Bitcoin is 'capped' at 20k maximum now, because of high Fees (till when?)

[Roccker]

Hi  there!

So if Bitcoin would go to 20k in eg december 2018 -
then fees would go cracy high like 50usd again, wouldn't it?
Is that right?

I mean, what do we have, a few more % adoption of segwit, which does.. not do anything much, does it?
Anything we have now that we don't had in last december 2017?

So basically bitcoin is capped at eg 15k (when did fee's become cracy?) - until lightning is mass adopted?
What is a guess of timeframe for lightning mass adoption - 3 years?

[1714846521]

1714846521

[1714846521]

1714846521

[1714846521]

1714846521

[gentlemand]

Segwit is now regularly delivering blocks far above 1mb compared to back then but the more important one is the increased amount of batching used by services with a lot of on chain throughput. That's what'll deliver consistently lower fees.

When Coinbase went down for a bit it appeared they were responsible for a vast percentage of Bitcoin transactions. https://bitcoinist.com/mempool-coinbase-spamming-bitcoin/
they're working on batching too which will release a huge amount of space.

Many have theorised that those super high fees were created by miners, probably Bitmain, spamming the blockchain to drive up fees to draw attention to scaling and Bcash. As they collect most of the fees they can afford to recirculate them.

And price doesn't necessarily indicate fees. It's hype and frenzy. If there was a monster crash it's possible fees would spike heavily as people rushed to buy and sell. If it got to 20 grand slowly over a few years without excitement fees might still remain in the cents.

[Tytanowy Janusz]

During december bitcoin was under spam attack - that overload network and create those high fees. Of cours there was also increased number of transfers but mostly due to extremly high volatility rather than high prices(lots of transfer from wallet to exchange to sell bitcoin which is now 20k and week ago was 10k and from exchanges/kantors to wallets made by newbies buying in fomo- it wont happend if we will slowly go to 20k)

Massive volume is made by exchanges. If only they will add segwit network wont suffer that much. We dont need every user to use lightning to unload network.


edit:

agreed

[Roccker]

Great stuff, thanks


Ok, eg coinbase, bitfinex, binance, kraken, nanex since about 03 2018 (https://cryptoslate.com/top-exchanges-slash-bitcoin-transaction-fees-segwit-adoption-spreads/)

Segwit adoption: https://p2sh.info/dashboard/db/segwit-usage?orgId%3D1%26from%3Dnow%252Fy%26to%3Dnow&orgId=1&from=now-1y&to=now

Ok, now 40% of transactions are segwit, it started 1 year ago, 08 2017



----


Does Bitcoin become unusable again at 20k like December 2017, with 50usd fees?

No, now it’s better:
- More Segwit Adoption since last time (eg coinbase, bitfinex, binance, kraken, nanex since about march 2018 (https://cryptoslate.com/top-exchanges-slash-bitcoin-transaction-fees-segwit-adoption-spreads/), this will help. Now (08 2018 40% of transactions are segwit, it started 1 year ago at 08 2017 with 0%)

- More Exchanges now Batch their transactions, this also helps.
(https://www.ccn.com/after-last-years-mempool-drama-batched-bitcoin-transactions-finally-on-the-rise/)

- Perhaps: Bitmain spamming the bitcoin network (?) – if they stop doing that, it also helps.

- Also: it’s not about price, it’s about number of transactions. A slow steady upcrawl is possible (but not parabolic bubble)

- Lightning (in next 3 years?)
- Schnorr Signatures (in next 3 years?)

Number of transactions waiting to be confirmed: from 120k at top of bubble to 4k or less since 03 2018
https://www.blockchain.com/charts/mempool-count?timespan=1year&daysAverageString=7&showDataPoints=true

[1Referee]

Segwit is now regularly delivering blocks far above 1mb compared to back then but the more important one is the increased amount of batching used by services with a lot of on chain throughput. That's what'll deliver consistently lower fees. 

The stipped size of blocks is still capped at 1MB and that's exactly what the blockchain absorbs, regardless of the increased virtual block size due to Segwit.

Segwit only makes sure that more transactions can fit within that fundamentally capped 1MB block, which is its biggest advantage in terms of providing a temporary scaling solution.

It's a shame that till this day Segwit isn't being utilized by more than 50% of the network. It's clearly a big block attack to not devalue their asic boost technology. Assholes that they are.

A fully deployed Segwit network could fit like 6000-7000 transactions within 1MB block, which is insane. It will last us a year or two, easily.

[BrewMaster]

what you are mistaking is that fees don't go up because of high price. fees go up because of only one things: more transactions

now the question is what increases the number of transactions.
well there are multiple things. the major ones are these:
- people using bitcoin as a currency for purchases, transferring money,...
- traders moving funds to and from exchanges selling/buying bitcoin and also altcoins
- spam attacks
1 and 2 increase during price rises but the second one also increases during price drops. for example today price is not changing that much but 2 days ago when price was playing with $6000 and $5900 there were a lot of transactions from people panic selling and others who were accumulating cheap coins.
and spam attacks can happen at any time.

now to answer your main question, it doesn't matter if bitcoin is worth $1 or $1000000. what matters is how we got there. if for instance price slowly creeps up to that high price we won't see that much of an increase in number of transactions. but if it shoots up there, then we will see a huge rise in the number of transactions because obviously people seeing the rise (like last year from $9k to $20k in less than a month) are selling their coins and others are buying coins and that means tx on the chain.

[Febo]

Hi  there!

So if Bitcoin would go to 20k in eg december 2018 -
then fees would go cracy high like 50usd again, wouldn't it?
Is that right?

No. with no spam fees could be few $. By the time we will see $20k Bitcoins I am sure there will be some technical solutions to reduce price of transactions more.

[newinbtc]

Hi  there!

So if Bitcoin would go to 20k in eg december 2018 -
then fees would go cracy high like 50usd again, wouldn't it?
Is that right?

No its not true , there are lot of development happens in last 6 months and bitcoin is spited into further currency like bitcoin gold and swigget.
First its impossible to reach 20k$ by 2018 December. It may happen in upcoming 3 years by 2021 year.
its good if it reach 20k$ again I may become rich by investing now and sell later.

fees only increasing according to demand on mined blocked , Lots of pending tranx , High electricity Rate , many other factors such as High amount of fund transferring from one country to another country with help of bitcoins. The fees go to the miners to incentivise them to keep mining, which in turn keeps the Bitcoin network secure.

[aso118]

Prices went up to $20k. Fees went up as well. It is not sufficient to conclude that one was the cause of the other.
Fees may go up without the price going up blindly. Conversely, the price might go up and fees may remain low. The only thing which impact fees is the transaction backlog. So the conclusion that Bitcoin's maximum price capped is wrong.

[exstasie]

So if Bitcoin would go to 20k in eg december 2018 -
then fees would go cracy high like 50usd again, wouldn't it?
Is that right?

I mean, what do we have, a few more % adoption of segwit, which does.. not do anything much, does it?
Anything we have now that we don't had in last december 2017?

So basically bitcoin is capped at eg 15k (when did fee's become cracy?) - until lightning is mass adopted?
What is a guess of timeframe for lightning mass adoption - 3 years?

I don't think fees "cap" the price at all. There's no evidence for that. If you compare fee trends with price trends, fees appear to follow price. Logically, that's because rising price coincides with rising network activity.

Segwit and any other linear throughput increases will only offer limited scale. Lightning and perhaps other mechanisms like sidechains will be integral, but it's impossible to tell when adoption will take off. For now, LN is not user-friendly at all.

[Yaunfitda]

Hi  there!

So if Bitcoin would go to 20k in eg december 2018 -
then fees would go cracy high like 50usd again, wouldn't it?
Is that right?

I mean, what do we have, a few more % adoption of segwit, which does.. not do anything much, does it?
Anything we have now that we don't had in last december 2017?

So basically bitcoin is capped at eg 15k (when did fee's become cracy?) - until lightning is mass adopted?
What is a guess of timeframe for lightning mass adoption - 3 years?

The network spammers is gone, trading exchanges are batching their transactions and people are adopting Segwit now. So I doubt that we will see a network clogged if ever bitcoin tops $20K again at the end of the year.

And I get your idea that bitcoin is capped because of fees.

Lightning is still in beta phase, as far as I know (please someone correct me if I'm wrong), And until its rolled out, we don't know the extend of its adoption.

[exstasie]

Lightning is still in beta phase, as far as I know (please someone correct me if I'm wrong), And until its rolled out, we don't know the extend of its adoption.

According to Core's version sequencing, Bitcoin is still in beta as well. So that doesn't tell us much.

Beyond the question of LN adoption, its effects are even harder to estimate because LN has a different security model than regular Bitcoin transactions. For that reason, it's hard to know what percentage of transactions could be offloaded onto LN, even after the network is robust and usable. For most of my own uses cases, Lightning isn't really desired or feasible.

[Wind_FURY]

Segwit is now regularly delivering blocks far above 1mb compared to back then but the more important one is the increased amount of batching used by services with a lot of on chain throughput. That's what'll deliver consistently lower fees.  

The stipped size of blocks is still capped at 1MB and that's exactly what the blockchain absorbs, regardless of the increased virtual block size due to Segwit.

Segwit only makes sure that more transactions can fit within that fundamentally capped 1MB block, which is its biggest advantage in terms of providing a temporary scaling solution.

It's a shame that till this day Segwit isn't being utilized by more than 50% of the network. It's clearly a big block attack to not devalue their asic boost technology. Assholes that they are.

A fully deployed Segwit network could fit like 6000-7000 transactions within 1MB block, which is insane. It will last us a year or two, easily.

It is not a "big block attack". Haha.

Users and merchants have the freedom to use and adopt Segwit if they want, and if they do not want to, ok. If you want to know what a real big block attack is, it's when some people spread the propaganda that "Bitcoin Cash is the real Bitcoin".

OP, simple answer. Because of the limited space per block, yes the fees will rise.

[el kaka22]

People explained a lot better than I could but that is basically the gist of it.

Bcash and bitmain + volatility + huge user number increase + sudden attention and all that combined created bitcoin to jammed and it costed a lot for the people however if today that were to happen like $20k and not that many people got interested or it were to happen slowly over time than you can be sure that the price will not increase in fee's.

The important part is the jamming of bitcoin with tons of actions of buying selling (basicaly sending and receiving) and that jams the blockchain, if you do it over time, it will always be better.

[1Referee]

It is not a "big block attack". Haha.

Users and merchants have the freedom to use and adopt Segwit if they want, and if they do not want to, ok. If you want to know what a real big block attack is, it's when some people spread the propaganda that "Bitcoin Cash is the real Bitcoin".

Till you realize that Bitmain & Co have stakes pretty much everywhere in this ecosystem. It is a big block attack.

It's in everyone's (except the big block camp) benefit to have a fully deployed/utilized Segwit network in order to significantly increase Bitcoin's throughput, but it's not happening. If users love the freedom to choose, then they shouldn't complain about the fees, but they do, which makes them look like a bunch of retarded hypocrites in that case. You not seeing that this is an attack on Bitcoin is just funny.

[Wind_FURY]

It is not a "big block attack". Haha.

Users and merchants have the freedom to use and adopt Segwit if they want, and if they do not want to, ok. If you want to know what a real big block attack is, it's when some people spread the propaganda that "Bitcoin Cash is the real Bitcoin".

Till you realize that Bitmain & Co have stakes pretty much everywhere in this ecosystem. It is a big block attack.

It is not an attack but greed. It will always be in the interest of Bitmain for Bitcoin to be successful.

It's in everyone's (except the big block camp) benefit to have a fully deployed/utilized Segwit network in order to significantly increase Bitcoin's throughput, but it's not happening. If users love the freedom to choose, then they shouldn't complain about the fees, but they do, which makes them look like a bunch of retarded hypocrites in that case. You not seeing that this is an attack on Bitcoin is just funny.

But adoption is slowly climbing. I believe Segwit adoption is already on 50%. Let the users decide, sooner or later they will know that there is nothing to be afraid of.

Fees though, will still go up. I believe Segwit is not enough for scaling on-chain.

[adam1230]

Until Halving happens. After the next halving bitcoin will skyrocket and its going to hard to own 1 Bitcoin.
Thats why charlie said that you have to own at least 1 bitcoin for future.
So get your bitcoins now while its so cheap

[Pursuer]

But adoption is slowly climbing. I believe Segwit adoption is already on 50%. Let the users decide, sooner or later they will know that there is nothing to be afraid of.

Fees though, will still go up. I believe Segwit is not enough for scaling on-chain.

based on block sizes that I see are common I don't think the SegWit adoption is at 50% otherwise block sizes should have been higher than what we see these days. although this is just my observation not stats.

as for scaling, nothing will ever be enough for on-chain scaling. we just have to  increase it as much as we can while having the least amount of downsides.

[Wind_FURY]

But adoption is slowly climbing. I believe Segwit adoption is already on 50%. Let the users decide, sooner or later they will know that there is nothing to be afraid of.

Fees though, will still go up. I believe Segwit is not enough for scaling on-chain.

based on block sizes that I see are common I don't think the SegWit adoption is at 50% otherwise block sizes should have been higher than what we see these days. although this is just my observation not stats.

as for scaling, nothing will ever be enough for on-chain scaling. we just have to  increase it as much as we can while having the least amount of downsides.

There is a site graphing how much Segwit adoption there is. The last time I visited it had Segwit adoption around 45% and fast-moving to 50%, which I believe, could be there by now.

[Roccker]

Liquid is also live now.
It's for Crypto-Exchanges, to send and receive Bitcoin off-chain,
so this reduces the amout of on-chain bitcoin transactions.


Over 500 Bitcoin in lightning Network-Channels right now.

How many do we need for this to really be 'significant'?

50 000?
500 000?
5 000 000?

Of the 21 million bitcoins.

[cellard]

I have not seen enough evidence to conclude that Bitcoin's all time high was capped by the capacity of the network reaching a threshold of high fees, high enough that it stopped further buyers from entering the market. It most likely had an impact on those wanting to buy small amounts, but serious investors woudln't care about 50 bucks.

Nonetheless, it most likely got to that point due:

1) Exchanges being a mess (no tx batching)
2) Segwit wasn't operative
3) LN wasn't operative
4) Ver, Jihad and co were spamming the network

Next time things will be different. Capacity has been increased, tx batching is in, and bad actors mentioned above are now broke due bagholding massive Bcash bags.

[el kaka22]

I think segwit and LN is not operative. They are just not massively adopted. Exchanges still charge you a lot of money to withdraw your coins but in reality it costs them so much less and they make a profit of that difference. It is not like your small 0.001 profit would mean too much to you but 0.001 profit from each customer for binance means the world for them considering how many times people withdraw in a day.

If you assume at least 1000 people withdraw that's 1 bitcoin if nothing thats still a good amount for daily profit making 30 bitcoins a month 365 bitcoins a year and I assume the number is WAY more than just 1000 people withdrawing. Hence, we are capped at 20k is a liable assumption but high fees are not because of blockchain not carrying enough, its others that take advantage of once upon a time problem.

As soon as one exchange say withdraws will be tiny, others will have to follow in order to not lose market share.

[exstasie]

I think segwit and LN is not operative. They are just not massively adopted. Exchanges still charge you a lot of money to withdraw your coins but in reality it costs them so much less and they make a profit of that difference. It is not like your small 0.001 profit would mean too much to you but 0.001 profit from each customer for binance means the world for them considering how many times people withdraw in a day.

That's not all profit. Exchanges have to deal with huge numbers of outputs from customer deposits. Whether you send a thousand 0.001 BTC deposits or one 1 BTC deposit, Binance credits the same amount to your balance, but the costs to make customer withdrawals are way different in these two scenarios. Their customer withdrawal transactions are way larger and more expensive than anything we have to deal with. They might make some marginal profit, but it's less than you think.

[1Referee]

It most likely had an impact on those wanting to buy small amounts, but serious investors woudln't care about 50 bucks.

Definitely. I recall having seen a video where Roger Ver and another dude explained how bad the situation was at that point. The point basically was that the dude who sent a transaction worth millions has seen the value of that transaction tank hard because the fee was too low and the transaction was stuck for a long time.

It's so ridiculous that it isn't even something you can take serious. If you send a transaction of that magnitute you will even include a fee of $1000 to make sure the transaction goes through with the first block. One can better 'lose' $1000 in fees than nearly a million in value. Another thing is that the dude could have double spent that transaction. High fees are obviously not something to cheer for, but it similarly isn't the end of the world.

People don't understand that BCash taking over half of Bitcoin's hashrate made the block times stretch all the way to 15-17 minutes instead of the 10 it usually hovers around. They also severely spammed the network to advertise their "cheap" chain. Take away the hashrate movements and the spam attacks, I dare to say that the fees would peak out at $10-$15 due to the price being insanely high.

[exstasie]

It most likely had an impact on those wanting to buy small amounts, but serious investors woudln't care about 50 bucks.

Definitely. I recall having seen a video where Roger Ver and another dude explained how bad the situation was at that point. The point basically was that the dude who sent a transaction worth millions has seen the value of that transaction tank hard because the fee was too low and the transaction was stuck for a long time.

It's so ridiculous that it isn't even something you can take serious. If you send a transaction of that magnitute you will even include a fee of $1000 to make sure the transaction goes through with the first block. One can better 'lose' $1000 in fees than nearly a million in value. Another thing is that the dude could have double spent that transaction. High fees are obviously not something to cheer for, but it similarly isn't the end of the world.

Replace-by-fee is an easy solution. Ver and Bitpay continue to criticize it, but it's an elegant and fast way to push stuck transactions. Between good fee estimation and RBF, there's no reason anyone should be waiting many hours or days for a high-value transaction.

[cellard]

I think segwit and LN is not operative. They are just not massively adopted. Exchanges still charge you a lot of money to withdraw your coins but in reality it costs them so much less and they make a profit of that difference. It is not like your small 0.001 profit would mean too much to you but 0.001 profit from each customer for binance means the world for them considering how many times people withdraw in a day.

If you assume at least 1000 people withdraw that's 1 bitcoin if nothing thats still a good amount for daily profit making 30 bitcoins a month 365 bitcoins a year and I assume the number is WAY more than just 1000 people withdrawing. Hence, we are capped at 20k is a liable assumption but high fees are not because of blockchain not carrying enough, its others that take advantage of once upon a time problem.

As soon as one exchange say withdraws will be tiny, others will have to follow in order to not lose market share.

But this has nothing to do with Bitcoin's network or in other words it's technology per se, that is just part of the competing exchanges which are free to put whatever fee they think reasonable to find profit and remain competitive.

If you don't like the fees of a certain exchange, use another one, and if you think you can do better then create your own... what can I tell you? I don't really use exchanges at all except in rare occasions, so im not sure how it looks like nowadays, but on-chain fees definitely have gone down. Capacity has been objectively increased because of reasons I mentioned.

[okala]

Hi  there!

So if Bitcoin would go to 20k in eg december 2018 -
then fees would go cracy high like 50usd again, wouldn't it?
Is that right?

I mean, what do we have, a few more % adoption of segwit, which does.. not do anything much, does it?
Anything we have now that we don't had in last december 2017?

So basically bitcoin is capped at eg 15k (when did fee's become cracy?) - until lightning is mass adopted?
What is a guess of timeframe for lightning mass adoption - 3 years?

I think the issues of high fees has been deal with sometimes ago and we are surpose to have low fees even if bitcoin went as high as $100,000. I think by now fees is no longer the problem because bitcoin was made to provide low fees.

[darewaller]

I think the issues of high fees has been deal with sometimes ago and we are surpose to have low fees even if bitcoin went as high as $100,000. I think by now fees is no longer the problem because bitcoin was made to provide low fees.

Ye,s the problem of scalability have been resolved once we got segwit activated and right now the total number of pending bitcoin transactions to be picked by next block in memory pool is less than 1600 transactions and optimal fee per Kb is 1170 satoshi which is ~4 US cent as per current BTC value. Do we still need to consider that tx fees is stopping bitcoin's rising markets ?

How do we assume that the ATH of $20k was set by tx fees ? I understand OP like due to high fees, there were no new investors and due to lack of new investors bitcoin was struggling to get beyond $20k. But, since 2018 beginning I was not seeing high tx fees, still bitcoin was falling down by failing to attract new investors.

Tx fees was a reason why bitcoin's value was not rising. But, now we got many other problems like whales manipulations and due to those reasons now we are trading below $4k and honestly not thinking about $20k as of now, just $10k also will make me a happier bitcoin investor.