[2018-01-19] Op-Ed: Bitcoin’s High Fees are Forcing Companies to Optimize

[lemonte]

There have been quite a few proposals to raise Bitcoin’s block size limit by way of a hard fork over the past three years, but none of them were able to gain consensus among the nodes on the network. The key selling point of such an increase to the block size limit has always been the idea that an increase in the supply of block space will lead to lower transaction fees and the ability for the network to process more transactions per second, but the current congestion seen on the Bitcoin network has actually had a positive impact in terms of the forced optimization of companies’ interactions with the blockchain.

While higher transaction fees have undoubtedly priced out some low-value use cases of Bitcoin block space, the optimizations being implemented by bitcoin custodians and wallet providers should help the cryptoasset network retain its core value proposition of decentralized, censorship-resistant digital money over the long term.

https://coinjournal.net/op-ed-bitcoins-high-fees-forcing-companies-optimize-interactions-blockchain-thats-good-thing/

[hatshepsut93]

One could say that we actually have high fees because companies don't optimize their transactions - they don't use "pay to many", aka batching, they don't use SegWit, they use horrible fee estimation algorithms that sometimes overpay 5-10 times more than necessary, some use addresses with uncompressed public keys, and so on. If everyone took an effort to optimize their own transactions, we would probably have just a $2-3 fees today, but those companies don't bother, because most of the time they are not paying those fees, their customers do.

[Kprawn]

This is soon going to be a non-issue, because the Lightning Network will solve all those issues. These companies can start by

implementing SegWit in preparation for the Lightning Network. They can also start to look at Lightning-charge as the first

step to implement the Lightning Network. 

[hv_]

But what if lots of other alternatives (like BCH) are quicker to impl and cheaper? LN is far from ready and lots of risk analyst say it will be more centralized and carries too much systemic and operational risks ! Havn't you checked what even P. Todd's tweeded lately?

[BitHodler]

But what if lots of other alternatives (like BCH) are quicker to impl and cheaper? LN is far from ready and lots of risk analyst say it will be more centralized and carries too much systemic and operational risks ! Havn't you checked what even P. Todd's tweeded lately?

Regardless of other altcoins being faster and cheaper, nothing comes even close to how secure and strong Bitcoin's network is. For noobs it may not seem like a big deal, but for those who look further it definitely is.

Those who care have no problems with waiting for everything to get ready. People want to make use of Bitcoin in each and every aspect, and not use altcoins instead.

Altcoins function as speculative investment options only, and that definitely shows. If people weren't willing to pay and wait for Bitcoin, it would be clear by now in the way that Bitcoin would slowly deflate like a balloon.

[hv_]

But what if lots of other alternatives (like BCH) are quicker to impl and cheaper? LN is far from ready and lots of risk analyst say it will be more centralized and carries too much systemic and operational risks ! Havn't you checked what even P. Todd's tweeded lately?

Regardless of other altcoins being faster and cheaper, nothing comes even close to how secure and strong Bitcoin's network is. For noobs it may not seem like a big deal, but for those who look further it definitely is.

Those who care have no problems with waiting for everything to get ready. People want to make use of Bitcoin in each and every aspect, and not use altcoins instead.

Altcoins function as speculative investment options only, and that definitely shows. If people weren't willing to pay and wait for Bitcoin, it would be clear by now in the way that Bitcoin would slowly deflate like a balloon.

Sure. But how if lot's of noobs already have been tricked into less secure SW + LN ?

It is only about hashpower that might move finally.

[squatter]

The key selling point of such an increase to the block size limit has always been the idea that an increase in the supply of block space will lead to lower transaction fees and the ability for the network to process more transactions per second, but the current congestion seen on the Bitcoin network has actually had a positive impact in terms of the forced optimization of companies’ interactions with the blockchain.

This was one of the original (and strongest) arguments against XT, Classic, Unlimited, et al. If we simply increased the block size every time demand warranted it, services/custodians (and users) would never optimize their transactions. They would simply get used to increasing block size instead.

This is soon going to be a non-issue, because the Lightning Network will solve all those issues. These companies can start byimplementing SegWit in preparation for the Lightning Network.

Segwit and Lightning aren't going to solve Coinbase's fractured UTXO set. And I suspect that's one of the reasons they've long supported hard forks. And we have to factor in onboarding costs as well (opening and closing channels). It's a bit early to say Lightning "will solve all those issues." On-chain transaction demand will only increase, so on-chain transaction optimization is going to remain extremely important going forward.