Transaction fees

[FrankS]

I remember that back when Bitcoin was starting to get attention, one of the key arguments against eg Paypal was that you could transfer your money without paying any fee (and yes, the tx didn't get stuck). But now the network has reached the point where transaction fees are sometimes higher than Paypal or similar. Even worse, if you managed to collect a lot of Satoshis from various faucets or such, you have only accumulated so-called dust and are practically told to forget about it.

What's a solution for that? How would you explain to average John Doe that his efforts to collect Satoshis were useless? If several hundred people send one cent to your traditional bank account, you have a few dollars. The bank won't tell you to forget about that money because it came in as cents.

What about:
1. Increase blocksize so that more transactions can be included into a block to lower fees. Why isn't that done?
2. Transactions where all input addresses are the same as the output address are identical could be free to allow combining dust.
3. Transactions with low/no fees should be included if the sender is willing to wait long enough, like 2 weeks, or a month.
4. Low/no fee transactions could require extra work on the clientside so that spam attacks are not feasible (like a few mins requiring 100% CPU).

[Qartada]

I remember that back when Bitcoin was starting to get attention, one of the key arguments against eg Paypal was that you could transfer your money without paying any fee (and yes, the tx didn't get stuck). But now the network has reached the point where transaction fees are sometimes higher than Paypal or similar.

True.  That's very annoying.

If several hundred people send one cent to your traditional bank account, you have a few dollars. The bank won't tell you to forget about that money because it came in as cents.

That's misleading.  With PayPal for example, if you sell goods or services you have to accept a 3.4% + 20p fee for it, which makes all payments below 20p useless and all transactions below about £1/$1 impractical to take, or "dust".

The average Joe's attempt to collect satoshi was based on the gimmick of Bitcoin, not for what they regard as "real money".  You couldn't imagine traditional fiat currencies having pages like that, where you just fill in a captcha and get free fiat, because it would be just as dumb.

I agree that it should be possible to do things like that, which is part of the reason for faucets existing in the first place - for the sake of existing - but I don't think their tiny amount of Bitcoin was that meaningful anyway and they were just wasting time.

What about:
1. Increase blocksize so that more transactions can be included into a block to lower fees. Why isn't that done?

There's a lot of argument about that.  Some people argue that it would increase the cost of running full nodes too much, eventually leading to centralisation and thus leaving nodes too public and/or prone to attack.  I don't particularly agree with this for small increases, but I can see the argument that it's a "slippery slope" of sorts.

Some people go for SegWit paired with more offchain solutions like the Lightning Network, or for both of the two things at the same time.  The argument between the two "sides" is mainly what stops anything actually happening.

3. Transactions with low/no fees should be included if the sender is willing to wait long enough, like 2 weeks, or a month.

That would require cooperation.  Currently, a lot of transactions get rejected from mempools in that time (default Bitcoin Core time right now is 2 weeks, I think).

4. Low/no fee transactions could require extra work on the clientside so that spam attacks are not feasible (like a few mins requiring 100% CPU).

Spammers who are working hard or professionally wouldn't find this an issue if the actual cost in fiat was still low.  If it was high, there would be no point in sending the "low fee" transactions anyway.

[Willeampere]

This problem did not exist before, it takes a lot of time when there are too many small operations, certainly the block size needs to be increased.

[coolcoinz]

I don't think the fees are higher than PayPal's when it comes to overseas transfers + currency exchange. I'm an EU citizen and remember receiving some cash from a friend in the USA and it included normal overseas transfer + conversion to Euro, and it costed me about €20. Me, because my friend didn't even know it's going to consume so much, so he sent a full sum and when I got it it, the fees were deducted from the sent amount and I got much less than I had expected.
Bitcoin is much cheaper and you immediately know how much you're sending. Also the fees are paid by the sender, not deducted from the money being sent.

[Lizzie_Girl]

I don't even understand what is going on. I sent 0.015 btc and paid close to 0.004 fee and still I wait after weeks. Yobit days it's coming through it's in the blockchain but nothing. Very annoying.  0.004 is $10 wtf. That's just under 30% of what I'm sending.

[eaLiTy]

I agree hundred percent with coolcoinz, it is not that simple as they sound,there is conversion charges for sending the coins and then there is transactions charges they are entirely different and people are crying about the fact that bitcoin fees have increased and mircro transactions are not possible,yes the days of micro transactions are over for good and now,it can be viewed as a total package of asset class to safe guard your assets with full control over it,i personally would like to see the old bitcoin days back where claiming from faucet was a good thing and the transaction charges are lower,things move on and i changed accordingly.

[erikalui]

PayPal fees have become relatively less compared to bitcoins. I am paying 0.0015 fixed fee for all my transactions irrespective of the amount which makes it very expensive to trade in BTC. BU/SegWit were trying to work on this issue but till now there has not been any updates. We need to have a solution for the transaction blocks so that more transactions could be added and confirmed faster with low fee to be paid but now everything is in the hand of the miners for which we need to pay over 300-400 sats/byte for a transaction to get confirmed or rely on viabtc. Also, spam transactions should be directly dropped from the network.

[iluvpie60]

Paypal charges you a fee for using their services. All sellers who go through ebay or paypal have to pay somewhere around 2.9%.

While.it is true you can send money to others on paypal for free, that isnt the same thing as bitcoin. Using paypal uses worthless and inflationary USD. Bitcoin in long term would be better.

[richardsNY]

While.it is true you can send money to others on paypal for free, that isnt the same thing as bitcoin. Using paypal uses worthless and inflationary USD. Bitcoin in long term would be better.

Main point of importance is that PayPal gets the job done properly, instantly, for free, and that isn't something that goes up for Bitcoin currently. People are looking for convenience, certain form of security when it comes to purchases, a wide level of acceptance -- that's something PayPal is doing exceptionally well. It's pointless to deny that just because you have a bias towards Bitcoin....

[pawel7777]

I remember that back when Bitcoin was starting to get attention, one of the key arguments against eg Paypal was that you could transfer your money without paying any fee (and yes, the tx didn't get stuck). But now the network has reached the point where transaction fees are sometimes higher than Paypal or similar. Even worse, if you managed to collect a lot of Satoshis from various faucets or such, you have only accumulated so-called dust and are practically told to forget about it.
...

For starters, promoting Bitcoin as a free way of transferring wealth was always a stretch. By design, transactions are not meant to be free. But I guess that was appealing to masses and people got carried away in promoting BTC this way.

Right now Bitcoin is far more expensive (and slower) on average than PayPal (with free non-purchase transfers in the same currency). But the biggest selling point was/is decentralisation and freedom from censorship - you're in full control of your own funds and can send them to whoever you want anywhere in the world.

Despite what some people think, insanely high txs fees are the issue and something will have to be done or Bitcoin will get replaced, that's how free market works. Hopefully we'll see SegWit + 2mb blocks in near future (as per NY agreement), not a pretty solution, but at least it breaks the stalemate.

...
What about:
1. Increase blocksize so that more transactions can be included into a block to lower fees. Why isn't that done?
...

There are literally hundreds of threads in this forum alone regarding this subject, don't start another one, do some research.

I don't think the fees are higher than PayPal's when it comes to overseas transfers + currency exchange. I'm an EU citizen and remember receiving some cash from a friend in the USA and it included normal overseas transfer + conversion to Euro, and it costed me about €20. Me, because my friend didn't even know it's going to consume so much, so he sent a full sum and when I got it it, the fees were deducted from the sent amount and I got much less than I had expected.
...

Paypal rips you off on currency conversion, but if you want to be fair in comparing PayPal Vs BTC, you should compare cost of sending bitcoins + cost of converting BTC to fiat, which also doesn't look very good in most cases.

[ekoice]

I don't even understand what is going on. I sent 0.015 btc and paid close to 0.004 fee and still I wait after weeks. Yobit days it's coming through it's in the blockchain but nothing. Very annoying.  0.004 is $10 wtf. That's just under 30% of what I'm sending.

Heavy transaction fees is becoming a great issue in bitcoin.I too had suffered for even ten days before getting confirmed.But still,transaction fee is less compared to other payment options like paypal,etc.

[Kakmakr]

I had something similar happen to me, when I took my Coin Jar to the bank. It contained $300 worth of small change. The bank charged me $23 handling fees, because they had to count it. < Over the counter transactions in my country is very expensive > So this is not a Bitcoin problem only. ^hmmmmm^

If you used faucets linked to Xapo, you would not have had that problem. All off-chain "dust" transactions in Xapo is free, and you just pay miners fees, when you withdraw from these services. < The withdraw is basically a on-chain transaction >

Fees will come down after the Lightning network or something similar is introduced. ^smile^

[TGJJ]

One of the main unique selling points of btc is now  massive liability, and has been for years.

Its rendered btc useless for most commerce transactions, as the majority of transactions made in business are small

[deisik]

One of the main unique selling points of btc is now  massive liability, and has been for years.

Its rendered btc useless for most commerce transactions, as the majority of transactions made in business are small

I don't really know how true is this claim

But it is certainly not the primary reason why Bitcoin is mostly useless for commerce right now. It may play a certain role of course, but it is surely not the most important one. After all, merchants could just open their checking accounts in any reputable and reliable web wallet out there like Xapo or Coinbase and then start receiving payments to these wallets off-chain (from other such wallets), and thus break free from limitations imposed by high and higher transaction fees (if they were really interested in accepting Bitcoin as a means of payment in the first place)

[mayax]

I don't even understand what is going on. I sent 0.015 btc and paid close to 0.004 fee and still I wait after weeks. Yobit days it's coming through it's in the blockchain but nothing. Very annoying.  0.004 is $10 wtf. That's just under 30% of what I'm sending.

Heavy transaction fees is becoming a great issue in bitcoin.I too had suffered for even ten days before getting confirmed.But still,transaction fee is less compared to other payment options like paypal,etc.

why do you still use BTC while other e-currencies are MUCH cheaper?

[FrankS]

If several hundred people send one cent to your traditional bank account, you have a few dollars. The bank won't tell you to forget about that money because it came in as cents.

That's misleading.  With PayPal for example, if you sell goods or services you have to accept a 3.4% + 20p fee for it, which makes all payments below 20p useless and all transactions below about £1/$1 impractical to take, or "dust".

That's why I said traditional bank account. Paypal has always been rather greedy imho so it was a good target for "fee-free" Bitcoin.

What about:
1. Increase blocksize so that more transactions can be included into a block to lower fees. Why isn't that done?

There's a lot of argument about that.  Some people argue that it would increase the cost of running full nodes too much, eventually leading to centralisation and thus leaving nodes too public and/or prone to attack.  I don't particularly agree with this for small increases, but I can see the argument that it's a "slippery slope" of sorts.

It will grow nevertheless constantly, unless someone comes up with a smart idea to reduce size. On the other hand, storage space gets cheaper. It will just get more annoying to copy and/or do a fresh restart.

I don't think the fees are higher than PayPal's when it comes to overseas transfers + currency exchange. I'm an EU citizen and remember receiving some cash from a friend in the USA and it included normal overseas transfer + conversion to Euro, and it costed me about €20. Me, because my friend didn't even know it's going to consume so much, so he sent a full sum and when I got it it, the fees were deducted from the sent amount and I got much less than I had expected.
Bitcoin is much cheaper and you immediately know how much you're sending. Also the fees are paid by the sender, not deducted from the money being sent.

Just went to blockchain.info and took a look at the latest blocks and picked the USD values of some random transactions:

Code:

Amount  Fee     Ratio   Transaction-ID
 1,24   0,17    13,7%   7637e4cb225fbe5d549fb544e18ffcbd51267a46e3451eb7dafef25e3b3c60c4
22,04   3,07    13,9%   331f9bab79acf9489a6834a0f2b0c9c41f6f6153607d3ff75c5647c2a0839199
28,69   7,11    24,8%   c22624bb677b630a5635777860dee67bfa2bc321e64d784e416b1d898a934e6d
 2,19   2,92   133,3%   8c9a3646533c9141581c9ca15d82c94d2a1ad6b6b1b2ce981c99793c9138bc74
14,55   2,68    18,4%   1c0fdecbc5de6a2725d1b1ee4c9c6c5c58bd332962187bb6893cb825514d5f6b

Currency exchange aside, it's hard to explain those fees to average Joe; and he won't consider those amounts as dust either. With this, it won't be interesting for end-user and merchant adoption. Bitcoin will turn into a trading currency for people with bigger funds. Transactions need to stay below eg Paypal's fees to stay competitive. Milking users now will bring everything downhill.

Right now Bitcoin is far more expensive (and slower) on average than PayPal (with free non-purchase transfers in the same currency). But the biggest selling point was/is decentralisation and freedom from censorship - you're in full control of your own funds and can send them to whoever you want anywhere in the world.

In the long run even Bitcoin will centralize. People want convenience sadly, that's why webbased wallets are successful. They can easily drop fees for "inhouse" transactions and brake traceability in the blockchain.

[kamina87]

I also think that the current Bitcoin transaction fee is really high and I feel this will hinder future Bitcoin

[1Referee]

why do you still use BTC while other e-currencies are MUCH cheaper?

I have seen a large number of people 'threatening' to switch over to altcoins because they offer faster and cheaper confirmations, but these people are not backing up their words by any actions. It's just an empty threat. The reason that most of the altcoins offer faster and cheaper confirmations, is that their networks barely enjoy any sort of significant usage, like is the case with Bitcoin. Just look at what happened with Ethereum. Ether has been facing some serious network difficulties, as it couldn't cope with the increased demand. In other words, every altcoin that at some point ends up experiencing a decent bit of usage, will go through the same difficulties. People however don't seem to realize this.

[Renji Abarai]

why do you still use BTC while other e-currencies are MUCH cheaper?

I have seen a large number of people 'threatening' to switch over to altcoins because they offer faster and cheaper confirmations, but these people are not backing up their words by any actions. It's just an empty threat. The reason that most of the altcoins offer faster and cheaper confirmations, is that their networks barely enjoy any sort of significant usage, like is the case with Bitcoin. Just look at what happened with Ethereum. Ether has been facing some serious network difficulties, as it couldn't cope with the increased demand. In other words, every altcoin that at some point ends up experiencing a decent bit of usage, will go through the same difficulties. People however don't seem to realize this.

That is true sir. Some are hating bitcoin because of this speed but is it really a good alternative? Maybe like in other altcoins, its faster but when it has many user, will it be the same? Its correct also regarding with Ethereum, that is why some ICO's are moving to waves since it is still new. Transaction fees in bitcoin is affordable. If you are in hurry, then you can increase the fees its understand. There is also standard fees but of course, you have to wait until your turn to be processed.

[mackenzied]

I remember that back when Bitcoin was starting to get attention, one of the key arguments against eg Paypal was that you could transfer your money without paying any fee (and yes, the tx didn't get stuck). But now the network has reached the point where transaction fees are sometimes higher than Paypal or similar. Even worse, if you managed to collect a lot of Satoshis from various faucets or such, you have only accumulated so-called dust and are practically told to forget about it.

What's a solution for that? How would you explain to average John Doe that his efforts to collect Satoshis were useless? If several hundred people send one cent to your traditional bank account, you have a few dollars. The bank won't tell you to forget about that money because it came in as cents.

What about:
1. Increase blocksize so that more transactions can be included into a block to lower fees. Why isn't that done?
2. Transactions where all input addresses are the same as the output address are identical could be free to allow combining dust.
3. Transactions with low/no fees should be included if the sender is willing to wait long enough, like 2 weeks, or a month.
4. Low/no fee transactions could require extra work on the clientside so that spam attacks are not feasible (like a few mins requiring 100% CPU).

That's right, what you put out is really accurate, but it's in the past, when bitcoins are still uncommon and it carries a low value. However, when too many people use bitcoin, it becomes slow and costs more.