What would happen to the transaction fee if bitcoin SKYROCKETED

[zimmah]

Dont you think mining fees are already quite low

no,

mining fees are pretty reasonable since block rewards are high enough to cover mining expenses.

Once block reward halved another 3 or 4 times or so miners can start to worry about transfer fees. That will be many years from now.

By that time the amount of transactions will be so high that even with a much smaller transfer fee than we currently have the transfer fee total will far outweigh the block reward. And most likely the transfer fees in total would be even more than 50 bitcoins per block.

[teukon]

What would happen to the transaction fee if bitcoin SKYROCKETED

Well, the block reward will skyrocket in real terms, so the cost of processing a transaction fee will also skyrocket (consider how the inclusion of a transaction increases the probability that a block will be orphaned).

This certainly puts upward pressure on transaction fees, but there are good reasons to believe that they will not rise in real terms to as great an extent (consider that many pools process transactions for free today).  Even so, I would expect that fees will rise hugely following a typical period of stubbornness.

Note: This is all under the rather tenuous assumption that Bitcoin remains decentralised.

[Beliathon]

Speaking of skyrocketing...

[bryant.coleman]

Speaking of skyrocketing...

Well... one thing is clear... the Mt Gox effect is no longer able to overshadow the good news flooding in from all the nooks and corners (Li Ka Shing, Branson, Bitpay, Xapo, DISH.etc).

[contantisaluti]

In today's economy , there are around 5 trillion dollars , if you consider all economies.

Even more

Okay , take it as 6.3 trillion , assuming there are all 21m BTC mined.
That will still be 300k , which is much lesser than necessary to cause a problem resulting in need to further divide Bitcoin.

It is unlikely that Bitcoin will ever cross a million $ , but I expect it to definitely hit the 10k range.
People who expect it to reach 1m in a few years are extreme fanatics.

Comparing Bitcoins future growth to the 300x boost it saw ages ago is stupid.
If Satoshi told 2 people about BTC when he first envisioned it and tripled the Bitcoin enthusiasts in a minute , we should not expect that to happen again in a minute.

TLDR; Bitcoin will rise , but even if it becomes as big as USD is now , it will be under 40k$ per Bitcoin (of todays USD value)
We will not need to further divide BTC in a long long time and if we do , we will have far more capable devs waiting to do so.

I think the main problem of BTC is the NO advertising and NO communication of itself. If TVs and newspapers of all the world should launch an insistent and well explained promotional campaign tomorrow, it could reach $100k before next sunday
The world is not aware of BTC, it's still in its ignorance..especially peoples with ridicolous government currencies (so excluding USD, EUR, GBP, JPY, etc. that should be the less interested)

[teukon]

I think the main problem of BTC is the NO advertising and NO communication of itself. If TVs and newspapers of all the world should launch an insistent and well explained promotional campaign tomorrow, it could reach $100k before next sunday

Was this a problem for gold and silver in their early days?

I agree that Bitcoin has had adoption problems in the past.  2009 was a great example of that.  But I maintain that slow adoption is among the least of Bitcoin's problems today.  In fact, I submit that excessive evangelism leading to artificially stimulated adoption is becoming a problem.  A lot of people are being led to believe that Bitcoin is more polished and less risky than it really is.

[zimmah]

it's still better than fiat.

people are let to believe fiat is much safer and more polished than it really is, while in reality it only benefits a few.

[Beliathon]

In today's economy , there are around 5 trillion dollars , if you consider all economies.

Even more

Okay , take it as 6.3 trillion , assuming there are all 21m BTC mined.
That will still be 300k , which is much lesser than necessary to cause a problem resulting in need to further divide Bitcoin.

It is unlikely that Bitcoin will ever cross a million $ , but I expect it to definitely hit the 10k range.
People who expect it to reach 1m in a few years are extreme fanatics.

Comparing Bitcoins future growth to the 300x boost it saw ages ago is stupid.
If Satoshi told 2 people about BTC when he first envisioned it and tripled the Bitcoin enthusiasts in a minute , we should not expect that to happen again in a minute.

TLDR; Bitcoin will rise , but even if it becomes as big as USD is now , it will be under 40k$ per Bitcoin (of todays USD value)
We will not need to further divide BTC in a long long time and if we do , we will have far more capable devs waiting to do so.

The world is not aware of BTC, it's still in its ignorance..especially peoples with ridicolous government currencies (so excluding USD, EUR, GBP, JPY, etc. that should be the less interested)

You're right, but it doesn't matter. You don't need to advertise for something this good. The internet didn't have much advertisement in 1994, yet it caught on just fine.

Go to wikipedia, type "history of the internet" and use edit -> find (ctrl+f) "nearly instant in historical terms". Read that sentence several times until the implications sink in.

The rise of the internet is the story of what happens when a decentralized, organic, open, evolving entity goes up against the ancient clunky model of centralization.

Bitcoin is the same story, accelerated by greed.

[redwhitenblue]

Here is what I mean,

Imagine if 1 satoshi = $1 ..... WHat would happen to the fee, I mean 1 satoshi is smallest fraction of a bitcoin. It would be stupid to buy a $10 meal and the fee being $1-$2

This problem would likely be solved prior to the value of 1 satoshi being $1

I would guess that one of the below solutions would be implemented when the value of one Bitcoin reaches either five or six figures when measured in USD.

1. The most likely solution would be that the Blockchain would be hardforked with a change to the Bitcoin protocol so that one bitcoin is divisible by (probably) 14 digits (however this value, x, could be anything as long as it is greater then 8.

2. The next most likely solution would be to have more off chain transactions with sites like Coinbase. Generally speaking, only larger transactions would be included in the blockchain so that he tx fee would be small compared to the size of funds being transferred.

This presents a number of issues. The primary issue would be this would cause centralization of bitcoins to major players, which is something that Bitcoin is suppose to stop/reverse. Another major issue would be that by the time this would happen the block rewards would likely be substantially lower then they are now (probably either 3.125 or 6.25 BTC plus tx fees per block) and having a lower amount of TX fees could compromise the security of the network as there would be less of an incentive to mine making it easier to execute double spend attacks.

[bryant.coleman]

Today there was a very significant development. The combined Bitcoin mining hash rate hit 100,000,000 GH/s. The exchange rates are not rising proportional to the change in hash rates. That spells trouble for the miners.

[teukon]

Another major issue would be that by the time this would happen the block rewards would likely be substantially lower then they are now (probably either 3.125 or 6.25 BTC plus tx fees per block) and having a lower amount of TX fees could compromise the security of the network as there would be less of an incentive to mine making it easier to execute double spend attacks.

3.125 BTC is more than 10% of the current block reward in bitcoin terms.  If from "skyrocketing" you have in mind a rise of 10-fold or more then difficulty should in fact be higher than it is today.

[Corelianer]

In today's economy , there are around 5 trillion dollars , if you consider all economies.

Even more

Okay , take it as 6.3 trillion , assuming there are all 21m BTC mined.
That will still be 300k , which is much lesser than necessary to cause a problem resulting in need to further divide Bitcoin.

It is unlikely that Bitcoin will ever cross a million $ , but I expect it to definitely hit the 10k range.
People who expect it to reach 1m in a few years are extreme fanatics.

Comparing Bitcoins future growth to the 300x boost it saw ages ago is stupid.
If Satoshi told 2 people about BTC when he first envisioned it and tripled the Bitcoin enthusiasts in a minute , we should not expect that to happen again in a minute.

TLDR; Bitcoin will rise , but even if it becomes as big as USD is now , it will be under 40k$ per Bitcoin (of todays USD value)
We will not need to further divide BTC in a long long time and if we do , we will have far more capable devs waiting to do so.

I think the main problem of BTC is the NO advertising and NO communication of itself. If TVs and newspapers of all the world should launch an insistent and well explained promotional campaign tomorrow, it could reach $100k before next sunday
The world is not aware of BTC, it's still in its ignorance..especially peoples with ridicolous government currencies (so excluding USD, EUR, GBP, JPY, etc. that should be the less interested)

I totally agree. I just bougt me a couple of t-shirts with "In cryptography we trust" and "Starve the banks".

[Dr. Pepper]

The fee has and can always be adjusted and probably will be if the value skyrocketed, but what happens when the opposite happens? The fees are so tiny anyway really.

[Kluge]

Today there was a very significant development. The combined Bitcoin mining hash rate hit 100,000,000 GH/s. The exchange rates are not rising proportional to the change in hash rates. That spells trouble for the miners.

Yeah, but $/hash is decreasing dramatically as ASIC producers continue pushing their prices to something reasonable. WH/hash is decreasing, too. That'd be an interesting graph...

[bryant.coleman]

Yeah, but $/hash is decreasing dramatically as ASIC producers continue pushing their prices to something reasonable. WH/hash is decreasing, too. That'd be an interesting graph...

Agreed. But the initial capital expenditure is only a small part of the overall expenses. What about the electricity charges? As the hash-power increases, the miners will consume more and more electricity.

[lewisg]

There may be a good number of transactions, but I guarantee it's not a significant part of the volume spike and  transaction fee will go up.

[jbreher]

Yeah, but $/hash is decreasing dramatically as ASIC producers continue pushing their prices to something reasonable. WH/hash is decreasing, too. That'd be an interesting graph...

What about the electricity charges?