bitcoin transactions costs in the future

[stompix]

I'll admit I'm not expert in mining.  I know very little about it, in fact.  What I'm wondering is what would happen if bitcoin's price reached a level that was so insane that 1 satoshi was something like $5 or even higher.  Would that not screw up the entire bitcoin system?  There would be no way to send small amounts of bitcoin or very exact amounts, much less pay a fee to the miners.  

Am I missing something in that hypothetical case other than the fact that 1 satoshi will probably never be worth that much?

In that hypothetical case, you miss the fact that one bitcoin is going to be worth 500 million, and all the bitcoins in the world are going to be worth ~10 000 trillion, or about 120 times the GDP of the entire world. If that would happen in the next ten or 20 years a coffee cup would have to be 100 or 200$, so no point breaking satoshis.

And even in that case, there is still a possibility, a fork to further split satoshis in smaller denominations.

But I doubt we will ever reach that point.
Even at 1 cent/Satoshi, we're still talking about a bitcoin being worth 1 million, I can still an insane price level where it's still pretty much feasible to deal with it

The most important here is that there is always the development of better mining equipment that hopefully will do things faster and most importantly more efficient in the use of power (this is a big concern for many especially environmentalists).

Better miners don't make transactions happen faster and that efficiency is not what about the green environment but how many green bills you get for the power burned:P

If Bitcoin reaches 100k tomorrow, there will be 180 million to be earned, miners would be happy to spend 150 million a day on energy to get that.

At a price of 5 cents per kwh....you're not going to like the result  

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[LUCKMCFLY]

Of course all this turns out to be a problem, now more than ever because everything depends on the price of bitcoin, that is, if the price of bitcoin increases the fee rates they will also do it, it is something that does not make sense but due to this only for the mining part but for the Exchanges, this always happens, in some way they want to take advantage of the opportunity.

In Venezuela electric power is almost given away, however now due to power cuts is a serious problem, unless you reside in the Country Capital, now if we see it from the point of view of being a good business, it is , as long as the bitcoin is on the rise, so the energy goes free, many miners are not only worried about the price of energy, but the performance of their machines, even if they are machines, they can be damaged, your cards as some part of the hardware that should be replaced immediately, if we take into account these costs, the rate of profit is increased much more in negative, but now the spcial market is having a good upward turn, which means that it is in a very good run for the miners that they leave a little more expensive electric power service.

If solar energy is used to make it function, it must be taken into account that the voltage must be generated to start and keep the machines running without loss, and without risking the flow of operation of the same.

[sirminesalot]

Nobody will ever supply electricity for free that is impossible in this world we live in and even if you can be talking about the power of the sun there will always be generation and operational cost. Now even if the electricity is free, you have a big investment with the equipment and other related expenses. The most important here is that there is always the development of better mining equipment that hopefully will do things faster and most importantly more efficient in the use of power (this is a big concern for many especially environmentalists). I am looking forward to many good innovations and changes soon in the bitcoin mining industry.

it is true that in all countries, especially in my country, there is no free electricity. surely the cost of the opera is very expensive for the power of the sun

[Netnox]

If Bitcoin reaches 100k tomorrow, there will be 180 million to be earned, miners would be happy to spend 150 million a day on energy to get that.

At a price of 5 cents per kwh....you're not going to like the result  

A large part of the expenses incurred by the miners can be attributed to the capital costs. Setting up a mining farm can be very expensive, with all those mining rigs and air conditioners. Right now, there are only a few manufacturers that produce the mining rigs. And they don't have the spare capacity to increase the production 100x.

[Fredomago]

If Bitcoin reaches 100k tomorrow, there will be 180 million to be earned, miners would be happy to spend 150 million a day on energy to get that.

At a price of 5 cents per kwh....you're not going to like the result  

A large part of the expenses incurred by the miners can be attributed to the capital costs. Setting up a mining farm can be very expensive, with all those mining rigs and air conditioners. Right now, there are only a few manufacturers that produce the mining rigs. And they don't have the spare capacity to increase the production 100x.

Which is real, the setup will already burned you as hell when you do this mining business, not everyone can afford that only those who have huge investment capital and have a good source of cheap or free electricity will manage to proceed and do this business, its a risk to take even value of
bitcoin will increase to that level.

[el kaka22]

It can never be "free" even the energy evolution of solar energy is not free. Running that place costs money, even if its less than the original ways its still has a operational cost, from salaries of people who run those places to maintenance and stuff we don't know. So it can never be free, it could totally be clean and cheaper but not free. That is one part, on top of that bitcoin miners needs to profit as well, so even if electricity gets really cheap we need to put miners profit on top of that as well and we have a cost at our hands.

Now miners do mine bitcoin in return so that could mean they will be paid in the bitcoins they mine but the transactions could be free but looking at how the halving is getting close I am pretty sure just the bitcoins mined can't be enough, its a possibility but a very low one at that. We already have only 3 million bitcoins left to mine so I doubt it will be feasible but even if it is not going to last too long.

[wahyu wida]

If Bitcoin reaches 100k tomorrow, there will be 180 million to be earned, miners would be happy to spend 150 million a day on energy to get that.

At a price of 5 cents per kwh....you're not going to like the result  

A large part of the expenses incurred by the miners can be attributed to the capital costs. Setting up a mining farm can be very expensive, with all those mining rigs and air conditioners. Right now, there are only a few manufacturers that produce the mining rigs. And they don't have the spare capacity to increase the production 100x.

Which is real, the setup will already burned you as hell when you do this mining business, not everyone can afford that only those who have huge investment capital and have a good source of cheap or free electricity will manage to proceed and do this business, its a risk to take even value of
bitcoin will increase to that level.

cheap electricity resources will be very difficult for developing countries. only developed countries can do so with an established level of welfare. of course if that happens, it will be a good mining for minner, of course the cost will be reduced

[NewRanger]

If Bitcoin reaches 100k tomorrow, there will be 180 million to be earned, miners would be happy to spend 150 million a day on energy to get that.

At a price of 5 cents per kwh....you're not going to like the result  

A large part of the expenses incurred by the miners can be attributed to the capital costs. Setting up a mining farm can be very expensive, with all those mining rigs and air conditioners. Right now, there are only a few manufacturers that produce the mining rigs. And they don't have the spare capacity to increase the production 100x.

Which is real, the setup will already burned you as hell when you do this mining business, not everyone can afford that only those who have huge investment capital and have a good source of cheap or free electricity will manage to proceed and do this business, its a risk to take even value of
bitcoin will increase to that level.

cheap electricity resources will be very difficult for developing countries. only developed countries can do so with an established level of welfare. of course if that happens, it will be a good mining for minner, of course the cost will be reduced

it  just be a dream for citizen from developing countries.they government need much fund to provide infrastructure.so if they give subsidy it difficult to happen.meanwhile mining need low cost electricity to able generate profit from current price.

[2chase]

Unfortunately, in my opinion, Bitcoin now has a very significant negative factor that governments of many countries are drawing their attention to. The point is that the cost of maintaining the activity and performance of the Bitcoin network is currently too high. Too much energy at this point in time is going to ensure the stable operation of the Bitcoin network.

[stompix]

~

A large part of the expenses incurred by the miners can be attributed to the capital costs. Setting up a mining farm can be very expensive, with all those mining rigs and air conditioners. Right now, there are only a few manufacturers that produce the mining rigs. And they don't have the spare capacity to increase the production 100x.

Not immediately of course.
But when gear that was sold for 400$ a few months ago can earn 720$ a month even at 10 cents per kwh every bitcoin mining chip maker will be able to go to TMSC and make them an offer that would take 1st place in the queue.

Abut air conditioning..common, we have stocks for that for tens millions of homes and businesses it won't be a problem to a few thousands small farms or a few hundred huge ones.

And I wasn't talking about 100x, but the price reaching 100k.

It can never be "free" even the energy evolution of solar energy is not free. Running that place costs money, even if its less than the original ways its still has a operational cost, from salaries of people who run those places to maintenance and stuff we don't know. So it can never be free, it could totally be clean and cheaper but not free. That is one part, on top of that bitcoin miners needs to profit as well, so even if electricity gets really cheap we need to put miners profit on top of that as well and we have a cost at our hands.

Not only the energy is not free, but in most places, you can even sell that energy so it's not like you get it for free and you have no use for it. Even if you use it to mine and generate profit you must first check and subtract what profit you would have had if you would have sold the energy directly to the grid without the headaches of monitoring bot miners and bitcoin price.

[BitHodler]

Unfortunately, in my opinion, Bitcoin now has a very significant negative factor that governments of many countries are drawing their attention to. The point is that the cost of maintaining the activity and performance of the Bitcoin network is currently too high. Too much energy at this point in time is going to ensure the stable operation of the Bitcoin network.

It's just a matter of time before people find Bitcoin useful enough to no longer care about its energy consumption, just like how people don't care anymore about the energy consumption of the banking system and internet/tech giants.

Back in the days there was a similar discussion going on about how the internet would result in an environmental disaster due to how much energy massive datacenters consume at cost of the local economy/environment.

Right now no one even cares about these datacenters anymore, where most of them run on renewable energy, which eventually will be adopted by most Bitcoin mining farms as well. History has shown that things CAN change for the better.

[dddudidd]

I agree this is a big and free resource and in my opinion this is a new breakthrough in the world of agriculture.  so that working farmers don't fully use their muscles.  regarding the return of investment, it is clear that it will return if the project and company continue to make significant progress.

[Kimonoe]

Unfortunately, in my opinion, Bitcoin now has a very significant negative factor that governments of many countries are drawing their attention to. The point is that the cost of maintaining the activity and performance of the Bitcoin network is currently too high. Too much energy at this point in time is going to ensure the stable operation of the Bitcoin network.

It's just a matter of time before people find Bitcoin useful enough to no longer care about its energy consumption, just like how people don't care anymore about the energy consumption of the banking system and internet/tech giants.

Back in the days there was a similar discussion going on about how the internet would result in an environmental disaster due to how much energy massive datacenters consume at cost of the local economy/environment.

Right now no one even cares about these datacenters anymore, where most of them run on renewable energy, which eventually will be adopted by most Bitcoin mining farms as well. History has shown that things CAN change for the better.

changes will always exist, and usually changes that are more effective and more efficient are the people's choices. therefore if there is renewable energy, then the two factors above are considered for the continuation

[stompix]

Back in the days there was a similar discussion going on about how the internet would result in an environmental disaster due to how much energy massive datacenters consume at cost of the local economy/environment.

Right now no one even cares about these datacenters anymore, where most of them run on renewable energy, which eventually will be adopted by most Bitcoin mining farms as well. History has shown that things CAN change for the better.

It's because there is a slight difference.

A few decades ago you had HDD with 1 GB of data and CPUs running at 166 Mhz, imagine the size of youtube datacenter if they would have to replace all their HDD's with some with 1g capacity and how many servers they would require to process 4k videos if they would use that generation of chips.

But data centers were saved by efficiency.

Bitcoin doesn't work that way.
More efficiency mining means only that you get more $ per kWh spent and everyone will try to maximize their profits and in the end spent the same amount of energy.

Right now we have around 3 millions miners plugged in, at 8000$ per bitcoin.
At 80 000$ we will have probably 30 million.
Now imagine 30 million miners drawing each 2500W.
That's 100 millions Dell R740 fully equipped and with 2 GPU units.
Google for example for all its services including youtube has around 3.2 million, in 2015 there were only 75 million servers in the whole world!!!!

The only thing that will prevent this waste is going to be the reward halving.

[KlepZ]

To understand how fees might become a significant incentive for miners we need to understand what the costs of transactions look like in terms of the current mining rewards. With this measure each transaction costs around 0.045 BTC, or approximately $17 at the end of October 2014. The network is able to process more transactions per second than it is right now. It's currently running at about 30% of its capacity and has doubled in the last 12 months.

[Betwrong]

~ What I'm wondering is what would happen if bitcoin's price reached a level that was so insane that 1 satoshi was something like $5 or even higher.  Would that not screw up the entire bitcoin system?  There would be no way to send small amounts of bitcoin or very exact amounts, much less pay a fee to the miners.  Am I missing something in that hypothetical case other than the fact that 1 satoshi will probably never be worth that much?

Let's assume 1 satoshi is $5. Since 1 Bitcoin is equal to 100 million satoshis, it makes 1 BTC worth $500 million. When finding a block miners receive not only transaction fees from all the txs included in the block, but also a block reward that is 12.5 BTC currently.

12.5 x 500 million = $6.25 billion

If the block reward was so high, miners would start including transactions with zero fee without any problem, because only to receive the block reward would be more than enough for them.

And even after 2020 halving, when the block reward will be reduced to 6.25 BTC, even then, and I would say, many years after that, the block reward would be the main source of miners' income in the case of very high price of Bitcoin, not the transaction fees.

[South Park]

Even using the renewable source of energy, you still need to cover the initial investments of the equipment used. So you still need to charge fee for every transaction, though you have the option to lower such charges. And in that regard, future bitcoin transaction fees might be lower as compared to current rates, even if you want to add more satoshis to accelerate your transaction.

Exactly, mining equipment is very expensive and not only that miners need to pay their employees as well which raises their costs, however miners are not the ones that determine the costs of transactions, that is done by us, since the space in each block is limited this means the supply is low and when the demand gets higher like when the price of bitcoin goes up then it is natural to see a spike in the fees since everyone is trying to outbid one another to get their transactions to be confirmed as fast as possible.

[befriendmywater]

Even using the renewable source of energy, you still need to cover the initial investments of the equipment used. So you still need to charge fee for every transaction, though you have the option to lower such charges. And in that regard, future bitcoin transaction fees might be lower as compared to current rates, even if you want to add more satoshis to accelerate your transaction.

Exactly, mining equipment is very expensive and not only that miners need to pay their employees as well which raises their costs, however miners are not the ones that determine the costs of transactions, that is done by us, since the space in each block is limited this means the supply is low and when the demand gets higher like when the price of bitcoin goes up then it is natural to see a spike in the fees since everyone is trying to outbid one another to get their transactions to be confirmed as fast as possible.

I really do not complain about BTC transaction costs. I am a trader and I have many ways to avoid BTC trading but money can still come back to my wallet very quickly. For example, if you are trading on an exchange, you are holding 1 BTC. You can divide it and sell it at altcoins with low transaction fees like Nano, XRP, LTC, ETH, CS, ... then we can convert to 1 wallet and everything will become very simple.

[figmentofmyass]

So I would like to add a possibility: if the necessary energy to move the mining activity was supplied *for free*, could btc transactions be executed for free as well?

it will always require capital to acquire solar panels and other renewable energy infrastructure. it doesn't come free. just like now, miners need to invest in hardware and infrastructure to indirectly invest in BTC.

as bitcoin mining transitions towards green energy sources, it'll be better for the earth, but the fundamental incentive design won't change. we still need to pay miners to include our tx in blocks.

[stompix]

I really do not complain about BTC transaction costs. I am a trader and I have many ways to avoid BTC trading but money can still come back to my wallet very quickly. For example, if you are trading on an exchange, you are holding 1 BTC. You can divide it and sell it at altcoins with low transaction fees like Nano, XRP, LTC, ETH, CS, ... then we can convert to 1 wallet and everything will become very simple.

You call that simple?
You first sell your BTC for altcoins, you pay fees, you also have to set up wallets, and...you end up with shitcoins!!!

Most of us are concerned about sending BTC and receiving BTC not converting into some shitcoin.

What am I going to do if I want to send somebody some bitcoin, send them to an exchange...convert them to an altcoin, send the guy the altcoin then he sends to the exchange and converts them to BTC ...and he withdraws?
Paying twice the fees for BTC, twice conversion and withdraw fees?
Calling that simple!!!!!