Can bitcoin sustain itself on fees alone?

[squatter]

My theory.

I believe that there will be a small group of people in the community who will FUD a narrative that the block rewards should not be halved.

After the next having of 2020, some miner, maximalist, developer, or Bitcoin oligarch will call for a change in the consensus rules to maintain the 6.25 block rewards on 2024, but without inflating the supply to "save Bitcoin".

I know it sounds preposterous now, but just watch.

It's inevitable, really. Peter Todd has been saying for years that a predictably low but permanent inflation rate (like 1% per annum) would be a superior security model for Bitcoin. He might be right, and he's not the only one thinking that. There is no precedent for Bitcoin's hard cap on supply. It's an experiment and no one can say from experience how it'll work out.

Since there is a hard cap on supply, it's incredibly important that we retain a hard cap on block size to force fees higher. Without inflation, that's the only way to guarantee that miners have incentive to keep mining Bitcoin.

[1715422888]

1715422888

[1715422888]

1715422888

[1715422888]

1715422888

[1715422888]

1715422888

[1715422888]

1715422888

[bbc.reporter]

Will cryptocoin users begin looking for other coins to use for cheaper transactions?

Yes, bitcoin has been slowly losing dominance.

are you sure about that?

first, you're probably mistaking altcoin speculation for actual usage. "cheaper transactions" has been an effective marketing ploy for many altcoins but their rise in price doesn't necessarily indicate people are using them for cheap fees. people are probably just speculating that cheap fees will be important for future utility. that doesn't make these speculators correct that bitcoin will be cannibalized by coins with lower transaction fees. the market will decide that.

second, as more and more coins are launched (with higher and higher circulating supplies), "bitcoin dominance" as a function of market cap should continue dropping. that really doesn't indicate that bitcoin has lost its dominance over the market. no altcoin comes anywhere near dethroning bitcoin in price, liquidity, usage, value transferred, etc and i think that will continue to be true.

Have you noticed that sportsbooks, dice sites and other businesses are also accepting altcoins and are increasing? Do you think the people will continue to use bitcoin when the fees are high? No, the people will look for alternatives, I reckon.

[Dreamchaser21]

Bitcoin and Cryptos in general are going to continue to evolve and adapt to continue to remain profitable and survive. Fees will be play a strong part in this.

Fees can be the best source of bitcoin to survive but of course if its continues to grow we can expect a more good market and fees will just become a part of it. Its still cheaper compare to other coins and a lot more faster so I don’t see any threat with regards to the transaction fees.

[figmentofmyass]

Have you noticed that sportsbooks, dice sites and other businesses are also accepting altcoins and are increasing?

yes, to some extent. this should be expected as the altcoin markets grow, especially when most merchants are using payment processors. with coinpayments, accepting altcoins is like flipping a switch on. this doesn't necessarily suggest altcoins are threatening to overtake bitcoin.

Do you think the people will continue to use bitcoin when the fees are high? No, the people will look for alternatives, I reckon.

is that what happened in late 2017?

there's a pretty strong correlation between fees and price: they rise together. evidently, people have been willing to pay what the fee market charges.

i'm all for the market having different options, anyway. i think people will be willing to pay for bitcoin's superior security. for lower value transactions, there's lightning, sidechains, altcoins. it's hard to say how things will pan out exactly, but i think strong demand will remain for bitcoin because of its network liquidity and security.

[Wind_FURY]

My theory.

I believe that there will be a small group of people in the community who will FUD a narrative that the block rewards should not be halved.

After the next having of 2020, some miner, maximalist, developer, or Bitcoin oligarch will call for a change in the consensus rules to maintain the 6.25 block rewards on 2024, but without inflating the supply to "save Bitcoin".

I know it sounds preposterous now, but just watch.

It's inevitable, really. Peter Todd has been saying for years that a predictably low but permanent inflation rate (like 1% per annum) would be a superior security model for Bitcoin. He might be right, and he's not the only one thinking that. There is no precedent for Bitcoin's hard cap on supply. It's an experiment and no one can say from experience how it'll work out.

Since there is a hard cap on supply, it's incredibly important that we retain a hard cap on block size to force fees higher. Without inflation, that's the only way to guarantee that miners have incentive to keep mining Bitcoin.

I have said that before, and I know there are others who have said that before me.

I believe it's time to re-orient ourselves on what Bitcoin is and what it isn't. What it cannot be is a decentralized, peer to peer, digital cash that anyone can send for free. Decentralization has a cost as we have witnessed.

[BlackPanda]

Bitcoin and Cryptos in general are going to continue to evolve and adapt to continue to remain profitable and survive. Fees will be play a strong part in this.

Fees can be the best source of bitcoin to survive but of course if its continues to grow we can expect a more good market and fees will just become a part of it. Its still cheaper compare to other coins and a lot more faster so I don’t see any threat with regards to the transaction fees.

Yes the cost is still fairly cheap compared to other media. I also think that Bitcoin will grow even better.
What we need to do is continue to support the development of Bitcoin by increasing the number of transactions using Bitcoin every day.
This has become a thing that will help develop Bitcoin significantly in the market.

[Stedsm]

Shouldn't this debate be over the speed of processing transactions instead of mining income? Even if miners stop to mine, it will stabilize and even reduce the difficulty gradually which will give voluntary users a chance to keep the network secure. What I believe is the network will still remain secure (except a possible 51% attack which depends on the then number of miners and the hashrate).

2 things scare me for such times:
- Will the transactions still process the way they are processing currently? As the deduction in the difficulty ratio when miners back off will surely lead to gradual speed reduction in terms of processing individual transactions of same or higher block sizes (if a blocksize increase proposed till that time gets accepted).
- Will we see those price hikes in transaction fees too just like we witnessed during 2018? Will we need to pay very large transaction fees like $100 to get even $10 worth of BTC transacted?

[bbc.reporter]

Have you noticed that sportsbooks, dice sites and other businesses are also accepting altcoins and are increasing?

yes, to some extent. this should be expected as the altcoin markets grow, especially when most merchants are using payment processors. with coinpayments, accepting altcoins is like flipping a switch on. this doesn't necessarily suggest altcoins are threatening to overtake bitcoin.

Do you think the people will continue to use bitcoin when the fees are high? No, the people will look for alternatives, I reckon.

is that what happened in late 2017?

there's a pretty strong correlation between fees and price: they rise together. evidently, people have been willing to pay what the fee market charges.

i'm all for the market having different options, anyway. i think people will be willing to pay for bitcoin's superior security. for lower value transactions, there's lightning, sidechains, altcoins. it's hard to say how things will pan out exactly, but i think strong demand will remain for bitcoin because of its network liquidity and security.

2017 was only a temporary rise in fees. I am speculating on fees that are permanently high because 20 years from now the mining rewards will be very low for miners to support themselves. Miners might leave or users might be required to pay high fees.

Can bitcoin sustain itself on fees alone?

[Herbert2020]

there's a pretty strong correlation between fees and price: they rise together. evidently, people have been willing to pay what the fee market charges.

there used to be a correlation between fees and price back when fees were introduced and started becoming a thing. at first price was so low so the fees were high, something like 1000k-100k satoshi. then as price went up the fees went down to match the price to something like 10k satoshi fixed and then to lower amounts. then at some point since the blocks became full instead of fees being in accordance with price, they started becoming a tool of competition.

and that last part plus the spam attack was what happened in 2017.

[squatter]

2017 was only a temporary rise in fees.

That's what markets do -- they temporarily rise and fall. 2017 is indicative of what happens when there is strong demand for Bitcoin transactions.

You think they won't rise again? If long term adoption is growing, fees should rise over the long term too.

I am speculating on fees that are permanently high because 20 years from now the mining rewards will be very low for miners to support themselves. Miners might leave or users might be required to pay high fees.

Can bitcoin sustain itself on fees alone?

The mining subsidy will be very low. What makes you think the total mining rewards would also be very low? Because you assume adoption/usage is slowing down or dropping?

Nobody knows for sure if the zero inflation model will work, but it's the way Satoshi designed things. We'll have to wait and see.

[bbc.reporter]

@squatter. What makes me think total miner's rewards might be low? It might because there will only be 21,000,000 bitcoins in existence hehehe. Miner's rewards are going to 0, except for the fees. Can the miners sustain themselves from the fees alone?

Also, if the fees in bitcoin are permanently high, would it not make the people begin using other cryptocoins?

[rollingstorm45]

The last mineable block is far away and won't be a problem as bitcoin continues to develop. It will probably switch to POS at some point with other stake incentives added in the decades to come

the value of bitcoin is very dependent on its users, if the demand is large, the price will rise and if the demand for a little price will go down, the one who can determine the price is market players, bitcoin mining is only a supply of available coins, so bitcoin cannot determine itself , everything related to bitcoin is the determinant of bitcoin.

[bbc.reporter]

I do not see any clear arguments to support the sustainability of bitcoin mining from fees alone. Can this prove that a tail emission similar to what Monero and Aeon has might be the correct way to maintain a blockchain's security? What about Grin's transparent inflation schedule?

[franky1]

people DO NOT need to pay high fee's to make bitcoin mining functional. here is why

1. having an increased transaction count per block can offset this.
    EG 2000 tx of 25cents doesn't mean 2000 tx of 50cents after a halving. instead 4000 tx of 25cents offers the same solution
    this is not a point where the usual snake charmers shout out "gigabytes by midnight" or "blockchains cant scale".
    reality is they can scale. and it doesnt need to be jumping extra large real fast. but progressively over time

Are you finally admitting that the block size increase in Segwit was the right decision at the right time?

no, he is still saying the same thing as ever. to increase the block size itself with a hard fork but instead of jumping to a ridiculous number like 32 byte, go at it with a slower pace like increase to 2 MB first then maybe a couple of years later to 3 or something like that.
although I still don't understand why he is denying SegWit's scaling that happened already!

firstly it is you segwit/LN lovrs that have been the ones spouting out gigabytes by midnight.. no one else
secondly segwit did not/does not offer any bettr scaling for the bitcoin network. sgwit actually if you count the bytes per transaction, segwit is WORSE than legacy.. however segwit hides the real bytes with the wishy washy witness scale factor, stripped data and vbyte crap

my stance for years has never been jump to gigabytes ASAP but instead do what happened before 2015.. which was scaling.
2009-2011 0.25mb
2011-2013 0.5mb
2013-2014 0.75mb
2014-2015 1mb

segwits 4mb is not actually 4mb.. its a tx data base area of 1mb and a tailend area for signatures. the issue is by bloating up bytes per average transaction via new features. and the cut out the signature in the bas area still keeps the max tx count roughly the same.
EG
1mb legacy had a 600k a day tx count implied offering which is a number known back in 2010
but due to bloated features and new use-case features. blocks surpass 1mb of data.. yet we have not had a single day that has surpassed a 600k transaction count for a day.  

secondly my stance of fee's is that making veryone pay an average. and that average being hit due to how much demand there is, is not useful for anyone. as all it does is promote stalling/stagnating bitcoin scaling purely to try keeping a fee average up.

however RE-introducing a fee priority mechanism that is more based on age of funds. EG spammers that have funds only 1 confirm age pay more than a user that have funds that are over 144 confirms pay less.
this means people still pay fee's even if blocks are full or not as fees are not linked to a stifled blocksize.
it also penalises spammers, and to flip the argument incentivise those spammers that multispend a day to see the benefit of LN.
whilst those that only spend once a day/week/month dont get penalised to the same average.. they also because they dont spend often wont see benefit of LN anyway so shouldnt be burdened with paying the same price as spammers