Mining fees will eventually kill bitcoin

[jaysabi]

Now that the SEC has rejected the Winklevoss bitcoin ETF, I decided to actually glance through their S-1 (registration statement) that they filed with the SEC just for the heck of it. The S-1 requires a statement and discussion of possible risks associated with a security that is seeking SEC registration. In the Winklevoss S-1, I found this section particularly noteworthy (emphasis is original):

As the number of Bitcoins awarded for solving a block in the Blockchain decreases, the incentive for miners to continue to contribute processing power to the Bitcoin Network will transition from a set reward to transaction fees. The requirement from miners of higher transaction fees in exchange for recording transactions in the Blockchain may decrease demand for Bitcoins and prevent the expansion of the Bitcoin Network to retail merchants and commercial businesses, resulting in a reduction in the Blended Bitcoin Price.

If transaction fees paid for the recording of transactions in the Blockchain become too high, the marketplace may be reluctant to accept Bitcoins as a means of payment and existing users may be motivated to switch from Bitcoins to another Digital Math-Based Asset or back to fiat currency. Decreased use and demand for Bitcoins may adversely affect their value and result in a reduction in the Blended Bitcoin Price.

Not only is this a risk that they highlighted, my view is this is inevitable, and that mining fees will eventually become prohibitive not only to bitcoin expansion, but everyday bitcoin function. This is the flaw that will eventually render bitcoin unusable for everyday commerce, and the price will decline accordingly as demand for coins falls off as a result.

Mining fees will eventually kill bitcoin, the question is if this is avoidable with some type of change, or a predetermined fate that cannot be altered due to the nature of the ecosystem?

[joe101]

The fees are getting more and more expensive everyday!

Just today, i sent 3.77 usd and the bitcoin core client wanted 0.50 cents, that's ridiculous for 3.77

i created my own fee and the fee turned out to be 0.07, it's been 7 hours and no confirmations yet,

im not worried, i think eventually it will go through, and i wanted to test it to see how long it would take,

but yes, bitcoin would not work for small transactions for stores and between strangers, its too slow

i know the 0.50 cent fee would of been super fast, but it's way to expensive,

i remember when there was free fees and it was fast,

i have no problem if there is no free fees, i don't mind paying fees, to support the bitcoin technology because the transactions fees help the miners, but it is getting way out of control

i don't think bitcoin will go down that easy, it's still very convenient to transfer lots of money, millions,
 
i'm not ready to give up on bitcoin yet, but i hope they fix things, or yes it could kill bitcoin

[X-ray]

The fees are getting more and more expensive everyday!

Just today, i sent 3.77 usd and the bitcoin core client wanted 0.50 cents, that's ridiculous for 3.77

i created my own fee and the fee turned out to be 0.07, it's been 7 hours and no confirmations yet,

im not worried, i think eventually it will go through, and i wanted to test it to see how long it would take,

but yes, bitcoin would not work for small transactions for stores and between strangers, its too slow

i know the 0.50 cent fee would of been super fast, but it's way to expensive,

i remember when there was free fees and it was fast,

i have no problem if there is no free fees, i don't mind paying fees, to support the bitcoin technology because the transactions fees help the miners, but it is getting way out of control

i don't think bitcoin will go down that easy, it's still very convenient to transfer lots of money, millions,
 
i'm not ready to give up on bitcoin yet, but i hope they fix things, or yes it could kill bitcoin

I know about that, if 0.50 cent looks too expensive just for the below $4 transaction. But can you provide your txid? Or have you tried for using the transaction accelerator? More adoption and more transaction with the limit bandwith for the block to catch and validate the transaction and i think this thing will be resolve in the future. I don't know about the exact date but if the drama of bitcoin developer has ended and they are come with new scalable answer.

[oaks05]

.50 for a transaction under $4 damn thats crazy, need to get that under for control.

[Holliday]

Transaction fees are a necessary part of Bitcoin and without them, Bitcoin would lose it's most useful, unique properties and thus, it's value.

The resources required to facilitate censorship-proof transfer of value and a seize-proof store of value are quite expensive.

Since the dawn of Bitcoin, this cost was paid for through inflation (new coins entering the market through the coin base reward were given to those who used resources to secure the network).

At time passes, the inflation rate (supply of new coins) continues to be cut in half (so that Bitcoin isn't constantly inflating at a rate which would erode it's value).

Yet, the network still has costs to maintain.

Transaction fees paid for by those who enjoy Bitcoin's properties will slowly take the place of the coin base reward as a means to pay for the security of the network.

As more people come to value Bitcoin's unique properties, there will be more competition to have transactions written into the permanent ledger in a timely manner, and fees will increase.

Some users have grown used to the block reward subsidy paying for the utility which Bitcoin provides and will have to be dragged kicking and screaming into the future if they want to continue to enjoy Bitcoin's unique and useful properties.

[HabBear]

Could the processing that's done by miners be coded into the activity that blockchain takes in the transaction? There's nothing unique from one miner to the next, they're just verifying the transaction...doing the math, so to speak. If it's just math it can be coded and automated and set free for the world.

Evolution has occurred with all great advancements in society, Bitcoin is not immune to that eventuality and the idea of bitcoin is strong enough to generate the inspiration required to make that evolution reality.

If I'm being super naive here, let's talk...I want to learn!

[pooya87]

that is a lot of "may" and the chances for them are pretty small.
by 2020 block reward will go from 12.5BTC to 6.25BTC and by then two things will happen and there is a high possibility for them. price will be higher and also more advanced mining equipment will be created with better efficiency. people always forget about hardware advances! and this means there would still be no need to increase fees to cover mining cost.
save goes for 2024(?) 3.125BTC and so on.

but yeah. i fully agree that if fees go up, at some point people will stop using bitcoin. and although some people find it hard to accept but it is a truth. and eventually it can turn bitcoin into something only whales who don't care about paying for example 0.1BTC fee use to move their 1000BTC around.

[shield132]

Well, that mining fees have two side. It has positive side for miners and gaves them stimulus to mine and mine because nowdays transaction fees are so high that mining rewards are high now. So for bitcoin users, which use bitcoin for payments, than fees are very bad. Nowdays I have to send minimum transaction with at least 0.0006 btc fee to receive it normally.
I agree you, that fees aren't attracting people, they are worst.

[Xester]

Mining fees will not kill bitcoin. The higher the price of bitcoin and the more users using bitcoin the difficulty in mining has increased. The miners fee are just normal and must be implemented otherwise id mining industry will stop then bitcoin will die instead. If the miner fees are high then lets dont send small amount of bitcoin several times but send a large amount of bitcoin in one go that way you can save.

[Amph]

Transaction fees are a necessary part of Bitcoin and without them, Bitcoin would lose it's most useful, unique properties and thus, it's value.

The resources required to facilitate censorship-proof transfer of value and a seize-proof store of value are quite expensive.

Since the dawn of Bitcoin, this cost was paid for through inflation (new coins entering the market through the coin base reward were given to those who used resources to secure the network).

At time passes, the inflation rate (supply of new coins) continues to be cut in half (so that Bitcoin isn't constantly inflating at a rate which would erode it's value).

Yet, the network still has costs to maintain.

Transaction fees paid for by those who enjoy Bitcoin's properties will slowly take the place of the coin base reward as a means to pay for the security of the network.

As more people come to value Bitcoin's unique properties, there will be more competition to have transactions written into the permanent ledger in a timely manner, and fees will increase.

Some users have grown used to the block reward subsidy paying for the utility which Bitcoin provides and will have to be dragged kicking and screaming into the future if they want to continue to enjoy Bitcoin's unique and useful properties.

are we sure that a currency need fee? couldn't be done in another way i see that there is this coin called railblock, that has no fee for miners that only need to act when doing a transaction(not continuos mining)

the distribution is based on captcha there, not the best one i guess, it can be improved, but still transaction are confirmed instant and there is not a single fee

[Kemarit]

I don't think its killing bitcoin although it may shy away potential bitcoin users because of the increasing mining fee. Although as shield132 pointed out, the fee is somewhat becoming more attractive to miners to continue mining. But this is causing concern among bitcoin enthusiast, the increasing demand for faster transactions has also led to a drastic rise in the miner fee associated with each transfer. I guess, the increasing fee is currently an integral part of bitcoin ecosystem unless a solution has made been to alleviate the currrent crisis.

[ArdiPrabowo]

.50 for a transaction under $4 damn thats crazy, need to get that under for control.

about sending fee and estimate time to confirmation transaction you can read in here https://bitcoinfees.21.co/
sending fee not about how sending bitcoin balance you sending, but how much block size youre sending

[pedrog]

Transaction scarcity and increased fees will not kill bitcoin but they will kill some of its utility, using bitcoin as a means of payment and any micro transactions on chain, like colored coins will be priced out.

Merchants are already dropping bitcoin because no one wants to deal with all the 'transactions are not confirming' problem, it's a lot of support tickets that need to be taken care of and that costs a lot of money, accepting bitcoin as payment will end up more expensive than other payment methods.

[Betwrong]

If Bitcoin will continue to rise in price it is not necessary that the fees will rise as some think they will. It will be enough reward for miners to continue their work without rising fees.

But I agree that right now the situation for small transactions is looking strange. Paying $0.5 to send $3 is really a lot.

[machinek20]

If Bitcoin will continue to rise in price it is not necessary that the fees will rise as some think they will. It will be enough reward for miners to continue their work without rising fees.

But I agree that right now the situation for small transactions is looking strange. Paying $0.5 to send $3 is really a lot.

I agree, the fee now is very expensive and there are a lot of people stop using bitcoin because the fee is too high, they prefer to choose another type of payment, if this keep continue it will kill bitcoin, because nobody want to pay 0.5$ for 3$ transaction, the fee is more than 15% of the transaction

[ladydark]

The fees are getting more and more expensive everyday!

Just today, i sent 3.77 usd and the bitcoin core client wanted 0.50 cents, that's ridiculous for 3.77

i created my own fee and the fee turned out to be 0.07, it's been 7 hours and no confirmations yet,

im not worried, i think eventually it will go through, and i wanted to test it to see how long it would take,

but yes, bitcoin would not work for small transactions for stores and between strangers, its too slow

i know the 0.50 cent fee would of been super fast, but it's way to expensive,

i remember when there was free fees and it was fast,

i have no problem if there is no free fees, i don't mind paying fees, to support the bitcoin technology because the transactions fees help the miners, but it is getting way out of control

i don't think bitcoin will go down that easy, it's still very convenient to transfer lots of money, millions,
 
i'm not ready to give up on bitcoin yet, but i hope they fix things, or yes it could kill bitcoin

Yes,its a matter of serious concern.With your fees as 0.07 cents, in my experience,i think it will take 6 days for your transaction to be processed.Thats ridiculous.The main feature of bitcoin,i.e., the low transaction fees has been compromised.

[joe101]

update!!

I woke up this morning and it has gone through,   it is currently at 73 confirmations

So i'm guessing it took about 16 hours to go through, still pretty damn fast compared the banks, and cheaper

Bitcoin is still King!


so for small transactions that i am not in a rush, bitcoin still rocks!

considering the donation i gave was from a country outside my country,

if i tried via the bank, it would cost me 30 bucks to transfer the money to another country,

and probably 2 weeks, not counting the exchange rate

i can easily adjust the fees i want to pay as long as i am willing to wait,  0.07cents for 3.77 i think is fair


Like i said, Bitcoin won't go down that easy, its still extremely convenient

I think Bitcoin will continue to go up and up!  1,246usd per bitcoin, this is just the beginning

we're going to be able to purchase a home with a single bitcoin someday

glad i got at least 1 bitcoin stored offline

long live bitcoin!

[cellard]

Bitcoin works fine, but to reach mainstream status we need offchain transactions, otherwise its impossible. I dont see other way out but leave the blockchain as a settlement of offchain transactions, yes not ideal, but we have no other way out.

[molsewid]

This is in blockchain is getting bigger of the fees when you send estimated of 10$ they will automatically reduce 1$ of it in fees so why coins will be acceptable whether i sent it to be honest im using our based web wallet here in my country even the price is not accurate on preev.com but whether you want to send its free and when you want to withdraw its also free.

[nethan1btc]

Mining fees will not eventually kill bitcoin because they are not that big and they are now getting lower in numbers. It doesn't make thise transacting at mining to be profitable to them and even those investing to a reliable sources decline back and stop transaction with them, because most of them were scam.