Mining fees will eventually kill bitcoin

[Amph]

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.

they are higher than ever, 50k satoshi on average per transaction is huge, it's more than $0.5 and that is only the average, many people are paying already above $1 per transaction, how cna you say that this is small

currently miners are earning something like 1 whole btc added to their block reward, their block reward is basically 13.5 btc now

Yes, the mining fees are getting more and more expensive day by day and we must find any concrete solution for it otherwise, it will reach the level of what other fiat companies are charging today. The core benefit of bitcoin is that it is (still) cheaper than other payment options in terms of transaction costs and it needs to remain under control.

yes i am also not in favour of increasing the mining fee. i also think that this problems must of solve on priority basis include the bitcoin transaction fee also.

it's common misconception that are miners increasing the fee, it's actually the user that by wanting to be first among other is paying more, the more you pay the higher is your transaction priority against other,

this is happening because of the limitation of the block, and this why bitcoin will not die because of fee increase

[terrate]

no kill.
Now bitcoin price quite high.
 Just logically think if u are miner, u seen bitcoin price up, u will think to up fees or not?

This is a good thing to encourage them to mine. Of course not good to us because high fee.

Don't take for granted. If people not mine, our transaction will be congested.

 

[deisik]

Yes, the mining fees are getting more and more expensive day by day and we must find any concrete solution for it otherwise, it will reach the level of what other fiat companies are charging today. The core benefit of bitcoin is that it is (still) cheaper than other payment options in terms of transaction costs and it needs to remain under control.

yes i am also not in favour of increasing the mining fee. i also think that this problems must of solve on priority basis include the bitcoin transaction fee also.

it's common misconception that are miners increasing the fee, it's actually the user that by wanting to be first among other is paying more, the more you pay the higher is your transaction priority against other,

this is happening because of the limitation of the block, and this why bitcoin will not die because of fee increase

This is not a misconception, by any means

It looks more like it is you not caring or wanting to look deeper into the matter. So before aggressively hitting the Quote button, honestly answer just two questions. First, are users interested in paying more fees to miners? And second, are miners interested in users paying more fees to them? If the answer to the first question is negative while to the second positive, think again before hitting that button. Perhaps, it is you after all who is misunderstanding something here, and it is actually miners who are making the users pay higher transaction fees (whether the latter like it or not)

[kryptqnick]

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.

Yes, I agree. I think it will all be just fine. And although amount is not increasing partly because the price grows, the fee is supposed to decrease with each halving, because smaller sum will be mined and thus smaller will get stuck between the blocks. At least from what I've been watching on btc this seems correct.
Perhaps I misunderstood some stuff though.

[deisik]

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.

Yes, I agree. I think it will all be just fine. And although amount is not increasing partly because the price grows, the fee is supposed to decrease with each halving, because smaller sum will be mined and thus smaller will get stuck between the blocks. At least from what I've been watching on btc this seems correct.
Perhaps I misunderstood some stuff though

It seems to be the case

Mining rewards as such are inconsequential to the average size of a transaction fee since the size of the reward doesn't affect the number of transactions, which seems to be the root of your confusion (it would still take only 1 transaction to receive the reward). The transaction fee (in dollar terms) is obviously in positive correlation with Bitcoin price, and this correlation should be quite close to 1. On the other hand, it could still be claimed that diminishing miner rewards would make miners look for ways to collect more fees (to compensate for the drop in rewards), and with the same block size that could be done only by raising an average fee per transaction. So in reality it will likely work opposite to what you think, i.e. fees will rise, not decline with less rewards

[classicsucks]

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?

It depends on if Core devs can get it through their skulls that the block size needs to increase. The current people manipulating market price prefer steady volume, high mempool, "high frequency" trading. Prices can't be controlled profitably if the volume increases. On the positive side, spam and churn behavior have been taxed and reduced by fees.

The ETF would have helped the price shillers by reducing supply. I suspect the bitcoin mempool would've instantly buckled if the Twinkle Towers ever did go live with ETF trading. Good riddance,

Lightning Network is way too "hypothetical future" and likely unsound or just lame. Another geek turkey fest.

[Idrisu]

Mining fee is what motivate the miners to keep mining for traders and generally transactions bitcoin are made possible through activities of miners. So without mining no bitcoin and without bitcoin no transactions and without transactions no fee to pay.

[LoyceV]

it's common misconception that are miners increasing the fee, it's actually the user that by wanting to be first among other is paying more, the more you pay the higher is your transaction priority against other,

Even worse: it's now the default setting of many wallets to "use the best fee". That means most people now just pay more. Paying more doesn't solve the fundamental problem: blocks are too small. In the end this means the high fee still isn't enough, so the next day you'll have to pay more again. Fees have been spiralling up for quite a while now.
0.5 mBTC fee is common now for a small transaction, which is (in dollars) about 50 times more than I used just over a year ago. Unfortunately, I can only conclude this is limiting Bitcoin's growth potential.

Mining fee is what motivate the miners to keep mining for traders and generally transactions bitcoin are made possible through activities of miners. So without mining no bitcoin and without bitcoin no transactions and without transactions no fee to pay.

You're going at this the wrong way. More fees means more competition for miners, higher hash rate, paying more on new hardware and electricity. You could argue it becomes harder to do a 51% attack, but in the end it only leads to more competition for miners.
If there would be only 1 miner, happily mining on his CPU, blocks could handle exactly the same amount of transactions. We don't need more miners to process transactions, that doesn't change how many transactions Bitcoin can handle at all.

[deisik]

Mining fee is what motivate the miners to keep mining for traders and generally transactions bitcoin are made possible through activities of miners. So without mining no bitcoin and without bitcoin no transactions and without transactions no fee to pay.

You're going at this the wrong way. More fees means more competition for miners, higher hash rate, paying more on new hardware and electricity. You could argue it becomes harder to do a 51% attack, but in the end it only leads to more competition for miners.
If there would be only 1 miner, happily mining on his CPU, blocks could handle exactly the same amount of transactions. We don't need more miners to process transactions, that doesn't change how many transactions Bitcoin can handle at all

As to me, this is an absurd situation

Generally, to claim that higher fees lead to more competition between miners, you have to solve the following dilemma, i.e. to explain how it is possible that users are competing between themselves for the inclusion of their transactions in the new block by increasing the amount of money they are willing to pay for that, and at the same time (as you claim), the competition between miners rises as well. I guess you can't have it both ways at the same time in a free market

[classicsucks]

Mining fee is what motivate the miners to keep mining for traders and generally transactions bitcoin are made possible through activities of miners. So without mining no bitcoin and without bitcoin no transactions and without transactions no fee to pay.

You're going at this the wrong way. More fees means more competition for miners, higher hash rate, paying more on new hardware and electricity. You could argue it becomes harder to do a 51% attack, but in the end it only leads to more competition for miners.
If there would be only 1 miner, happily mining on his CPU, blocks could handle exactly the same amount of transactions. We don't need more miners to process transactions, that doesn't change how many transactions Bitcoin can handle at all

As to me, this is an absurd situation

Generally, to claim that higher fees lead to more competition between miners, you have to solve the following dilemma, i.e. to explain how it is possible that users are competing between themselves for the inclusion of their transactions in the new block by increasing the amount of money they are willing to pay for that, and at the same time (as you claim), the competition between miners rises as well. I guess you can't have it both ways at the same time in a free market

But maybe this isn't a free market because the blocksize has been artificially retarded by the Core Politburo? That could certainly cause fees and miner competition to go up simultaneously... Hmmm.

[LoyceV]

at the same time (as you claim), the competition between miners rises as well

Mining is very simple: if it's worth the investment, you can start mining! Google for a "mining calculator", and you get an estimate on the return for a certain hash rate.
If the turnover per block goes up, miners earn more money in the short term. Longer term, it will lead to new investments, which will lead to an increase in hash rate, which means a new equalibrium is found until it's not profitable to invest anymore for new actors to join.
It's basically standard market economy.

[BitcoinPanther]

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.

they are higher than ever, 50k satoshi on average per transaction is huge, it's more than $0.5 and that is only the average, many people are paying already above $1 per transaction, how cna you say that this is small

currently miners are earning something like 1 whole btc added to their block reward, their block reward is basically 13.5 btc now

Yes, the mining fees are getting more and more expensive day by day and we must find any concrete solution for it otherwise, it will reach the level of what other fiat companies are charging today. The core benefit of bitcoin is that it is (still) cheaper than other payment options in terms of transaction costs and it needs to remain under control.

yes i am also not in favour of increasing the mining fee. i also think that this problems must of solve on priority basis include the bitcoin transaction fee also.

it's common misconception that are miners increasing the fee, it's actually the user that by wanting to be first among other is paying more, the more you pay the higher is your transaction priority against other,

this is happening because of the limitation of the block, and this why bitcoin will not die because of fee increase

Then if it is the users why does there are fees that were ignored?  And we can see that there is always an update of the standard fee that can be accepted?  Who then set these fees?  I use electrum and using it with dynamic fee auto adjust the fee and I noticed it is ever increasing.

[Dudeperfect]

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.

they are higher than ever, 50k satoshi on average per transaction is huge, it's more than $0.5 and that is only the average, many people are paying already above $1 per transaction, how cna you say that this is small

currently miners are earning something like 1 whole btc added to their block reward, their block reward is basically 13.5 btc now

Yes, the mining fees are getting more and more expensive day by day and we must find any concrete solution for it otherwise, it will reach the level of what other fiat companies are charging today. The core benefit of bitcoin is that it is (still) cheaper than other payment options in terms of transaction costs and it needs to remain under control.

yes i am also not in favour of increasing the mining fee. i also think that this problems must of solve on priority basis include the bitcoin transaction fee also.

it's common misconception that are miners increasing the fee, it's actually the user that by wanting to be first among other is paying more, the more you pay the higher is your transaction priority against other,

this is happening because of the limitation of the block, and this why bitcoin will not die because of fee increase

Then if it is the users why does there are fees that were ignored?  And we can see that there is always an update of the standard fee that can be accepted?  Who then set these fees?  I use electrum and using it with dynamic fee auto adjust the fee and I noticed it is ever increasing.

Let's learn it from the example,

There were 10 billboards in the city and 10 advertisers. The billboard holders decided to charge $1 per day for the billboard. Every advertiser was happy with one billboard by paying $1 for it.

Now, 100 foreign companies entered the town (Because Trump was not the mayor, lolz) in the year and they started approaching billboard holders to put their advertisements on the billboard.

The billboard holder said he will charge the same rate as usual to everyone but those who want to put their ads on the priority basis will have to pay extra priority charges. He was charging $1 (the same rate for advertising) but he was giving more priority to those companies willing to pay more priority charge (depending on the compititiors offer for the same).

In the same way, miner fees are the same for confirmation but since some users are paying high fees (priority charge) for their transactions, usual transactions are getting delayed confirmation.

[jaysabi]

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.

Yes, this is very much the point I was making. As new coin originations fall, miners will demand more fees to supplement the income they need to continue mining. This will lead to a dramatic increase in the fees in bitcoins, and also make transactions cost-prohibitive in dollars. I would think this would cause a decrease in demand for bitcoin when it becomes too expensive to transact with, and thus, a fall in the price.

[jaysabi]

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!

Essentially, miners serve two functions, they verify transactions while propagating the network. The miner who "solves" each block gets to include whichever transactions in the block he wants. Obviously, to maximize his own reward, he will choose the transactions that have the highest fees/byte. This is why over time, mining will get more expensive and the fees it takes to get your transactions into a block will increase. If you don't pay a high enough fee, you'll constantly be line-jumped by everyone willing to pay more. This is a free-market system, but not a cost efficient one.

[jaysabi]

Yes, the mining fees are getting more and more expensive day by day and we must find any concrete solution for it otherwise, it will reach the level of what other fiat companies are charging today. The core benefit of bitcoin is that it is (still) cheaper than other payment options in terms of transaction costs and it needs to remain under control.

yes i am also not in favour of increasing the mining fee. i also think that this problems must of solve on priority basis include the bitcoin transaction fee also.

it's common misconception that are miners increasing the fee, it's actually the user that by wanting to be first among other is paying more, the more you pay the higher is your transaction priority against other,

this is happening because of the limitation of the block, and this why bitcoin will not die because of fee increase

This is not a misconception, by any means

It looks more like it is you not caring or wanting to look deeper into the matter. So before aggressively hitting the Quote button, honestly answer just two questions. First, are users interested in paying more fees to miners? And second, are miners interested in users paying more fees to them? If the answer to the first question is negative while to the second positive, think again before hitting that button. Perhaps, it is you after all who is misunderstanding something here, and it is actually miners who are making the users pay higher transaction fees (whether the latter like it or not)

How is it the miners causing this? It seems to be the inevitable outcome of a truly fair market system where a limited number of transactions can be processed at any one time. Competition over a limited amount of block space is what determines the price of the transaction fee. If all the payers refused to pay a fee above 20 sats/byte, miners would have no choice but to accept that as the fee because nothing else is available. Because there is competition for this limited space, and people willing to pay more to essentially line jump, the miners aren't causing the price to rise, they're just reaping the reward from it. The limited space in the block and competition for a slot in it is what is causing transaction fees to rise as transaction volume creates more congestion to compete against.

[Yuuto]

I've always thought that mining fees were going to be the future of bitcoin?

I mean sure, they are a bit too high right now for bitcoin to be competitive. Remember how we used to say "bitcoin compared to Paypal and Perfectmoney transaction fees of 2% each transaction is so good"? Well now we are losing that competitive edge.

But still, as mining rewards drop in the future the most important method of income will be through the transaction fees people pay to get their transactions confirmed. I think that if the fee keeps increasing as is the price, then bitcoin has no future.

[deisik]

at the same time (as you claim), the competition between miners rises as well

Mining is very simple: if it's worth the investment, you can start mining! Google for a "mining calculator", and you get an estimate on the return for a certain hash rate.
If the turnover per block goes up, miners earn more money in the short term. Longer term, it will lead to new investments, which will lead to an increase in hash rate, which means a new equalibrium is found until it's not profitable to invest anymore for new actors to join.
It's basically standard market economy

This is an oversimplified view on the "standard market economy"

Before anything, if the amount of profit obtained per block goes up, that should necessarily cause the fees to drop, nor rise (in a free market). I guess this is the first thing that should happen if there were a genuine competition between miners. In other words, more profits first increase the competition among existing miners (and only later new miners join in). The reason for this is that miners aim at earning certain margin, if this margin goes up, the competition increases and the margin goes down to its typical level. But it can go down only through lowering fees provided the number of transactions remains more or less the same (which seems to be the case here). But the latter should lead to cancelling out the competition between users (this competition is causing the rise in fee amount they have to pay). To put it differently, both of these things cannot exist simultaneously. That's what my point basically comes down to

There were 10 billboards in the city and 10 advertisers. The billboard holders decided to charge $1 per day for the billboard. Every advertiser was happy with one billboard by paying $1 for it.

Now, 100 foreign companies entered the town (Because Trump was not the mayor, lolz) in the year and they started approaching billboard holders to put their advertisements on the billboard

The main issue with your example is that there may not be any real new foreign company in the town, i.e. the number of transactions seems to be artificially increased via flooding the network with spammy transactions. Really, why would people want to transact more if the fees have risen?

[JavaLove]

While I do agree that mining fees can kill Bitcoin due to the fact that it will eventually suck out all of our money, I don't think that it will be the death of Bitcoin.

The mining fees really depend on the user base existing within the Bitcoin community, and the overall competition to receive/send their money quickly. As the user base grows, the demand for mining efficiency grows along with it. Therefore, the prices will increase as well. Of course, there are plenty of other factors that relate to this issue.

In this case, though, I recommend you just change the fee that you pay. That's what I do anyway. Of course, I don't want my payment to become static and never move, thus I try to increase the fee to about 5000 satoshi per payment. It usually takes a couple of hours to process which isn't terribly long. But, I'll admit, there needs to be a solution to the problem. Sooner or later our low fee transactions are going to take days to process and people will flock to sell their Bitcoins. In such a case, we may never see this "honeymoon" period in BTC value ever again.

[mrcash02]

While I do agree that mining fees can kill Bitcoin due to the fact that it will eventually suck out all of our money, I don't think that it will be the death of Bitcoin.

The mining fees really depend on the user base existing within the Bitcoin community, and the overall competition to receive/send their money quickly. As the user base grows, the demand for mining efficiency grows along with it. Therefore, the prices will increase as well. Of course, there are plenty of other factors that relate to this issue.

In this case, though, I recommend you just change the fee that you pay. That's what I do anyway. Of course, I don't want my payment to become static and never move, thus I try to increase the fee to about 5000 satoshi per payment. It usually takes a couple of hours to process which isn't terribly long. But, I'll admit, there needs to be a solution to the problem. Sooner or later our low fee transactions are going to take days to process and people will flock to sell their Bitcoins. In such a case, we may never see this "honeymoon" period in BTC value ever again.

This is already happening. I tried to send a transaction of 0.001 BTC with a 5000 satoshis fee and I couldn't complete it. After more than one week the satoshis came back to the wallet, operation canceled. If the technology doesn't evolve to support more transactions at same time it will become even worse. And transaction spammers will always exist, principally if someone wants to sabotage Bitcoin.