Alright, so today I was writing a piece of code integrating BTC into my "Business" and I realized a huge flaw with use of BTC economically. Please prove me wrong.
Let us take a small business named Juice4Days that sells cups of orange juice to customers. Each cup is worth 2$ according to BTC/USD exchange rate. Let us also estimate that Juice4Days sells 20 cups of orange juice each day (using only BTC of course). If we assume that BTC/USD exchange rate stays the same, Juice4Days accumulates $14600 in one year on their
single BTC address. In one year, the owner of Juice4Days, Chad, decides to send total revenue to his other address for safe keeping. This is where Chad stumbles upon a huge problem:
If we assume that each cup sold was added to Juice4Days BTC address as an input carrying approximately 180bytes of data, we get that the overall size of Chads transaction to his safe keeping address will be 180Bytes x 7300Cups = 1314000 Bytes. According to bitcoinfees.earn.com "The fastest and cheapest transaction fee is currently 0.0000023 BTC/byte", this means that Chad will have to pay 1314000 x 0.0000023 = 3.0222BTC for his transaction.
Chad will have to pay more in transaction Fees than he has made selling his amazing orange juice.
Where did Chad go wrong?
Please explain to me, I really want to know how Chad could have improved his system to minimize transaction fees.
P.S Even if Chad pays the lowest possible transaction fee per byte he still has to pay 1236.00 US Dollars. Add to that the possibility that his transaction may never get confirmed.
Chad went wrong by doing two things. First of all, he is using an uncompressed public key. Secondly, he is not using Segwit.
Using a compressed public key itself will reduce the size of each input to 148 bytes.
Using segwit will reduce that even further. A normal P2PKH input with compressed pubkey will be 592 Weight units. With P2SH nested segwit, the input will only be 243 weight units. So with your fee rate of 58 satoshis per weight unit (230 sat/byte is 57.5 sat/weight unit), Chad would only have to pay 1773900*58=102886200 satoshis = 1.02886200 BTC, one third of what you calculated earlier. At the current market rate, he would still be making a profit.
Furthermore, Chad could also wait for the Lightning network to be deployed. If the majority of his customers used the Lightning network and were repeat buyers or routed payments through other lightning network nodes so overall he would have to make very few and small transactions.
Alternatively Chad could also pay a very low fee rate and just wait a long time. If he does not need the money urgently and instead consolidates outputs periodically at a very low fee rate, he would have to pay way less in fees.
