the minds of the developers, and it probably is, so, what's the plan? Or perhaps there's already a plan coming to action and I'm just unaware of it. Anyway, please elaborate on this.

You dont need to wait until the confirmation will finish and the payment in bitcoin will appear in your balance. What it needs is that there is a transaction that has been done and the transfer is ongoing. If I am a merchant I will not think of it as a problem I will give my products to him even if the transaction is unconfirmed. Sooner or later it will be confirmed and will appear on my balance.

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February 15, 2017, 03:49:39 AM
 #9

So, currently in electrum, the recommended fee to get a transaction included in the next block, is 0.001835 BTC/kb. Thats 1.85$ PER KILOBYTE.

Now, to be fair, that is the recommended fee to get the transaction as soon as possible, but think of it this way:
I go to buy a cup of coffee and want to pay in bitcoin. I pay them but need to wait  some time for the transaction (obviously the coffee shop would want to receive a few confirmations on the transaction so they're sure I don't leave with a free coffee). Lets say I pay a high fee to get the transaction done soon, for this example lets say I paid a 1.85$ fee (and remember that is the recommended fee is per kilobyte, that's not the recommended total fee), now I've got to wait like 10 minutes and pay a dollar or two just to pay for a coffee with bitcoin (and remember that a few dollars is a high price to pay as a fee to buy something for a few dollars).

And this is in the current network. In order for me to pay for a coffee with bitcoin we'd probably need the mass adoption everybody seems convinced will happen. With mass adoption mean WAY more transactions on the network than now, and I feel mass adoption would cause the user base to grow much faster than the network (most of the people using bitcoin now are probably good with technology and would consider mining or hosting a node, if everybody joined then we probably wouldn't have a user base like that). Think of the kind of fees then.

I'd think that this should be a problem that is on the minds of the developers, and it probably is, so, what's the plan? Or perhaps there's already a plan coming to action and I'm just unaware of it. Anyway, please elaborate on this.

You dont need to wait until the confirmation will finish and the payment in bitcoin will appear in your balance. What it needs is that there is a transaction that has been done and the transfer is ongoing. If I am a merchant I will not think of it as a problem I will give my products to him even if the transaction is unconfirmed. Sooner or later it will be confirmed and will appear on my balance.
Such confirmation delay doesn't create any issue. As mentioned when the amount gets deducted we can have a confirmation that amount is sent. But recent days the backlogs of transaction was increasing day to day from 300000 btc transactions to 900000btc transactions pending without confirmation in a very small time scale.

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February 15, 2017, 03:58:50 AM
 #10

One thing that is clear though is that the future demand curve will be greater if bitcoin has more users then than if it has fewer.  

If Bitcoin does not retain it's unique properties in an attempt to accommodate "mainstream" usage, it's just a cumbersome PayPal, and no one is willing to use that.

I think everyone agrees with that.  Bitcoin is a peer-to-peer electronic cash system.  If it stops being useful as that (or turns into something else completely), then less people will use it.  ...  I do this because I think the biggest problem facing Bitcoin at the moment is the unreliable confirmations and high fees.  If in the future, Bitcoin faces another problem, I'll turn my attention to that.  

I do not believe people use Bitcoin because it is a p2p e-cash system.
They mostly use it because it works outside of governmental control or censorship.
In fact, its origins and revelation was within the cypherpunk sphere which has no
interest in e-cash, but the idea of true unrestricted e-exchange.

Though Satoshi intended Bitcoin to be a true p2p e-cash system originally, it
quickly became evident that it would not be possible without major sacrifices.
When the 1MB cap was placed into the code it was an admission that not all
factors had been fully anticipated prior to release, though he worked on it for years.

For Satoshi's original dream to come true today, too much will be lost with a very
likely possibility of experiment failure. If we can hold off for a few more years, maybe 5 to 10,
then enough time will have passed for technology to properly allow a block size increase and
maintain the same amount of censorship resistance and unregulatability.

I support on-chain scaling, but within reason and without sacrifices to what makes Bitcoin special.

Satoshi's greatest failure may be that the Bitcoin idea is really designed for 2035 and beyond,
and he was 26 years too early. Which shows great vision, but leaves us with the problems and
limitations of our time.

Edit: typos

I support a decentralized & unregulatable ledger first, with safe scaling over time.
Request a signed message if you are associating with anyone claiming to be me.
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February 15, 2017, 04:10:07 AM
 #11

You dont need to wait until the confirmation will finish and the payment in bitcoin will appear in your balance. What it needs is that there is a transaction that has been done and the transfer is ongoing. If I am a merchant I will not think of it as a problem I will give my products to him even if the transaction is unconfirmed. Sooner or later it will be confirmed and will appear on my balance.
But the reality is many merchants require us to wait our transaction at least get 1 confirmation, and you know what sometimes it took many times even though i pay recommended fee, and it's really bother me, well maybe someone's fee higher than me cause i know that miners usually include transactions with the highest fees first. I don't mind with that but it would be a problem for merchants that accept bitcoin as a form of payment, the reason is avoid the likelihood of losses also to prevent people from double spending.

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February 15, 2017, 04:10:34 AM
 #12

So, currently in electrum, the recommended fee to get a transaction included in the next block, is 0.001835 BTC/kb. Thats 1.85$ PER KILOBYTE.

Now, to be fair, that is the recommended fee to get the transaction as soon as possible, but think of it this way:
I go to buy a cup of coffee and want to pay in bitcoin. I pay them but need to wait  some time for the transaction (obviously the coffee shop would want to receive a few confirmations on the transaction so they're sure I don't leave with a free coffee). Lets say I pay a high fee to get the transaction done soon, for this example lets say I paid a 1.85$ fee (and remember that is the recommended fee is per kilobyte, that's not the recommended total fee), now I've got to wait like 10 minutes and pay a dollar or two just to pay for a coffee with bitcoin (and remember that a few dollars is a high price to pay as a fee to buy something for a few dollars).

And this is in the current network. In order for me to pay for a coffee with bitcoin we'd probably need the mass adoption everybody seems convinced will happen. With mass adoption mean WAY more transactions on the network than now, and I feel mass adoption would cause the user base to grow much faster than the network (most of the people using bitcoin now are probably good with technology and would consider mining or hosting a node, if everybody joined then we probably wouldn't have a user base like that). Think of the kind of fees then.

I'd think that this should be a problem that is on the minds of the developers, and it probably is, so, what's the plan? Or perhaps there's already a plan coming to action and I'm just unaware of it. Anyway, please elaborate on this.

Have you read the Bitcoin Capacity Increases FAQ published by Bitcoin Core? Segregated Witness will double transactions per second all miners have to do is upgrade to Bitcoin Core 0.13.1 or newer to signal a yes vote for SegWit. Bitcoin Unlimited supporters are trying to block adoption of SegWit so it is a political football unfortunately. You could already be enjoying lower fees if miners would just adopt SegWit.

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February 15, 2017, 04:23:13 AM
 #13

The issue is the community won't decided on plan A or B and it becomes A vs B and neither passes. I bet the block size will stay the same and high fees for priority transactions will become the norm and it won't be used for standard transactions but more large amounts. Cheaper transactions will just either be off chain through a service provider (unwise but people campaign for it) or an altcoin like Litecoin or Dash (oh no I said altcoin).

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February 15, 2017, 04:31:56 AM
 #14

One thing that is clear though is that the future demand curve will be greater if bitcoin has more users then than if it has fewer. 

If Bitcoin does not retain it's unique properties in an attempt to accommodate "mainstream" usage, it's just a cumbersome PayPal, and no one is willing to use that.

Politics aside, what is wrong with a payment layer built on top of the Bitcoin network? The possibilities for Bitcoin has become wider if there was a LN type network layer that could handle unlimited transactions and say could also become a bridge between blockchains. Real anonymous transactions could also be implemented. Why stop it just because "it does not retain its unique properties"? It is still there, you can still do transactions onchain.  


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February 15, 2017, 04:37:50 AM
 #15

I have the same mindset that we need something that is good for the future both in the bitcoin transaction fee and can be confirmed quickly, the problem can actually be solved if the great man bitcoin make changes

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February 15, 2017, 04:42:11 AM
 #16

I have the same mindset that we need something that is good for the future both in the bitcoin transaction fee and can be confirmed quickly, the problem can actually be solved if the great man bitcoin make changes

Great man Bitcoin? Who might that be? Last I checked anyone can make changes to Bitcoin it just depends if the group as a whole is willing to follow.

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February 15, 2017, 05:05:18 AM
 #17

One thing that is clear though is that the future demand curve will be greater if bitcoin has more users then than if it has fewer. 

If Bitcoin does not retain it's unique properties in an attempt to accommodate "mainstream" usage, it's just a cumbersome PayPal, and no one is willing to use that.

Politics aside, what is wrong with a payment layer built on top of the Bitcoin network? The possibilities for Bitcoin has become wider if there was a LN type network layer that could handle unlimited transactions and say could also become a bridge between blockchains. Real anonymous transactions could also be implemented. Why stop it just because "it does not retain its unique properties"? It is still there, you can still do transactions onchain.  

Where did I suggest that a layer could not be built on top of Bitcoin? Quite the opposite, keeping the underlying protocol and network lean and robust while scaling via additional layers (which could be peeled away if necessary) is probably the only solution which will allow Bitcoin to retain those unique properties.

My comment was clearly directed towards the idea that on-chain scaling via a massive block size increase is a viable solution.

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February 15, 2017, 05:06:25 AM
 #18

I think segwit is plan to fix slow transaction and high fees from developers,
unfortunately it is not activated because there are some people ( what I know the miners )
who disagree with activation of segwit and they won't update the software.
So we must wait and see other solution and what is the best can be accepted
by all of comunity of bitcoin until this problem finish.
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February 15, 2017, 05:14:37 AM
 #19

So, currently in electrum, the recommended fee to get a transaction included in the next block, is 0.001835 BTC/kb. Thats 1.85$ PER KILOBYTE.

that amount is for 1 KiloByte transaction size. a normal transaction is 1/5 of that amount making the highest fee (according to Electrum suggestion) about 0.00035119BTC or $0.35

with that said fees are high and have been rising at an alarming rate. and the "plan to fix" it seems to be just waiting around to see if miners decide to accept one of the proposals or not. which they seem to be more than happy about the higher fee situation aka fee war.

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February 15, 2017, 05:17:19 AM
 #20

As a creative coffee shop owner, I would find ways to work around that, for instance : I will train my staff to educate people on signing up for a service like Xapo where the transactions are instant and basically free. My regulars will then have no problem paying for their daily coffee and I would help with adoption.

I will even give discount on people paying with Bitcoin. < 10% less per cup of coffee and first 10 cups free, if you signup for Xapo >

This is not the ideal solution but it is a option until they solve the scaling problems.

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