Crypto's utility as a payment tool

[fiulpro]

One can always try the lightning network but at the same time its not like you guys are actually able to do the transaction for free .

See the thing is , the transfer fee is really justifiable , because there are numerous small miners working hard and their salary is dependent on it .

I do believe that we are ignoring the fact that someone from the creators wrote :

"Craig Steven Wright is a liar and a fraud. He doesn't have the keys used to sign this message.The Lightning Network is a significant achievement. However, we need to continue work on improving on-chain capacity. Unfortunately, the solution is not to just change a constant in the code or to allow powerful participants to force out others. We are all Satoshi."

Thus we do realize that we have somehow achieved something good but still there are security issues with the lightning network. It might even promote centralization in the near future. Therefore I do think it's something we are not taking into account.

We have to actually reach another level and I do believe till then we should be happy with the Bitcoins as an asset ofcourse.

[stompix]

I think OP has made the assumption that

Op has done this:


He still thinks that the price and the fee are somehow related, yet, truly amazing the fees have dropped to average 1$ with the price being above the level where we were experiencing fees of 5$. How could this be possible? It's maybe because of the concentrated sarcasm that is screwing up charts?
Or am I looking at the wrong price chart and in fact is at 2000$ per coin?




Every time there is a question on how something will evolve in term of numbers and value, there is a guy with a system that knows the answer, and it's so simple, we just multiply it by 10 and here you have it, we know how fees will evolve in the next 452 years and two months.

Having said that, what are the driving forces for BTC fee volume?

I imagine that there is the amount of transactions that are being posted to the mempool. Therefore people would compete with higher BTC fee volumes to have their transactions posted first. but then what if there was a dip in transactions posted to the mempool and the fees drop?

The halving happened.
We were mining fewer blocks per day, less space for transactions, offer and demand, the fee went up, simple as that.
Then the retargeting happened the second time, we're mining an extra 10% blocks now, fees are going down.

Price has nothing to do with it, as it never did.

At present, the value of bitcoin is measured by USD ($). When the price of bitcoin increases, its value also increases.

The only thing that increases is shitposting..

[alani123]

I often wonder about this as well. How the fees will be regulated after the bitcoin protocol's block reward is negligible? I think OP has made the assumption that the BTC fee volume stays constant. As far as I am aware, this is not the case. If it was the case, then their would not only be a correlation between BTC price and transaction fee (which insinuates some variance) but it would actually be a linear function, such that:

transaction fee = BTC fee volume (constant) * BTC price

either that, or I have missed something in the conversation.

Having said that, what are the driving forces for BTC fee volume?

I imagine that there is the amount of transactions that are being posted to the mempool. Therefore people would compete with higher BTC fee volumes to have their transactions posted first. but then what if there was a dip in transactions posted to the mempool and the fees drop?

In the future when the block reward is infinitesimal and the fees drop, then the miners are getting less money. Which would cause them to lower the hashing power (electricity spend) on the network. Would that lower the security of the bitcoin protocol?

So in the future, would it be that the fees should be regulated by the amount of money that the community believes should be spent on securing the network. Given that there is about 3000 transactions. It would be how much we want to give the miners in order to secure the network such that our storage of value is protected from 51% attacks etc.

What would that figure need to be, to ensure a secure creation of new block? if we know that, then we can divide that by the amount of transactions in a block and that would be the fee. Right?

I think the point you bring up on bitcoin's blockchain security is interesting. Lower rewards mean a lower incentive to mine. And rewards are going to be near zero after some point too.
The monetary incentive from that point on would be fees. Lower or close to absolutely no block rewards also increase the interest miners have in the maintaining of a fee market.
So paradoxically, after that time before 2140 comes, parties that transact BTC will be providing the sole monetary incentive to upkeep the safety of bitcoin's chain. But a conflict here is that the same parties will also want cheap transactions.

The points in the OP are quite clear cut for a hypothetical. As isolated variables there's a perfect correlation between price and fee value.
The correlation is also proven to exist in bitcoin's real world usage as I showed charting years of data. So no need to keep trolling this thread.

I don't think it's safe to predict that fees would be lower at that point though. Neither in terms of monetary value nor in terms of sat/byte.
Who knows what bitcoin would be at that point. But if we're to assume that it'd be close to today's technical standard, then I think that parties operating mining equipment would have more bargaining power. Even with potentially higher adoption, altruistic miners would be the contributing force for how high expensive it would be to attack bitcoin. It would then be in the hands of the users to keep providing some incentive to miners so they can sustain their operation better and make it more attractive. Lower fees at that point could potentially mean less security for all.

I think OP has made the assumption that

Op has done this:

The points in the OP are quite clear cut for a hypothetical. As isolated variables there's a perfect correlation between price and fee value.
The correlation is also proven to exist in bitcoin's real world usage as I showed charting years of data. So no need to keep trolling this thread dear stormpix.

Nice comic though.

[juvo_3]

I think the point you bring up on bitcoin's blockchain security is interesting. Lower rewards mean a lower incentive to mine. And rewards are going to be near zero after some point too.
The monetary incentive from that point on would be fees. Lower or close to absolutely no block rewards also increase the interest miners have in the maintaining of a fee market.
So paradoxically, after that time before 2140 comes, parties that transact BTC will be providing the sole monetary incentive to upkeep the safety of bitcoin's chain. But a conflict here is that the same parties will also want cheap transactions.
 

Right. I agree. A question that arises from this: is there a monetary amount that we can state as $X USD which would provide a acceptable amount of network security?  Such that X amount is purely spent on mining (i.e. including human resources for maintaining rigs, electricity for running rigs and cooling them. Not including costs such as buying new mining hardware, development of liquidation algorithms, etc.).

I assume this is a complicated question, as electricity prices are different in different locations, miners have different efficiencies of converting electricity to computations.

[stompix]

The points in the OP are quite clear cut for a hypothetical. As isolated variables there's a perfect correlation between price and fee value.

Hypothetical stuff stops being hypothetical once you try to defend it with data.
Then it's either true or false. In this case false.

If it were true now we would still be experiencing 5$ average fee, and what a surprise, we don't!

The correlation is also proven to exist in bitcoin's real-world usage as I showed charting years of data.

Unlike you, I'm showing you clear graphs where the fees are not following the price and moving in opposite directions.
You paint a line and you think you've discovered Sicily

So no need to keep trolling this thread dear stormpix.

Nope, what you think is trolling is the reality , just because you don't like that your one-line theory is going in smoke, that doesn't make my posts trolling material.
So, with no trolling, I will give you something to think over, since it's obvious as per the images posted above fees are not related to the price in the last 6 months, do you want to hear something that is indeed related?




Holly cow...and pig..and chicken...and wabbit!  Those things match! So, if the mempool goes up, so does the average fee. Eureka!!! Did you know that?
But, what could have caused the mempool to go up?

Maybe,maybe?
https://bitinfocharts.com/comparison/confirmationtime-btc-sma7.html#3m
Oh, the block time spiked because the retarget was to slow after the halving, the hashpower dropped, fewer blocks were mined, the capacity decreased, the offer and demand kicked in, fees went up...although the price didn't budge?

Want to test my theory? Let's see how fees will evolve in the next two weeks, the ones starting on the 15 and 22.
If the price will keep in the same 9500-10 000 range or even go down, are you ok with the fees going actually up?  

[alani123]

@Stormpix

You called the chart I drew arbitrary while it was derived from the same data you had posted...
I proceeded to post all of the data and formulas used in the chart and graphs and you're still dismissing it.

Seeing that you're genuine I'm intrigued to simplify the argument.

The hypothetical scenario is that if we were to run a simulation where no other variables existed, price and fee value would have a perfect correlation.

Great example by you here:

At a hypothetical price of $9.000 per BTC, the cost of the transaction would be $4.3425.

So for 90k$ per BTC we will have 43$ on average.
And for 900k$ we will have 430$ on average.

Of course, with real world usage there are many more variables to account for. But there's still a correlation. A correlation coefficient of 0.42848 indicates such.
Don't get me wrong, correlation does not imply causation. That's not what I'm implying.

So, if the mempool goes up, so does the average fee.

Great find. There's probably a big correlation between mempool size and fee value too.
Most likely that would also correlate with price also. Makes you think, right?

[Lorence.xD]

The transfer fee is the only way that a site will earn and they are basing their rate on the prices of bitcoin which means that you will still pay whether you you want it or not, I do not think that it needs fixing because there isn't that much problem, you should be thankful that there isn't any taxation because that will pump the miscellaneous fees  that is already in there. We do not need not worry about the compromise in decentralization especially if this compromise will result in something that will be beneficial in the long run to the cryptocurrency as a whole.

[stompix]

The hypothetical scenario is that if we were to run a simulation where no other variables existed, price and fee value would have a perfect correlation.

But unfortunately, you continue preaching for it for a hypothetical scenario claiming it's true.

Great example by you here:

At a hypothetical price of $9.000 per BTC, the cost of the transaction would be $4.3425.

So for 90k$ per BTC we will have 43$ on average.
And for 900k$ we will have 430$ on average.

You're accusing me of trolling but you don't see that wall of sarcasm from one cm.

Of course, with real world usage there are many more variables to account for. But there's still a correlation.

Then why are you sticking to the price, when there are obviously others?
Sorry, but in your quest of trying to prove white is wet, you're making a mess of all terms so better avoid them next time.

Most likely that would also correlate with price also. Makes you think, right?

Nope, it won't.
The proof is that we're at 9700$ with the average fee of 1$ while at the moment you started the topic we were at 9000$ with an average fee of 4$.

I love how you stick to your numbers and your arbitrary line but you REFUSE to comment on the current situation!
Why is this happening and why is your 0.42848 failing for two weeks by now?

[TheGreatPython]

I have not taken the time to look into how the fees for Bitcoin transactions are being calculated, but the fees I’m paying for a transaction has never been a problem for me. And from my own experience, I only notice the increase in the fees we pay when there is a upsurge in the price of Bitcoin or there is a Halving. But when the price becomes stable at that range, the fees will still come down to the low fees we were paying before then. And from my understanding it happens when the Blockchain gets tight with lots of transactions and people are ready to add more money to fees to get their payment approved quickly.

Probably lightening network may solve the problem when more people adopt it. When LN works in a way people do not need to rush for getting their transaction to be included in very next block, miners will start including all the transaction they do see. This way LN will solve both higher fee and scalability issues.