Will transaction fees get in the way of the bull run?

[thecodebear]

We all saw the crazy $50 tx fees in December 2017. It's only gonna get way worse this next bull run since it seems nothing will be done anytime soon to address block congestion.

Do you think the bull run, or at least bitcoin's role in it, will get cut short significantly by absurd transaction fees in the next couple of years?

I could definitely see transaction fees going into the hundreds of dollars when the price really starts getting crazy, which I think would pretty quickly stop bitcoins bull run in its tracks. This is the only thing I'm worried about for the bull run over the next couple of years. Everything else looks positive except that nothing was done to address tx capacity during the down market.

[dothebeats]

I don't think that would be much of a problem now with the maturity of LN though I must admit that only a handful in the community have actually used the said off-chain service. Anyway, as the price increases, of course, fees will also increase in respect to BTC/USD relationship plus a lot of people wanting to not miss any action during the bull run as it happens. It will get in the way for some traders that don't want to miss the even a single dollar on the transfers but certainly not going to stop the big guys from moving around funds in between platforms and wallets.

[gentlemand]

I don't think that would be much of a problem now with the maturity of LN though I must admit that only a handful in the community have actually used the said off-chain service.

LN is still a curio and will be for quite a while yet. Most people don't regard it as BTC seemingly.

The difference between now and 2017 is that Bitmain isn't spamming. Recent transaction volumes have matched that period and fees have remained realistic. Maybe Calvin and Craigy are next up for BTC spamming.

The real deep pockets won't give a shit what a transaction costs. Retail stock market traders are used to paying several dollars per move. No one cares what the deadbeats who want to pay for their cuppa with it think.

[leowonderful]

Fees are likely going to rise if prices start going up again as people try to move their coins to exchanges to sell them off for fiat, but I too suspect fees won't be too bad this time around unless TX spamming starts back up again. Very few services also accept LN at this moment in time, with no major exchanges accepting LN payments AFAIK so I don't see LN alleviating congestion very much should the bull run start up again. Though high fees aren't ideal, I don't see it being something significantly impeding the bull run. I'll gladly pay a few dollars to get my transaction(s) through quickly.

[STT]

It's only gonna get way worse this next bull run since it seems nothing will be done anytime soon to address block congestion.

I thought they had done a ton of things to allow lower fees to pass and allow some traffic to go around or was that not the point to new measures bought in and all the fuss people kicked up about it.

Anyway the point I was going to make is that fees could encourage more holding then normal at least in the smaller sized wallets could mean a higher price then normal not the other way round.  Ironic but somehow I think it might work like that.  I'm against high fees being any good for BTC long term as it shows poor efficiency and ability to scale

[nc50lc]

Answer to the title: it never does, 2017's crash wasn't caused by the fees and it reached the peak despite of the growing fee.

I thought they had done a ton of things to allow lower fees to pass and allow some traffic to go around or was that not the point to new measures bought in and all the fuss people kicked up about it.

Yeah, SegWit and a small contribution by LN.
But seeing block size of average 1.2mb, it indicates that SegWit adaption isn't going pretty well after more than two years since the soft fork.

But that ±30% did a very good job on preventing mempool congestion; normally, high number of pending transactions would take weeks to clear up to normal level, but now, those past congestion only took less than a week or overnight.

But the mempool is still expected to clog unless LN is fully utilizable by a "regular joe" and most of the exchanges shift to SegWit addresses as well as regular users.
You'll know that a "major" SegWit adaption is happening if we starting to see 2mb+ blocks in a row.

-edit: typo-

[exstasie]

Answer to the title: it never does, 2017's crash wasn't caused by the fees and it reached the peak despite of the growing fee.

This. People who are thinking "new paradigm!" and planning on getting rich quick don't care about $1 fees or $10 fees, and probably not even $100 fees either. It's not coffee buyers and third world poor people who are driving bubbles. It's moneyed investors and institutions who think they're buying a piece of the future, and time is running out.

I especially think a lot of people underestimate the fervor around altcoins during Bitcoin bull markets. When altcoins are doing 10x-1,000x moves, I have to reiterate that nobody cares about fees that are negligible by comparison.

[target]

When bullrun comes, it doesn't matter how much the transaction cost will be as its worth sending anyway. During the last 2017 bullrun, we were sending BTC and some other coins back and forth. If you however will be sending a payment to someone which will only cost about $5 but the transaction fee would be $50, that would be a horrible situation. You'd rather be using paypal for it.

[jakelyson]

When bullrun comes, it doesn't matter how much the transaction cost will be as its worth sending anyway. During the last 2017 bullrun, we were sending BTC and some other coins back and forth.

That is true. The network is clogged and fees skyrocketed but it did not stop bitcoin price from skyrocketing. Bet it will be better the next bull run because of Segwit and LN.

If you however will be sending a payment to someone which will only cost about $5 but the transaction fee would be $50, that would be a horrible situation. You'd rather be using paypal for it.

There are cheaper altcoins to use even on the bull run. 2017 bull run, ETH and BTC network is clogged so I am using other coins which is cheaper to use for payments.

[pooya87]

history has proven that "traders" don't care about the fees as it is evident from last time bitcoin was under sever spam attack and fees went ridiculously high. so no it won't get in the way of "bull run" any time soon and price will continue to rise even if fees were to go back up to ridiculous levels again.

but the important thing to keep in mind is that high fees damage and eventually prevent adoption. example is Steam (Valve), Reddit,... stopped accepting bitcoin payments. so although in short term high fees may not prevent bull run (this bull run for instance) but in the long run if things remain this way there will be no more bull runs anymore because bitcoin will be unusable and may even be replaced.

Do you think the bull run, or at least bitcoin's role in it,

what do you mean "bitcoin's role in it"? there is only one bull run and bitcoin price rise is IT. there is nothing else!

[btc78]

If you are withdrawing large amount or transacting high then it is reasonable to have bigger fees ,but ofcourse things are different when the hype hit 2017 because panic sellers are all over the place and congestions happen

But i think with lightning network around? Everything will be smooth this time (though we are not sure of we will cross the $20,000 value)

[nc50lc]

If you are withdrawing large amount or transacting high then it is reasonable to have bigger fees ,but ofcourse things are different when the hype hit 2017 because panic sellers are all over the place and congestions happen.
-snip-

Nah-ah, I can send $1000 or $1 using the same fee and the same confirmation time  
This is the most famous misconception in Bitcoin's transactions.

It mostly depends on the number of inputs, its address type and slightly depends on the number of outputs of the transaction.

Problem with high transaction amount is: most of the time, the user doesn't have enough huge inputs to cover the amount to be sent which will make a (for example) 10 input transaction which is about 2,000bytes multiplied by the tx fee rate which is quite high specially during mempool congestion.
People just need to learn to consolidate their inputs to be able to make a cheap 1->1 or 1->2 txs.

[semobo]

This time we may not face huge unconfirmed transaction on the blockchain network like it happened in 2017 because now most of the exchanges uses segwit address and also transacting the withdraw as a group rather than single transactions for every withdrawal.

[dmamigo]

People do have a misconception about high value will lead to high fees. But as mentioned the fees increase due to congestion and unconfirmed transaction. That is when high fees result in quick completion of the transfer.

If the bull run is gradually slow and rises up decently, I think the fees will be in a good position. In that ATH peak time, people in the hope that will go even higher used to trade like anything and then the fees were high at that time. Otherwise, the crypto transaction is the cheapest form of transaction.

When I buy service or digital goods from cross border stores, the fees are very cheap. If I transact using any other alts, the fees are comparably lower.

[Tytanowy Janusz]

It's only gonna get way worse this next bull run since it seems nothing will be done anytime soon to address block congestion.

Well it's happening every day. This is not the same bitcoin as it was in 2017.


source: https://www.reddit.com/r/Bitcoin/comments/bjm2gj/btc_transactions_reach_new_highs_while_fees/?utm_source=ifttt

We already hit number of transactions from 2017 bull run and fees are low. And this chart does not include LN transactions.

[jseverson]

People do have a misconception about high value will lead to high fees. But as mentioned the fees increase due to congestion and unconfirmed transaction. That is when high fees result in quick completion of the transfer.

Well it can't be denied that there's a small correlation. Even if you're only paying the minimum of 1 sat/byte, if Bitcoin's value skyrockets 1000%, then the fees you pay also increase by 1000%. It's going to be a long while before this potentially becomes a problem though.

Either way, it doesn't seem like fees have been a major factor in market movements thus far. That's kind of expected too, considering most people still consider Bitcoin more of an investment than actual money that can be spent daily. It's only going to matter substantially once Bitcoin's utility becomes the primary driver of its market value.

[BrewMaster]

Either way, it doesn't seem like fees have been a major factor in market movements thus far.

to be fair apart from bitcoin being mostly considered an investment, the fees haven't been high for that long to cause any actual problems so far in the entire history of bitcoin so we really don't have that much data to work with. the most serious case was in 2017 and that mostly was the result of spam attack which stopped after the scaling debate ended.
with that said i believe in the long run if the fees go up and remain up we will be facing serious problems.

[LeGaulois]

We talked here and there many times about using Segwit, cheap fees are one of the reason, especially if you use a bench address (1bc......) you can reduce the fee by ~50%.
Yet the percentage of people using it is very low and worst when it's about companies. They don't want to listen to.
Segwit isn't new btw and there are other solutions to reduce the fees

[thecodebear]

It's only gonna get way worse this next bull run since it seems nothing will be done anytime soon to address block congestion.

I thought they had done a ton of things to allow lower fees to pass and allow some traffic to go around or was that not the point to new measures bought in and all the fuss people kicked up about it.

Anyway the point I was going to make is that fees could encourage more holding then normal at least in the smaller sized wallets could mean a higher price then normal not the other way round.  Ironic but somehow I think it might work like that.  I'm against high fees being any good for BTC long term as it shows poor efficiency and ability to scale

I think the fuss that was kicked up was because barely anything was done! The big debate never got a resolution, even a partial resolution. And because of that fees are gonna be even worse on this bull run. Fees are gonna start getting high well before bitcoin price starts going crazy.

All that was done was segwit, which helps a little but even if segwit was at 100% in 2017 the fees probably would have gotten pretty high, which means they are gonna be way worse next peak. And some exchanges did batching of transactions, which certainly helps some, but again both of these are partial solutions that don't come close to even resolving the problem for the next couple of years, let alone being long term solutions.

[thecodebear]

Either way, it doesn't seem like fees have been a major factor in market movements thus far.

to be fair apart from bitcoin being mostly considered an investment, the fees haven't been high for that long to cause any actual problems so far in the entire history of bitcoin so we really don't have that much data to work with. the most serious case was in 2017 and that mostly was the result of spam attack which stopped after the scaling debate ended.
with that said i believe in the long run if the fees go up and remain up we will be facing serious problems.

Yeah. and fees are guaranteed to go wayyyyy up. Things will be a lot worse in the next couple years than they were in 2017. It's going to become a very serious problem very soon. And the whole debate from 2016/2017 was just pushed away and the community seems to have pretended it went away during the slow part of the market cycle. That reallllly worries me. 2018 would have been a great time to fork with some scaling so that the next bull run doesn't run into the fee problem of the last bull run, and instead nothing was done, guaranteeing the problem will be way worse this time around.