How are Bitcoin transaction fees so low?

[Akash1243]

Recently i came to know that there was a 800M$+ transaction with fees around 1$,how is this remotely possible?
To my knowledge the transaction fees is actually a reward for the mining computers for successfully helping us create a block on the block chain.With such low fees wouldnt miners be discouraged to do so i.e. wouldn't mining become less profitable.
Also bitcoin can never become proof of stake unlike other coins,so where does this leave us ?

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[BlackHatCoiner]

It's because fees aren't calculated by the amount transacted, but by the size of the transaction. The more outputs you spend the greater the fee will be. Remember, the miner just includes data in a block and is incentivized to mine what pays more, regardless of the amount the people transact.

Also bitcoin can never become proof of stake unlike other coins,so where does this leave us ?

What does that have to do with the transaction fees?

[Charles-Tim]

It is because the mempool is not congested. If the mempool is congested, the feerate (sat/vbyte) to get transaction confirmed will be much more and increase as the mempool congestion increases, which will be otherwise as the mempool is getting less congested.

With such low fees wouldnt miners be discouraged to do so i.e. wouldn't mining become less profitable.
Also bitcoin can never become proof of stake unlike other coins,so where does this leave us ?

It has been working like this successfully since the creation of bitcoin. There will be time the mempool will get congested and there will be time the mempool will not be congested. If mining hashrate have been increasing, it means bitcoin miners are making profit. Yet, bitcoin has the strongest blockchain.

[mk4]

Also bitcoin can never become proof of stake unlike other coins,so where does this leave us ?

It leaves the Bitcoin network to be the most secure protocol to date. Having a SoV/hard money protocol to use PoS could end up being a really really big problem.

[pooya87]

with fees around 1$

Actually that is considered a high fee with these days standards. Most transactions are small (in virtual bytes not the amount they send) and the fees they pay are around 10 cents (1/10 of $1 fee).

To my knowledge the transaction fees is actually a reward for the mining computers for successfully helping us create a block on the block chain.With such low fees wouldnt miners be discouraged to do so i.e. wouldn't mining become less profitable.

Not exactly. The fees are more like icing on the cake for miners since they are already getting the block reward that is a significant amount of money for them. And for the foreseeable future they aren't going to need that much fees to cover the mining costs since the block reward is still high.

Besides profitability of mining mainly depends on costs and it is calculated with comparison to others and the entire hashrate. For example if you have access to cheaper electricity compared to others and your ASICs aren't old models, you'll make a bigger profit.

Also bitcoin can never become proof of stake unlike other coins,so where does this leave us ?

No because Proof of Stake is a fundamentally flawed protocol that only shitcoins use as a way to cheaply ensure their survival.

[Little Mouse]

Because the fee reward isn't the motivation for running mining for the miners. There is 6.25 BTC rewards for each block, so that's the reward they are after. However, as mentioned above, fees can be varied. It's not the same all the time. You can get your transaction into the next block with such low fees while sometimes, it's hard to get on the next few blocks with $5 worth of fee. By the way, it's worth mentioning that fee is calculated based on the number of inputs and output.

[tbct_mt2]

Bitcoin transaction fee depends on your transaction size, your fee rate, mempool condition and where you broadcast and send your Bitcoin.

If it is from your non custodial wallet, you can control factors 1 & 2.
If it is from exchange wallet, you can not control anything. Exchanges charge static withdrawal transaction fee no matter what is transaction size, what is mempool condition. You always are overcharge if you make your transaction from exchanges.

Check mempool
https://mempool.space/en
https://jochen-hoenicke.de/queue/#BTC%20(default%20mempool),24h,weight
Plot your transaction in mempool: https://bitcoindata.science/plot-your-transaction-in-mempool.html

[LFC_Bitcoin]

I remember 2017, we had lots of retail noobs then, also there were dust spam attacks on the network. I remember paying 180 sat per byte to get a confirmation. Fees even went over 200 sats per byte at one point.
We haven’t had the retail rush this bull cycle that we did back then. It’s probably to do with noobs & poor people buying dumb meme coins instead due to them being so cheap. These guys don’t want 0.1 bitcoin, they prefer millions of cheap shitcoins.
Plus we had various upgrades over the past few years like Segwit that helped increase block size limit & that obviously keeps fees much lower than in the past.

[stompix]

With such low fees wouldnt miners be discouraged to do so i.e. wouldn't mining become less profitable.

The last 24 hours reward for mining blocks was 39 million dollars from the basic block reward, if we would assume a median fee of around 30$ for each confirmed transaction that would still be only 9 million and least than 25% of what miners make.
In reality, fees made about 2.5% of the total revenue.

Except for spikes due to either a drop in hashrate that caused slower blocks diminishing the base reward per day ratio and above-average fees or simply usage spikes that trigger higher fees for a few days the ratio was never going above 10% anyhow. So with a price doubling every 2x to keep balancing the having in reward, there won't be any problems in the near future.
 

Also bitcoin can never become proof of stake unlike other coins,so where does this leave us ?

With the 1001th topic of the year with the same fake problem? 

[dkbit98]

Bitcoin fees are not always so low, but they are much better with greater adoption of segwit, so much that was normal for months to send transaction with 1sat/vB and expect to be received in few hours (day max).
More people are usins Lightning Network that can reduce the load on main chain, and there is over 32,000 LN nodes with over 19,000 being active, and almost 84,000 channels.
Paying minimal fees with more private transactions sounds very good to me.

Also bitcoin can never become proof of stake unlike other coins,so where does this leave us ?

That is never going to happen on Bitcoin and there is no need for that, but even if some people decide to fork off they will just create one more worthless shitcoin.

[Leviathan.007]

That's exactly why bitcoin is good for people who want to transfer huge amounts of money, you will have to pay thousands of dollars if you want to transfer that 800m dollars but using bitcoin you can pay less than ten dollar transaction fee and get your transaction confirmed, Basically it doesn't matter if you transfer one dollar or one million dollars is both cases you will pay the same amount of transaction fees which is very good for people with big transaction amounts.

[NeuroticFish]

how is this remotely possible?

As said, what it counts is the size (bytes) of the transaction and how congested the network is.
Now, since people were partying, also week-end is here, the number of transactions sent to be confirmed is low, hence the miners can easily get to confirm even the minimum 1 sat/vbyte ones.
But no worries, the things should get closer to normal when working days start, and the mempool will get congested again when the price gets to move again big.

[hatshepsut93]

That's exactly why bitcoin is good for people who want to transfer huge amounts of money, you will have to pay thousands of dollars if you want to transfer that 800m dollars but using bitcoin you can pay less than ten dollar transaction fee and get your transaction confirmed, Basically it doesn't matter if you transfer one dollar or one million dollars is both cases you will pay the same amount of transaction fees which is very good for people with big transaction amounts.

This isn't always like that. Bitcoin fees can get crazy expensive when there's a lot of trading activity which causes mempool congestion. And using Bitcoin for transferring value only works if both parties are using Bitcoin directly for their other transactions, which no one really does on large scale. Which means that both parties would have to use fiat exchanges. So the real cost of sending money via Bitcoin is the cost of buying BTC on exchange + network fee + selling fee + withdrawal fees of exchange.

And moving millions via fiat channels doesn't mean paying thousands in fees. There's often an upper limit to how high the fees can go, something like $30-40.

[24Kt]

That's exactly why bitcoin is good for people who want to transfer huge amounts of money, you will have to pay thousands of dollars if you want to transfer that 800m dollars but using bitcoin you can pay less than ten dollar transaction fee and get your transaction confirmed, Basically it doesn't matter if you transfer one dollar or one million dollars is both cases you will pay the same amount of transaction fees which is very good for people with big transaction amounts.

This isn't always like that. Bitcoin fees can get crazy expensive when there's a lot of trading activity which causes mempool congestion. And using Bitcoin for transferring value only works if both parties are using Bitcoin directly for their other transactions, which no one really does on large scale. Which means that both parties would have to use fiat exchanges. So the real cost of sending money via Bitcoin is the cost of buying BTC on exchange + network fee + selling fee + withdrawal fees of exchange.

And moving millions via fiat channels doesn't mean paying thousands in fees. There's often an upper limit to how high the fees can go, something like $30-40.

But for people who want to take advantage of the opportunity, they will check first the mempool status and if the fees are relatively low, that's the time that they can transfer their funds. You can always check the status in blockchain.com. You can really see some huge transactions paying small amount. And the good thing here is that you don't need to wait for days before you see your funds. Some are already recognizing the benefit of bitcoin and they are using it to their advantage.

[franky1]

It's because fees aren't calculated by the amount transacted, but by the size of the transaction. The more outputs you spend the greater the fee will be. Remember, the miner just includes data in a block and is incentivized to mine what pays more, regardless of the amount the people transact.

to clarify and correct.
1. fee's are not fixed to transaction data size. you can actually choose any value you want as a fee. the amount you pay is a mental calculation of how much you think is fair to put to get your transaction seen and included into a block, the less you pay the longer you wait. its not a hard rule

2. miners do not include data into blocks. we are not in solo-mining era of 2009-2011. miners in the current era are ASICS that just compute the blockheader(non transaction data) into a complex hash by a degree of difficulty.
ASICS run 24/7 whether there are 0 transactions or thousands. whether there are fee's or not.

3. POOLS (a separate entity to miners) manage the block content cumulation. and its the pools which decide what transactions they feel worthy of including. there is no hard rule that says they have to accept highest fee first. thats just pure economic human choice of greed, or social politics decision.
EG in a pure greed zero social politics. pools would add legacy transactions and ignore/delay segwit transactions because legacy has higher fees.
EG in a pure social politics less greed. pools would add segwit transactions and ignore/delay legacy transactions because segwit is the socially political friend.


4. yes a laymans suggestion is that you should pay more if your data is bloaty with many inputs and outputs, and pay more if you want to persuade a pool to include your transaction sooner. but this is not a guarantee.
some people only put in small fees because they are not too bothered about when their transaction will confirm.
some people put small fees when handling large value to purposefully give themselves more time and opportunity to RBF if they made a mistake when broadcasting a transaction

[ranochigo]

To my knowledge the transaction fees is actually a reward for the mining computers for successfully helping us create a block on the block chain.With such low fees wouldnt miners be discouraged to do so i.e. wouldn't mining become less profitable.
Also bitcoin can never become proof of stake unlike other coins,so where does this leave us ?

Mining is more profitable when there are high fees, because blocks are always filled with transactions and the average fee rates are a lot higher. It doesn't necessarily mean that the network becomes insecure; sure it becomes relatively less secure, because certain miners find it unprofitable to mine but it doesn't make for an insecure network.

The transaction fee is a function of many factors, the most important variable at play is the transaction volume in terms of size. It hasn't been that high since the peak a few months ago and you can get away with much lower fees if you want a reasonably fast confirmation.

[MIner1448]

Recently i came to know that there was a 800M$+ transaction with fees around 1$,how is this remotely possible?
To my knowledge the transaction fees is actually a reward for the mining computers for successfully helping us create a block on the block chain.With such low fees wouldnt miners be discouraged to do so i.e. wouldn't mining become less profitable.
Also bitcoin can never become proof of stake unlike other coins,so where does this leave us ?

Most likely, the pool was not loaded, the user very wisely chose the time for the transaction, the experienced means, most likely a whale or a market manipulator. In general, you should always learn from such people and analyze their actions, so as not to waste your deposits later.

[levyashin]

It wasn't always cheap like this.

I remember btc fork owners were congesting network with micro transactions to show how their shitty forks are good comparing to bitcoin. Thank god they stopped doing that and with LN and all, everything is smoother.

[franky1]

It wasn't always cheap like this.

I remember btc fork owners were congesting network with micro transactions to show how their shitty forks are good comparing to bitcoin. Thank god they stopped doing that and with LN and all, everything is smoother.

it wasnt the altcoiners/forkers that spammed the blocks. it was actually the Segwit supporters that spammed it, to conjure up the narrative that bitcoin needed to scale and segwit was the scaling solution. with the fake promises of 2mb+segwit if the community moved forward and upgraded their nodes to support segwit.
the fork occured by segwit supporters forking off those that stayed with their old nodes.

this whole drama occured because although they thought segwit would get announced in november 2016 and be activated by december. .. it didnt. and even in june 2017 it only had 45% support. so they had to push with every tactic they had to get segwit activated.

end result.. is not more transactions per block(scaling) but instead more bloat per block and less transaction
more bloat          block size average      / diagonal ascending up
less transaction   transaction count avg \ diagonal descending down

[fiulpro]

It's because fees aren't calculated by the amount transacted, but by the size of the transaction. The more outputs you spend the greater the fee will be. Remember, the miner just includes data in a block and is incentivized to mine what pays more, regardless of the amount the people transact.

Also bitcoin can never become proof of stake unlike other coins,so where does this leave us ?

What does that have to do with the transaction fees?

Also at the same time there are other options that can be used you can always use wallets like samourai where you can choose your transaction fee and at the same time you can also use the lightning network, which does mean that you can use it effectively well in case of small business requiring small transactions as well. Plus the data is too broad to consider any option as well. The price of Bitcoin keeps on changing which does mean that the price of transaction fee would change as well making it more profitable in certain circumstances and at the same time during the high prices the fee would be extensively high, therefore you cannot just analyse it in any way, we need more effective studies.