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Author Topic: Micro-payments with MASIVE fees [CLOSED]  (Read 1447 times)
river
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March 17, 2011, 10:16:46 AM
 #1

Ok, I'm confused about one thing here .... micro-payments.

Now, I know that BTC is divisible to 8 decimal places, great, so the 'grand total' SHOULD be 21000000.00000000 or dived to 21,000,000,000,000.00 if you 'move' the decimal place. So 21 trillion (with 'cents') total.

but if fees are 0.01 of the normal being 00000000.01000000 .. then what's the point of a 'micro-payment' of say 00000000.00000010 if you have to pay a fee of 00000000.01000000 .. it's no longer a grand total of 21 trillion with cents.  is just 21 million with a stupid decimal placement.

If this is the case .. then BTC is already dead since if you get more than Huh? say 1,000,000 people on it globally each person only gets 21.00 btc .. no enough for anything, since if, for example, a coffee is 0.00000100 BTC .. and a fee of 0.01 ... making a total payment of 0.01000100 for a 0.00000100 item .. then EVERYTHING is actually SCREWED .. HUGE FEES, not worth the digit it's 'printed' on.

Now if they change the 'fees' to .01 of the current decimal place ie 00000000.000000001 for a transaction of 00000000.00000100 great

can someone explain the 'limited' inflation and fees of this to me or the. or is it just toast???

I need to know this .. if I haven't explain it well enough ... my apologies.
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jgarzik
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March 17, 2011, 10:20:52 AM
 #2

0.01 minimum fee will be changed over time.

Jeff Garzik, bitcoin core dev team and BitPay engineer; opinions are my own, not my employer.
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March 17, 2011, 10:38:25 AM
 #3

0.01 minimum fee will be changed over time.

ok .. I understand that .. but what about SMALLER payments .. micro-payments of LESS then 0.01 .. do you still pay 0.01 for a 0.00001 payment .. that's just stupid!

Presently yes, but not in the future. Transactions have a cost (in disk space for participating nodes), so they have to have a cost. When the value of a bitcoin increses, the fee rules will be changed so they make sense for the amounts being worked with.
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March 17, 2011, 10:44:39 AM
 #4

It's not stupid, it's intentionally there to prevent extremely small micropayments from happening. As BitCoin scales up the limit can be moved so smaller payments become possible (assuming there's demand I suppose).

Note that relative to credit cards, sending <1 US cent is still pretty micro. BitCoin does much better than most micropayment schemes, even with the artificial limits in place.
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March 17, 2011, 11:11:55 AM
 #5

I"m not saying no fees .. I understand a fee of 0.01 .. but is that relative to the current 'value' of the decimal placement ...

when fees become more prevalent I know the will be 0.01 ... fine .. if in the future .. assuming the value of BTC goes WAY up ... and the decimal 'shifts' right .. will the 0.01 fee be equivalent to the current decimal placement AS it shifts right???

Do you understand???


once fee become 'the norm'

current ... payment 00000016.00000000 (say for a toaster) with a fee of 00000000.01000000
future .. value goes WAY UP ... payment 00000000.00001600 (for the same toaster) with a fee of 00000000.00000001
is this correct or as the value goes WAY UP will it be payment 00000000.00001600 (for the same toaster) with a fee of 00000000.01000000

if this doesn't make sense, ask for clearification or, please, don't reply.

Your question was already answered.
Currently, the bitcoin client doesn't deal with amounts less than 0.01 BTC. It's a temporary fix made for convenience.
In the future, when 0.01BTC will be worth more, the client will deal with amount less than that and will allow transaction fees lower than that. You'll be able to choose to pay a transaction fee of 0BTC or 0.00000001BTC. But we'll have to see then how quickly your transaction will be processed when you choose such a low fee.

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March 17, 2011, 11:13:07 AM
 #6

You should provide for more clarification, but I will post in an effort to understand what you are trying to say:

You are saying that this is crazy:
Toaster: 0.000016BTC
Fee: 0.01BTC

----

Correct?

If so, the second post of this thread said that the minimal fee will change based on the amount of bitcoins and their worth.
Currently, payments are made with 0.01 being the minimal significant payment amount, anything under than is insignificant. When/if the worth increases, the lowest significant payment will shift to 0.001 and then to 0.0001 and then lower still. When this happens, the minimal fee will/should match the lowest significant payment amount.

At the moment, bitcoins are worth nearly $1:1BTC ($0.086:1BTC to be accurate at the moment). So along with the adolescent nature of Bitcoin, the lowest significant payment is naturally 0.01BTC (nearly $0.01)

----

If that's not what you're trying to say, please elaborate.
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March 17, 2011, 11:30:33 AM
 #7

You should provide for more clarification, but I will post in an effort to understand what you are trying to say:

You are saying that this is crazy:
Toaster: 0.000016BTC
Fee: 0.01BTC

----

Correct?

If so, the second post of this thread said that the minimal fee will change based on the amount of bitcoins and their worth.
Currently, payments are made with 0.01 being the minimal significant payment amount, anything under than is insignificant. When/if the worth increases, the lowest significant payment will shift to 0.001 and then to 0.0001 and then lower still. When this happens, the minimal fee will/should match the lowest significant payment amount.

At the moment, bitcoins are worth nearly $1:1BTC ($0.086:1BTC to be accurate at the moment). So along with the adolescent nature of Bitcoin, the lowest significant payment is naturally 0.01BTC (nearly $0.01)

----

If that's not what you're trying to say, please elaborate.
This is more or less right. However, I think that the minimal transaction fee will be lifted completely, so you'll be able to choose any amount, rather than periodically being decreased. And yes, of course you will never pay a 0.01BTC transaction fee for a toaster worth 0.000016BTC.

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March 17, 2011, 11:33:09 AM
 #8

0.01 minimum fee will be changed over time.

That... and nobody will be sending micro payments of 1 penny (that is literally what 0.00000001 bitcoins works out to if it was indeed worth 21 trillion USD or the equivalent)...

Especially not in the year 2025 by the time we actually take this to a global scale.

Honestly, tell me. For what reason would you need to transfer a penny across the ocean?

Not to mention fees are not required. If you really want to send a penny, you can probably afford to wait an hour for a confirmation.
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March 17, 2011, 11:49:48 AM
 #9

Honestly, tell me. For what reason would you need to transfer a penny across the ocean?
Being able to send micropayments for viewing content websites will enable the elimination of ads (whether the payment is voluntary or mandatory depends on your preferred balance between "information wants to be free" and "authors want to eat").
Also you could use micropayments to pay for bandwith. I'm sure there are other examples.
However, the Bitcoin block chain is probably the wrong place for these, and another layer will be required.

Not to mention fees are not required. If you really want to send a penny, you can probably afford to wait an hour for a confirmation.
As I understand it, in the future your transaction may never be processed if the fee is too low.

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March 17, 2011, 11:58:26 AM
 #10

As I understand it, in the future your transaction may never be processed if the fee is too low.

That's dependent on how many transacitons, how many nodes, and the amount 1BTC is worth.

If the fee is uber low, there are many transactions, not as many nodes, and 1BTC is with 1USD, then the likelyhood of a timely transaction is low.

The less demand (transactions) and more supply (nodes), the more likely it will be processed. However due to the low fee (priority) it will be processed at a later time depending on the other two factors as well



If it does work that way I think once there are enough nodes/transactions, priority should be affected by the time passed from the transaction as well. You could have a transaction with 0BTC fee occur yesterday, but it would have a higher priority than a transaction with a 1BTC fee made 5 minutes ago.
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March 17, 2011, 12:07:56 PM
 #11

That's dependent on how many transacitons, how many nodes, and the amount 1BTC is worth.

If the fee is uber low, there are many transactions, not as many nodes, and 1BTC is with 1USD, then the likelyhood of a timely transaction is low.

The less demand (transactions) and more supply (nodes), the more likely it will be processed. However due to the low fee (priority) it will be processed at a later time depending on the other two factors as well



If it does work that way...
This matches my understanding.

I think once there are enough nodes/transactions, priority should be affected by the time passed from the transaction as well. You could have a transaction with 0BTC fee occur yesterday, but it would have a higher priority than a transaction with a 1BTC fee made 5 minutes ago.
The problem is that "priority" is determined by the incentives of the miners. A miner has no reason to include a 0BTC fee transaction, even if it's from yesterday, since he gains nothing from it (and presumably including extra transactions reduces his hashing rate, I'm a bit sketchy on that part). There will be calculators that tell you what fee you need to give to gain a certain expected processing time, and the sender should just give that instead of leeching. I suppose it's possible in theory to introduce a "bargaining" feature where the sender allows the offered transaction fee to increase automatically from its initial setting if a lot of time passes with no confirmation.

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