How much will transaction fees eventually be?

[tddjcoin]

I am new in bitcoin, How much will transaction fees eventually be? To send or recive coins?

[DodoB]

Same as they are now i think? i dont see a reason they will change

[hilariousandco]

I am new in bitcoin, How much will transaction fees eventually be? To send or recive coins?

Same as they are now i think? i dont see a reason they will change

They will and already have changed. They have to change with the value of BTC or it will become unprofitable to mine.

[Lewis2]

If bitcoin becomes worldwide accepted you will probably get a race to the bottom resulting to next to nothing percentage on you transactions.

[DannyHamilton]

If bitcoin becomes worldwide accepted you will probably get a race to the bottom resulting to next to nothing percentage on you transactions.

If the current protocol isn't changed, then you will more likely get a race to the top resulting in very high transaction fees that result in bitcoin only being useful for large value transactions.

[evermont732]

What are the current transaction fees? I thought there were no fees to send bitcoins from one wallet to another. I know the exchanges charge varying fees. Some charge to trade and they all seem to charge to withdraw,but not deposit.

[DannyHamilton]

What are the current transaction fees? I thought there were no fees to send bitcoins from one wallet to another. I know the exchanges charge varying fees. Some charge to trade and they all seem to charge to withdraw,but not deposit.

Regarding current transaction fees:
You can attempt to send your transaction without any transaction fee.  In many instances the transaction will go through just fine without a transaction fee.

Most wallets, peers, and miners (or mining pools) on the network enforce certain minimum fees in some situations.  One intended purpose of this enforced fee is to prevent someone from creating a Denial of Service attack against the network by broadcasting a HUGE number of transactions of extremely small value. Doing so would require that every node and miner verify every one of the transactions, which would reduce their ability to process legitimate transactions.  By adding a small expense on transactions that are either spending very recently received bitcoins or very small value bitcoins, the network protects itself from such an attack.

More information is available here:
https://en.bitcoin.it/wiki/Transaction_fees

[guybrushthreepwood]

If bitcoin becomes worldwide accepted you will probably get a race to the bottom resulting to next to nothing percentage on you transactions.

If the current protocol isn't changed, then you will more likely get a race to the top resulting in very high transaction fees that result in bitcoin only being useful for large value transactions.

It'll be interesting to see how the transaction fees affect Bitcoin. Could it ultimately lead to its downfall if it becomes unprofitable to mine or too expensive to send?

[terminalc]

If bitcoin becomes worldwide accepted you will probably get a race to the bottom resulting to next to nothing percentage on you transactions.

If the current protocol isn't changed, then you will more likely get a race to the top resulting in very high transaction fees that result in bitcoin only being useful for large value transactions.

It'll be interesting to see how the transaction fees affect Bitcoin. Could it ultimately lead to its downfall if it becomes unprofitable to mine or too expensive to send?

I thought about this too. Since some places have really cheap power i don't see it becoming unprofitable to verify transactions. How could it get any more expensive then banks already charge. Also there might be a transaction fee but the currency will not be getting inflated like before either and this provides value and more tolerance for a bit higher fees imo.

[DannyHamilton]

If bitcoin becomes worldwide accepted you will probably get a race to the bottom resulting to next to nothing percentage on you transactions.

If the current protocol isn't changed, then you will more likely get a race to the top resulting in very high transaction fees that result in bitcoin only being useful for large value transactions.

It'll be interesting to see how the transaction fees affect Bitcoin. Could it ultimately lead to its downfall if it becomes unprofitable to mine or too expensive to send?

There is a relief valve designed into the system to ensure that miners will always participate.  If some miners find mining to be too expensive, then then will stop mining.  This will result in a reduction in hashing power on the network, and blocks will slow down (less than an average of 1 every 10 minutes).  After 2016 blocks of this slower activity, the difficulty is decreased, and mining eventually becomes profitable for those that continue to mine.

There is also a relief valve built into the cost to send a transaction.  Miners choose which transactions they want to confirm.  The can increase their profitability by confirming transactions that pay a fee since they receive the transaction fee as well as the block subsidy.  If there are more transactions than will fit into a block, then the miners have a financial incentive to confirm the transactions that voluntarily offer the highest fee.  If people feel that the fee to get a transaction confirmed quickly is too high, then they will choose some other (non-bitcoin) method of transferring value.  This will reduce the total number of transactions.  Eventually there will be fewer transactions than necessary to fill a block.  At that point, miners will again have an incentive to include transactions that pay a smaller fee.  Eventually the market will settle on a fee that is acceptable to those that desire to use bitcoin for value transfer.

[DannyHamilton]

How could it get any more expensive then banks already charge.

The fees that a bank charges are typically either a flat fee per transaction or a fee that is a percentage of the value that is being exchanged.

The fees that miners will confirm will typically be based on the number of bytes that the transactions uses.

With bitcoin, it is possible to send $1,000,000 worth of bitcoin with less than 220 bytes.  However, it takes the same amount of bytes to send $0.001 worth of bitcoin.  This means that the fee that a miner will accept for a transaction exchanging $1,000,000 in value is the same as the fee that a miner is willing to accept for a transaction exchanging $0.001 in value.  The person sending $1,000,000 in value is likely to consider a $1 fee (0.0001% of the value transferred) to be quite acceptable. If there are many of these high value transactions, then the block is likely to be filled with them leaving no room for transactions that offer a fee valued at less than $1.  If the person sending $0.001 worth of bitcoins wants their transaction confirmed, they will be forced to pay a fee valued at $1 (1,000% of the value of the transaction!)

If there are a large number of people (or businesses) who desire to use bitcoin for large value transactions, this could result in fees that make bitcoin no longer useful for daily expense sized transactions.  Bitcoin would become a "clearing house" for other services or a "reserve" currency backing other currencies.

[guybrushthreepwood]

If bitcoin becomes worldwide accepted you will probably get a race to the bottom resulting to next to nothing percentage on you transactions.

If the current protocol isn't changed, then you will more likely get a race to the top resulting in very high transaction fees that result in bitcoin only being useful for large value transactions.

It'll be interesting to see how the transaction fees affect Bitcoin. Could it ultimately lead to its downfall if it becomes unprofitable to mine or too expensive to send?

There is a relief valve designed into the system to ensure that miners will always participate.  If some miners find mining to be too expensive, then then will stop mining.  This will result in a reduction in hashing power on the network, and blocks will slow down (less than an average of 1 every 10 minutes).  After 2016 blocks of this slower activity, the difficulty is decreased, and mining eventually becomes profitable for those that continue to mine.

There is also a relief valve built into the cost to send a transaction.  Miners choose which transactions they want to confirm.  The can increase their profitability by confirming transactions that pay a fee since they receive the transaction fee as well as the block subsidy.  If there are more transactions than will fit into a block, then the miners have a financial incentive to confirm the transactions that voluntarily offer the highest fee.  If people feel that the fee to get a transaction confirmed quickly is too high, then they will choose some other (non-bitcoin) method of transferring value.  This will reduce the total number of transactions.  Eventually there will be fewer transactions than necessary to fill a block.  At that point, miners will again have an incentive to include transactions that pay a smaller fee.  Eventually the market will settle on a fee that is acceptable to those that desire to use bitcoin for value transfer.

Thanks for that very informative answer. I'll have to read more into mining and transaction fees etc. Do you have any good links to a starter?

[DannyHamilton]

Thanks for that very informative answer. I'll have to read more into mining and transaction fees etc. Do you have any good links to a starter?

Here is the BEST starter that I know of:
http://bitcoin.org/bitcoin.pdf

People really should take the time to look that over before asking any questions, since it gives a great overview of what problems bitcoin is intended to solve, and how it is intended to work.

After that, you can learn more about mining and difficulty here:
https://en.bitcoin.it/wiki/Mining
https://en.bitcoin.it/wiki/Difficulty
https://en.bitcoin.it/wiki/Target

[guybrushthreepwood]

Thanks for that very informative answer. I'll have to read more into mining and transaction fees etc. Do you have any good links to a starter?

Here is the BEST starter that I know of:
http://bitcoin.org/bitcoin.pdf

People really should take the time to look that over before asking any questions, since it gives a great overview of what problems bitcoin is intended to solve, and how it is intended to work.

After that, you can learn more about mining and difficulty here:
https://en.bitcoin.it/wiki/Mining
https://en.bitcoin.it/wiki/Difficulty
https://en.bitcoin.it/wiki/Target

Thanks again. Do you personally think the network will be able to sustain itself and keep on being profitable to miners whilst being beneficial and affordable to its users?

[DannyHamilton]

Do you personally think the network will be able to sustain itself and keep on being profitable to miners whilst being beneficial and affordable to its users?

I find that question impossible to answer.  There are far too many variables and things we don't know.  Bitcoin is an experiment played out on a global scale.  Only time will tell the results of the experiment.  The fact that is has continued use and growth over a period of more than 5 years certainly creates a sense of optimism for its longevity.

If I had to make a personal guess, I'd say that mining will continue (although due to human nature, much of it may continue at a loss relative to simply exchanging fiat directly for BTC).

I'd also guess that bitcoin will remain beneficial and affordable to some users.  The demographic and distribution of those users that find it beneficial and affordable may change over time though.

Both of those guesses depend a lot on if/how the protocol is changed in the future.

[Cryptopher]

The person sending $1,000,000 in value is likely to consider a $1 fee (0.0001% of the value transferred) to be quite acceptable.

That part made me chuckle

Hmm $1 in exchange for transferring my $1M, I find that to be quite acceptable, but it could perhaps be more acceptable haha.

[Flashman]

Yah, send a billion dollars save a thousand bucks amirite? 



(presuming sending a million 1000 times)