Transaction Cost Problem

[mda]

This is the time where there are way many transactions then the number of mining pools to handle . I hope the team is working to build some more pools to divide the mining load .   

https://bitcointalk.org/index.php?topic=2381234.0

[DannyHamilton]

Check your math.  You seem to have made an error in that calculation.
That electricity is being used for much more than just "confirming a single transaction".

Do you mean in the philosophical sense?

If the actual, it's not too far off. Rounding some numbers:

Current network hash rate = 13.4 EH/s
13.4 EH / 14 TH per S9 = 960K units
960K * 1.4 KWatt = 1.34 GWatt
Average block time = 1/6 hours
Average transactions per block = 3000

1.34 GWh / 6 / 3000 = 74 kWh.

I assume not everyone uses the S9, so let's add 25% to get 90 kWh/tx.

When a miner adds a block to the blockchain, it doesn't ONLY add 1 confirmation to the transactions in their block.  It ALSO adds 1 confirmation to every transaction in the blockchain.

New transactions are only possible because the earlier transactions are immutable.  The earlier transactions are only immutable because of the continuing proof-of-work process.  This is why empty blocks are still valuable and useful.  The electricity being used is sustaining an international permissionless trustless immutable decentralized record keeping system.  It is securing every transaction that has ever happened, and making possible all future transactions that ever may happen.

So, if you want to use:
Average transactions per block = 3000

Then to be intellectually honest about it, at a minimum, you need to also use:
Total number of blocks in the blockchain: 499273 (as I'm typing this)

Therefore the electricity used should be divided by 3000 X 499273  and not just by 3000.

[Anti-Cen]

You can "stand by your numbers" as much as you want.  It won't make them correct.

I like people that question what they are told by the mejia and i fit into this group myself because I think that the block-chain solved a few
problems but created many more which as a developer I have been saying for about a year and now it looks like i am being proved right.

Then to be intellectually honest about it, at a minimum, you need to also use:
Total number of blocks in the blockchain: 499273 (as I'm typing this)

But when BTC was a mere $0.15 then it was more or less just a test network used by students so your theory is not valid since we are talking about prices today
were volumes and winning prizes are much, much higher

Trying to work out an actual number for the cost of producing one BTC must be a guestimated number since the number of nodes will go up or down
but i see no reason to argue with the many, many sites that put the number between $1k-2k in energy alone and not all the sites saying this
are working for green-peace or seem to have a vested interest in BTC

[mmhaimhai]

Haven't heard clear solution in process when it comes to transaction fee specially on bitcoins but what I observed transaction fee seems like pumping together with btc lol. Currently my wallet is charging me around 40$ for single transaction reagardless the amount of transaction so it really sucks but my own temporary solution so it won't be much burden in my part I always leave btc balance in my poloniex account so if I need to make btc transaction like sending fund to other wallet it only cost me 10k sats or around 1$.

[1NV3ST0NM3]

The current satoshis needed per byte to make a normal transaction successful is around 293 which give around $10 for an average transaction.
The high fee is an issue which everybody is pissed of. Bitcoin is not meant for any micro payments at the moment. Although it will be done in the future with the help of the lightning network it is just a waste of money to spend high fees on micro transactions. It is better to avoid small transactions and just hold the BTC until the lightning network is fully established. The development is going with a successful testing recently. I think people should stand together and join hands towards the development of BTC. Why should just a small group of people do all the hardwork and let the other enjoy it's benefits.

All these things are reducing the daily usage of BTC I think its becoming even costly for the campaign and bounty managers to pay off their participants. Considering the lightning network what if people or miners continue to oppose it? in search of hefty fees which could earn them more money? We saw very much the same thing with segwit2x. If we want to see btc as a mode of settlement it should send small amounts with relatively less fees.

[Swoshinima]

Due to I don't want to pay 15$ or more for one transaction, I preferred to change btc into eth before sending, but of the cryptokitties this is not a good idea nowadays, so I have to look for other coins which are supported by most of the exchanges and have low fees.

[jnano]

Then to be intellectually honest about it, at a minimum, you need to also use:
Total number of blocks in the blockchain: 499273 (as I'm typing this)

Okay, so you did mean in the more philosophical sense. In that case, the problem with the current system versus traditional ones is that maintaining the historical ledger has high continuous power requirements. And potentially the requirements increase over time, although they might plateau at some point.

[Anti-Cen]

Due to I don't want to pay 15$ or more for one transaction, I preferred to change btc into eth before sending, but of the cryptokitties this is not a good idea nowadays, so I have to look for other coins which are supported by most of the exchanges and have low fees.

The poor guy two up has been forced to pay $40 for a transaction and anything over $0.60 in my book is high and that's much more than
what it cost on the BTC network back in Jan of this year.

I think they have a test rig for using the Lightning Network up and running but BTC for years worked just fine until recent times so I
am sure the tests might produce good results but I am not alone when I see trouble with a two tear system where one is using channels
and the other is not.

Myself being a small time gambler it does not make me nervous to see a radical re-write of the whole system from start to end
but it does a lot of people around here and lets face it something radical about these transactions fees is going have to be done and done quite soon

P2P without brokers and a real decentralized system of miners where ten big names don't control 90% of the market is needed and we must
also cover micro-transactions in a much more efficient way than putting everything on this magical thing called the block-chain because that's become
what programmers call "Blocking" due to the size of the 200gb database and having to access leaf data from hundreds of leafs to workout ownership of each part of
a coin

[DannyHamilton]

Then to be intellectually honest about it, at a minimum, you need to also use:
Total number of blocks in the blockchain: 499273 (as I'm typing this)

Okay, so you did mean in the more philosophical sense. In that case, the problem with the current system versus traditional ones is that maintaining the historical ledger has high continuous power requirements. And potentially the requirements increase over time, although they might plateau at some point.

And how does that compare to the costs of operating all the banking buildings in the world?  All the banking employees?  All the vaults, safes, and armored cars?  All the payment processing systems? The production of all the currency? All the forces necessary to protect, regulate, and enforce that system?

This is my point.

People are looking at the entire cost of everything necessary to keep the bitcoin system running, and dividing it by the number of transactions in a single block.  That is not a reasonable way to do it if you want to compare to the "traditional system".

[jnano]

I do not know. It would be interesting to find out, assuming someone has ever attempted to estimate it.

Traditional banking with clerks and all that indeed seems wasteful, though they are transitioning more and more to the internet. But the scope of traditional banking is currently wider than what Bitcoin does.

But I agree with what started this thread: transactions costs are too high. And I mean the baseline network fees, not even talking about the artificially high fees of exchanges and web wallets.

[dogandogru]

Currently Transaction fees is about 323sat/byte which is too high to make transaction.
Lightning network is the only solution to this problem, it helps you make Scalable, Instant Bitcoin/Blockchain Transactions.

[TechPriest]

Currently Transaction fees is about 323sat/byte which is too high to make transaction.
Lightning network is the only solution to this problem, it helps you make Scalable, Instant Bitcoin/Blockchain Transactions.

LN don't do "instant blockchain transcations". 'Cause it works out "blockchain". Only genesis (open channel) and final (closing channel) transactions will be written into blockchain.

[jksmds]

There is a simple solution to High transaction fee.

Just create a Tether like coin for BTC,  like BTCS.

Exchange 10000 BTCS with BTC. Each BTCS would be always be worth of 10000 Satoshi.
Whatever amount of BTCS issued, maintain a public wallet, with exact equivalent value to BTC.

People will do micro transactions in BTCS.  This will reduce load on BTC, and make it faster too.

[lucianus_luciferus]

how about we make the transaction fee a fixed percentage of the transaction value? like 1% 

[drwhobox]

The block is too small to cover a lot of transactions but still more and more transactions with higher fees goes in the blockchain = increase of regular speed for fees.
there is a thing called the lightning network which is something that may speed up the transaction speed and lower the fees I think they are using smart contract.

Bitcoin is not really for small transactions at this moment. i think that as time goes the higher and higher fee.

[Stedsm]

The block is too small to cover a lot of transactions but still more and more transactions with higher fees goes in the blockchain = increase of regular speed for fees.
there is a thing called the lightning network which is something that may speed up the transaction speed and lower the fees I think they are using smart contract.

Bitcoin is not really for small transactions at this moment. i think that as time goes the higher and higher fee.

I doubt that the fee will remain higher all the time, because there are developers who may urge the miners to stop their monopolies and start taking low-fee transactions into the block (Someone please correct me here if I'm wrong) as I think that pools have the ability to choose what fee/byte transactions they are interested in involving into their block. Just as the price is breaking records, so are there the unconfirmed transactions. This debate is not going to end anytime soon, but I believe that as the miners came up with and agreed to SegWit, they will possibly hear to the concerns and help out the community if they are interested for the better of Bitcoins.

P.S.: To those thinking of doing micro-transactions, try to use exchanges and sell your coins for alts and then sell those alts to traders as it will save you a lot of fee. I recently sold my BTC and bought QTUM, sold QTUM to a mediator who sold them to a trader and gave me the money. I saved more than $13 as fee on this transaction as the fee I was being asked to pay was 0.001 BTC, and when I sold QTUM and sent it to the escrow's address, it charged me only 1k satoshis, see the difference.

[Capable123]

The issue with forcing low transaction fees is it will make the network prone to 51% attack. Why? As we all know, there is a finite number of coins. Once all coins are mined, the only financial benefit to miners will be transaction fees. If you force low fees, then it won’t be beneficial for miners to keep running, many would stop - it wouldn’t make sense if you’re losing money. If the mining pool is decreased then the likelihood of a 51% attack increases substantially.

Additionally, regardless is the cost of running the LN to reduce fees. The LN just doesn’t seem practical to me. I actually experienced a real world example of how this would work. I had the option to put away $5,000 to spend solely on health care related purchases, however, this required me to put the money in a separate account to use strictly with a small subset of items. This is how the LN is built, you would need to store say $100 in the Channel with your coffee shop, and only use that money for that merchant. Something I’m certainly less included to due when it’s micro purchases, yet alone health care purchases.

[Joyalice]

The transaction cost is not a problem for the moment. People invest in bitcoins because it's the king of the cryptos not because they will be able to buy things with bitcoin or because they want to share money. They have bitcoin because it's an investment. Like gold or silver. I think that later with the work of the team transcations will be cheaper and faster.

[JTEN18]

The transaction cost is not a problem for the moment. People invest in bitcoins because it's the king of the cryptos not because they will be able to buy things with bitcoin or because they want to share money. They have bitcoin because it's an investment. Like gold or silver. I think that later with the work of the team transcations will be cheaper and faster.

If there is already many exchanges/ miners to confirm our transaction it could be possible that we will have a cheap transaction fee. Of course we are encountering high fee now because we have high value of bitcoin so the rate or the basis also goes up as well us it was also depending on the number of volumes of the exchanges.

[AGD]

Then to be intellectually honest about it, at a minimum, you need to also use:
Total number of blocks in the blockchain: 499273 (as I'm typing this)

Okay, so you did mean in the more philosophical sense. In that case, the problem with the current system versus traditional ones is that maintaining the historical ledger has high continuous power requirements. And potentially the requirements increase over time, although they might plateau at some point.

And how does that compare to the costs of operating all the banking buildings in the world?  All the banking employees?  All the vaults, safes, and armored cars?  All the payment processing systems? The production of all the currency? All the forces necessary to protect, regulate, and enforce that system?

This is my point.

People are looking at the entire cost of everything necessary to keep the bitcoin system running, and dividing it by the number of transactions in a single block.  That is not a reasonable way to do it if you want to compare to the "traditional system".

This is a great misconception about Bitcoin, that a lot of people are suffering. I think this should be a sticky here and on bitcoin.org, also because I am tired to explain this over and over again.