Miner's fee a barrier to mass adoption

[histman]

Danny, if there is a way for the fee to be added, via the technology, so that when I send the BTC I cannot choose to not add the fee, then I will be happy to stand corrected.  I know that with blockchain.info I can choose not to add it.  It is entirely up to me, and if I say no, then it doesn't happen.  The person receiving the BTC has no say in it.  Maybe I am wrong, but I don't think that I am.  They can choose to not give me what I paid for until confirmation, but that is all.

Also, with Blockchain.info unconfirmed transactions get cancelled after 24 hours.

Thus, if I were to use that wallet to buy something at a store I could not pay the fee and I *might* get a free lunch. 

Zero confirmations is definitely not instant under these circumstances.  Zero confirmations simply means that the transaction may go through, and with no miner's fee paid there is a good chance it won't.

[bobitza]

... Or the merchant eats the fee by subtracting it from the transaction amount.  My guess is that it will evolve to the merchant eating the fee since that is how other payment systems work now.

That's the simplest and easiest way. The price of the good/service already "includes" the tx fee and the buyer won't know the difference. Just like it is now ... nothing changes.

[wtfvanity]

The current fee of 0.0001 is about less than 2 US cents.

Merchants don't need to insist on a fee. But merchants will insist on a confirmation.

Emphasis mine. Why did everyone skip over the answer? Merchants could give a rats ass about the fee, a big fee, little fee, whatever. They just need to know that the network accepted the transaction, be it 6 or even just 1 confirmation. How many sites do you see that accept 0 confirmations and let you get something out of them with the chance of your OP scenario?

[DannyHamilton]

Danny, if there is a way for the fee to be added, via the technology, so that when I send the BTC I cannot choose to not add the fee, then I will be happy to stand corrected.

Read about:

"Child-pays-for-parent"

and

"replace-by-fee"

with Blockchain.info unconfirmed transactions get cancelled after 24 hours.

This is not true.  It is not possible to "cancel" a transaction after you send it.  You can stop broadcasting it and hope that all the existing peers will drop it from their memory pools, but the receiver can continue to re-broadcast it forever without your permission.

Zero confirmations is definitely not instant under these circumstances.  Zero confirmations simply means that the transaction may go through, and with no miner's fee paid there is a good chance it won't.

This doesn't sound any different than a credit card or PayPal transaction?


Bitcoin is still in its infancy.  There is SO MUCH more development and innovation that will come in the future.

You are basing your opinion on the only ways you are aware of currently to make bitcoin based transactions.  I think if you come back here and re-read your thoughts in 10 years, you will be surprised and perhaps feel a bit foolish.

Imagine internet users in the early days (when TCP/IP was less than 5 years old) trying to picture what the internet would be like today.

[countryfree]

Fees are everywhere. You buy some groceries and you pay with your Visa, and Visa will collect a fee (paid by the merchant). And you paid first to get the Visa card. Paypal is quite successful and it charges much higher fees than BTC.

Maybe it would help if we hide the fee. Let's say you buy something for 10BTC, and you will pay that amount but the invoice will show that you've paid 9.995 for the product and a 0.005 fee. The software could work like this, instead of adding the fee, it could deduct it from the sum to send.

The only trouble is that the fee can vary according to the weight of the transaction. This could be a serious issue if your BTC has some dust in it.

[MAbtc]

Finding a solution for those two problems may not be necessary for mass adoption. Bitcoin is not well suited for face-to-face transactions because you have to wait for a confirmation. It is not also suited for small transactions where a few cents matters. That's just the reality. It doesn't mean that bitcoin is not useful to anyone.

Some merchants do zero-confirmation transactions..... the last bitpay invoice I paid cleared the second I sent, so I'm sure it was zero-confirmation. I wonder what the percentage rate of zero-confirmation transactions that are received and then rejected by the blockchain? Anyone know?

[odolvlobo]

Danny, if there is a way for the fee to be added, via the technology, so that when I send the BTC I cannot choose to not add the fee, then I will be happy to stand corrected.  I know that with blockchain.info I can choose not to add it.  It is entirely up to me, and if I say no, then it doesn't happen.  The person receiving the BTC has no say in it.  Maybe I am wrong, but I don't think that I am.  They can choose to not give me what I paid for until confirmation, but that is all.
Also, with Blockchain.info unconfirmed transactions get cancelled after 24 hours.
Thus, if I were to use that wallet to buy something at a store I could not pay the fee and I *might* get a free lunch.  
Zero confirmations is definitely not instant under these circumstances.  Zero confirmations simply means that the transaction may go through, and with no miner's fee paid there is a good chance it won't.

Nobody is denying that 0 confirmations is susceptible to fraud.

0 confirmations can be instant if the buyer sends the transaction through the sellers network, so that the seller can see the transaction.

Also, the seller can simply accept that the buyer has paid without proof. There are examples where trust is a reasonable risk. All of my direct bitcoin sales are 0 confirmation, and some people don't even bother to wait to see the transaction on the network.

[histman]

Danny, if there is a way for the fee to be added, via the technology, so that when I send the BTC I cannot choose to not add the fee, then I will be happy to stand corrected.  I know that with blockchain.info I can choose not to add it.  It is entirely up to me, and if I say no, then it doesn't happen.  The person receiving the BTC has no say in it.  Maybe I am wrong, but I don't think that I am.  They can choose to not give me what I paid for until confirmation, but that is all.
Also, with Blockchain.info unconfirmed transactions get cancelled after 24 hours.
Thus, if I were to use that wallet to buy something at a store I could not pay the fee and I *might* get a free lunch.  
Zero confirmations is definitely not instant under these circumstances.  Zero confirmations simply means that the transaction may go through, and with no miner's fee paid there is a good chance it won't.

Nobody is denying that 0 confirmations is susceptible to fraud.

0 confirmations can be instant if the buyer sends the transaction through the sellers network, so that the seller can see the transaction.

Also, the seller can simply accept that the buyer has paid without proof. There are examples where trust is a reasonable risk. All of my direct bitcoin sales are 0 confirmation, and some people don't even bother to wait to see the transaction on the network.

I know that if you try to send from Blockchain.info without a miner's fee you get a warning that if there are zero confirmations after 24 hours it will no longer be sent.  Danny, try for yourself if you don't believe me.

As for acceptable risk, tell the average Wal-Mart shopper that not sending a miner's fee may lead to them getting to keep their money and see how many choose to pay the fee.  Yes, there is an acceptable level of risk, and then there is mass exodus from miner's fees.

[DannyHamilton]

I know that if you try to send from Blockchain.info without a miner's fee you get a warning that if there are zero confirmations after 24 hours it will no longer be sent.  Danny, try for yourself if you don't believe me.

I know how blockchain.info works, I also know how the bitcoin protocol works.  You appear to only be aware of one of those two things.

As for acceptable risk, tell the average Wal-Mart shopper that not sending a miner's fee may lead to them getting to keep their money and see how many choose to pay the fee.

Tell the average Wal-mart shopper that they can report their credit card stolen, or pass a bad check, or manufacture some fake U.S. currency, or simply walk out with the merchandise without first paying for it and get to keep their money.  What's the difference?  Fraud is fraud, doesn't matter if it's with credit cards, counterfeit cash, paypal, checks, or bitcoin.

[RoadToHell]

I think that sellers of physical items that will be shipped would not mention the confirmation cycle.  They can simply hold shipment until they see the desired number of confirmations.  To the every-day honest buyer it will look the same as any CC purchase does now.  For downloadable digital purchases, it seems that the merchant would be best served by establishing a download queue.  They would show the user something like this: After you click "Confirm" your purchase will be available in your download queue in a few minutes. (click here to see why).  Then they move it to the download queue after they see the desired number of confirmations.

I think it all depends on the items being purchased and other circumstances specific to each industry and seller.

[tclo]

I understand ....  I know that blockchain.info will put it back in my account after 24 hours if it isn't confirmed.  Thus, merchants may refuse to take BTC fearing these types of "charge backs."

No you clearly don't understand and your facts are wrong.

[msc]

By "eat" the fee, I just meant "hide" the fee.  Just like merchants currently do with credit cards and paypal.  And the main reason it would be appealing to do this is because customers are not used to the idea that they are paying a fee when they use credit cards now. 

It's appealing, but it's not how Bitcoin clients work.  If the merchant charges you 1.0, you pay 1.0001 out of your wallet.  If they charge you 0.9999, you pay 1.0 out of your wallet. 

If you wanted the merchant to pay the fee and hide it from the customer, there would have to be more communication between the merchant and the Bitcoin client, which seems silly to me.

[RoadToHell]

By "eat" the fee, I just meant "hide" the fee.  Just like merchants currently do with credit cards and paypal.  And the main reason it would be appealing to do this is because customers are not used to the idea that they are paying a fee when they use credit cards now. 

It's appealing, but it's not how Bitcoin clients work.  If the merchant charges you 1.0, you pay 1.0001 out of your wallet.  If they charge you 0.9999, you pay 1.0 out of your wallet. 

If you wanted the merchant to pay the fee and hide it from the customer, there would have to be more communication between the merchant and the Bitcoin client, which seems silly to me.

yea - I realized that after I posted it.

Maybe this is something that needs to go into the payments protocol discussions.  (maybe it's already in there?)

[Marbit]

i don't see this being that much of a problem, but maybe i am missing something. 

[neilol]

You already pay a fee to use your current banking system, it is just hidden (and for this reason can be much larger in without you noticing).

If you have ever: paid for a product from your bank (insurance, 'premium' account etc) then this is subsidising your fees. Not to mention, if you have ever had any kind of penalty fee (late repayment of credit, 'charge' for using abroad etc etc) then again these kind of things cover your transaction fees.

Do you really think that banks just operate to provide you with a free service? Get real.

Only the most concientious of consumers can operate a high street bank without incurring any fees, by never going overdrawn or using any other services other than current accounts/deposits never incur any additional fees, but this is still OK for the bank, as this usually means that you have enough money deposited there that they are able to gamble with it and make money off you that way.

In reality, bitcoin payments should have the ability to be much more transparent (you can see your fee) and at the same time be much cheaper for most people:

For example, my UK bank charges £6 per day if you go overdrawn. I once went overdrawn (they had decreased my overdraft limit without telling me) and was overdrawn until I saw my next statement; 16 days that was, thats a £96 fine right there.

For comparison, that would have paid for over 8000 bitcoin transactions, and that is a single (albeit admittidly large) 'fee'.

A 'normal' £25 fee would still 'pay for' about 2000 BTC transactions.

Oh yeah, try sending >10,000£ from one country to another using the fiat system and take a look at the charges; that would still cost the flat block inclusion fee in bitcoin (amount does not matter)

Just quoting this because it is exactly what I was going to type out. Also - credit card companies charge 1-4% PERCENT of every transaction to merchants who pass it along to the consumer. Merchants accepting Bitcoin would not have to do this.

[Trongersoll]

I use Bitcoin-Qt, I find it interesting that people talk about Fee vs no fee likes the Fee is some kind of absolute. With QT people can change their default fee. If you feel .00001 is too high, then make it .000001. Several times i've used .00000005 as a fee just to see how long it would take to clear and i saw no noticeable delay.

So, paying a lower fee is a third option.

[testerx]

The problem with the fees is that they'll go up as the price of BTC goes up, so even though it's a few cents right now the fees could end up rivaling CC fees someday. 

[DeathAndTaxes]

i personally i find the fee system a bit of an unrequired feature for atleast a decade or two. the block 'reward' is more then enough... for now

Many miners will include "free" transactions.  The client however enforces a min mandatory fee on LOW PRIORITY tx.  There is no min mandatory fee on HIGH PRIORITY tx.  This rule is important as an anti denial of service mechanism.  It limits the amount that a malicious user is able to bloat the blockchain at no cost.  Without it one could simply send a tiny amount of BTC from one address to another and ensure all blocks are "full" continually.  Higher paying tx would get through but the attacker at negligible cost could ensure all blocks are "max" size.  Even with the 1MB "limit" that would still make the blockchain to date excessive large.

[DeathAndTaxes]

The problem with the fees is that they'll go up as the price of BTC goes up, so even though it's a few cents right now the fees could end up rivaling CC fees someday. 

The min mandatory fee has gone down four times as the value of BTC has risen.  Today (in BTC terms) is is 1/1000th of what it was originally.

[Dabs]

What were the historical minimum fees before? I was around when the minimum fees were 0.0005, then it became 0.0001.