Are Bitcoin's fees overpriced?

[Abiky]

Bitcoin's rise in popularity has congested the blockchain network over the past days. The pioneer cryptocurrency has seen a surge in price, as well as, network fees. Last time I've checked, fees where well above $10 per transaction. That's a lot for moving minuscule amounts of Bitcoin across the blockchain. Yet, fees aren't as high as they were back in December 2017. Depending on Bitcoin's price relative to Fiat, fees can either be overpriced or all the other way around. Bitcoin's limited block size will only make matters worse over the long term. There's still the Lightning Network, but it has many flaws that would put your funds at risk.

Do you think that Bitcoin's fees are overpriced right now? If not, why? Will it stay like this forever? Will people adopt the Lightning Network more thoroughly as fees soar on the main chain? Your input will be greatly appreciated. Thanks in advance

[btcsmlcmnr]

Bitcoin's rise in popularity has congested the blockchain network over the past days. The pioneer cryptocurrency has seen a surge in price, as well as, network fees. Last time I've checked, fees where well above $10 per transaction. That's a lot for moving minuscule amounts of Bitcoin across the blockchain. Yet, fees aren't as high as they were back in December 2017. Depending on Bitcoin's price relative to Fiat, fees can either be overpriced or all the other way around.

Do you think that Bitcoin's fees are overpriced right now? If not, why? Will it stay like this forever?

It is not the most expensive fee in past one year. The highest transaction fee is in March: https://jochen-hoenicke.de/queue/#1,1y. It is fee in satoshi units and your statement is right if consider the fee in $. Price of bitcoin in December is higher than in March for a few times.

Fee will drop in satoshis units but in $, I don't know as it depends on price of bitcoin. Same fee in satoshis but has higher fee in $ if bitcoin rises more.

Bitcoin's limited block size will only make matters worse over the long term. There's still the Lightning Network, but it has many flaws that would put your funds at risk.

I don't know the flaws for Lightning Network and I see its growth is slow but there are people opens their channels to use LN for their transactions.

[FinneysTrueVision]

If you are paying $10 to make a transaction then it is very likely that you are overpaying. According to mempool.space around $3 is what it would take to get your transaction accepted into the next block. Depending on if you're using segwit and the amount of inputs and outputs your transaction would be more expensive.

I don't expect it to stay like this forever. At the beginning of the bull run the fees were quite low and it wasn't until the price went past the all time high that they started soaring. The price won't remain bullish forever and since most on chain transfers are related to trading activity fees will go back down.

[Jennyjing1]

Sure, I think the same. The service fee of Bitcoin has become too high!!! I do not believe it is worth it in that almost everything is virtual, why do I have to pay this annoying money? It does me not enough good

[Pito001]

Bitcoin fees are pretty hight for sure. However, we cant do anything about it without protocol update. Every bull run there are a lot of transactions on the network. This makes fees so big

[Darker45]

I think some exchanges and wallets are really overcharging. In the past week or two, I made a couple of transactions with staggering withdrawal fees. One of them charged me 0.00145BTC. A fee as high as that was simply unnecessary.

We may put aside the Lightning Network for now as it is still under further developments but I wonder why features allowing custom fee are still not provided by many wallets, or even exchanges. It should already be the norm by now. I have yet to encounter an exchange which allows users to determine their own fee in Satoshis per byte.

[stompix]

It seems the fees are directly proportional to Bitcoin in value of dollar.
The higher the price, the higher it would become.

No, they are not.

Average fees in April 2017 were just under 1$, the price was 1-1.5k/BTC
Average fees in January -March 2020 were under 1$, with the price at 10k/BTC
Average fees right now have reached 10$ with the price at 22k/BTC
The highest fees seen on the network were in the last months were at the start of November, at around 12$ yet the price was just 13k/BTC

Where is that direct relation?
The only thing that matters is the demand for space in the blocks, if people will rush to transfer coins around you will see 10$ a tx even with the price at 3k. Oh, wai, that already happened

Do you think that Bitcoin's fees are overpriced right now? If not, why? Will it stay like this forever?

I don't know if overpriced is the best way to describe it, after all, there is nothing forcing you to pay a certain fee, you pay as much as you want, rather people are overpaying for stuff. As for the forever part, take a look at the mempool, you can get in the next block at 6sat/b as I type so probably around noon it will drop to 2-3 if not 1. It will not say like this forever unless there are people willing to pay that much, once they get tired of it they stop making that many transactions, the mempool gets emptied, fees drop, people rush to it, rinse and repeat.

[actmyname]

I don't know if overpriced is the best way to describe it, after all, there is nothing forcing you to pay a certain fee

Except for nodes broadcasting transactions - there is a minimum, though most people will probably want to pay more than it if the mempool isn't emptied.

In the past two weeks, you could get away with decent speeds from 10-30sat/byte most of the time and even occasionally 2+ sat/byte in a few valleys.

Still better than banking hours!

[Wexnident]

I don't think so. The high fees don't necessarily scale with the price afaik, it only scales with how busy the network is. It's like how Banks could have those over-congested transactions, but in the case of Bitcoin, you can go ahead of others by paying more, unlike in banks. It isn't overpriced as well, it's simply the common supply-demand thing logic, the more everyone wants to transact with Bitcoin, the more one would have to pay if you want your transaction to immediately go through. I think this is also one of the issues why Bitcoin can't be the main currency, the fees would be sky high with the number of transactions that happen each day.

[mk4]

Sure, I think the same. The service fee of Bitcoin has become too high!!! I do not believe it is worth it in that almost everything is virtual, why do I have to pay this annoying money? It does me not enough good

Quick note that if you're using a non-custodial wallet(which you definitely should) whereas you can set your own custom fees, you really don't need to pay higher fees if you're not in a rush. You can just set the fees to like 20-50sats/b if you don't urgently need the funds yet.

If you're referring to the hefty fees on exchanges, then you're out of luck.

[rijaljun]

I'm not really sure if it's overpriced but whenever I was using my electrum wallet to make a transaction there's always a warning that the fee I'm using exceed at some percentage and that's what I know if my fee is overpriced or not.

[pooya87]

The biggest issue that I see with fees is that they shoot up real fast instead of incrementing slowly. For instance a couple of hours ago they suddenly went up to over 100 sat/vbyte (from 5) while the mempool only grew about 20 MB.
This has always seemed to me like a serious issue with the implementations that instead of incrementing the fee in smaller steps they make bigger jumps. There is also the fact that fractions of a satoshi is not yet used in fees (with 200 byte fee goes like this 1 sat/byte> 2 > 3.... => 200 sat > 400 > 600 > 800 > 1000 while it could go up as 200 > 250 > 300 > 350 > ....)

Yet, fees aren't as high as they were back in December 2017.

That's because most of 2017 high fees were because of a lot of drama and spam attack against bitcoin network.

Bitcoin's limited block size will only make matters worse over the long term.

Limited block size is a necessity, we can't have unlimited block size.
The issue is when block size is much smaller than the demand for a place in the blocks.

[Lorence.xD]

10$ is a lot in my country so yeah I do believe that the fees are overpriced. I do believe that the only way this can be resolved is by putting a fixed fee, and not just a constant number for fee, I think that putting a percentage is the safest because it will be dependent automatically on how much you are going for transaction. I think that my solution has still some flaws but I believe that if there is a consortium on bitcoin like how the Internet works, I think that they can work something out.

[stompix]

The biggest issue that I see with fees is that they shoot up real fast instead of incrementing slowly. For instance a couple of hours ago they suddenly went up to over 100 sat/vbyte (from 5) while the mempool only grew about 20 MB.

That always happens when there is bad luck with blocks, there are no transactions getting confirmed and all the wallets recommend higher and higher fees, putting more and more on top of the highest fees, and if there there is no drop in the maximum at the top for a while we have situations like this, even if the mempool doesn't grow by a huge margin in terms of MB it grows disproportionately when it comes to sat/b.

Block 662800 got mined at 14:59, block 662817 at 21:09, that's 17 blocks in 6 hours, one block every 21 minutes. Indeed, a case of bad luck!  

[Debonaire217]

The bitcoin fees are fine for now because it seems that its gaining popularity and many people are already using it. The exchange and platforms also has a factor to the fees whether theywant it to be just high enough above the other coins because its the one with a lot of number of users. This won't stay for long for sure but I also guess that this will somehow decrease the value but not really go down. In marketing, fees always goes up and never go back again from where it started.

[MoreStamps.Global]

It is indeed. It took $11.12 for my yesterday's transaction. I mean this is not something I will use regularly. But if I compare it to PayPal - a leading payment processor, it is justifiable. They charges flat 7% fees on any transactions. On top of that, it further cuts the payment while transferring received payments into local currency. So, I think Bitcoin is a great solution but having it used often, I do consider that the current fee is high.

[meanwords]

It depends on where you use it. if you think transacting for a very amount of money, then Bitcoin's fee is definitely overpriced compared to others but when making larger transactions, Bitcoin is definitely cheaper. That's using the standard wallet of Bitcoin, not custodial or exchange wallets.

For exchanges, they definitely charge absurd amount of fee but that's understandable because they want to get the fastest transaction + probably a little bit of profit.

Will people adopt the Lightning Network more thoroughly as fees soar on the main chain?

This depends on the development of LN. As of now, it's still not viable because there are significant bugs that needed to be fix first.

[Wind_FURY]

OP, relative to the fees you pay in Bitcoin's centralized counterparts, yes, the fees are sometimes high everytime the mempool is flooded. From a censorship-resistance standpoint, and because of the design decisions made to overshoot security and maintain censorship-resistance, it's the right price at the given time.

[XZERO1]

Do you think that Bitcoin's fees are overpriced right now? If not, why? Will it stay like this forever? Will people adopt the Lightning Network more thoroughly as fees soar on the main chain? Your input will be greatly appreciated. Thanks in advance

Depending how much Bitcoin you're transferring the answer to that question could be different...

If you're usually sending $2-3k worth of BTC or more in your transaction then paying $10-12 per transaction would not be too much for you, but when you're dealing with lower amount of Bitcoin and you're trying to send 100$ worth of bitcoin or less it get real annoying to pay that much for a transaction, for example imagine if you want to buy something online that is worth 20$ or something like that using Bitcoin, in that situation you either have to forget about that or if that online shop uses other altcoins you can use them to buy stuff online.

Keep in mind that you can pay less transactions fees like 0.0001Btc or even less at times but in that case you should be willing to wait but you're transaction definitely will be confirmed with these amounts of fees as well and won't be stuck that long.

[witcher_sense]

I just want to add my two satoshis, bitcoin transaction fees are not overpriced, they cannot be overpriced since everything is occurring within the borders of the free market for money. Everything that is happening right now is a pure example of how supply and demand come to equilibrium. That is an example of how they should work and influence each other when there is no any meddling force trying to manipulate the market. This particular situation is a reflection of significantly increased demand for block space and a strictly limited supply of block space. Given that the space of the bitcoin block is limited, scarce, and is in high demand, you should expect a growth in prices. The people making decisions regarding how much they want their transactions propagated decide what a fair price is.