Avg. Transaction Fee of Bitcoin Surpassed the Peak from 2017

https://bitinfocharts.com/comparison/transactionfees-btc-xrp.html

by noxer • 5 years ago

43 69 5 years ago

dmm• 5 years ago

What happened in 2017? What's happening now? Is it related to miners being shutdown in China?

gruez11• 5 years ago

transaction volume went up. the date roughly corresponds to the last peak of ~20k. high prices/volatility means more people rushing to transfer their coins in/out of exchanges.

QuestionC• 5 years ago

People are panicking over Biden's ridiculous proposed capital gains tax changes. Everyone's panic selling and hiding assets.

2017 was the previous Bitcoin pump and panic.

dane-pgp• 5 years ago

Failing as planned.

rawtxapp6• 5 years ago

That's because you're looking at it in terms of USD, when you look at it in terms of satoshis per byte, it's actually much lower [1][3]. And if you want to avoid the fees because you expect to transact a lot, just use lightning network, exchanges are starting to integrate it[2].

edit: I should also add that, when you look at it in terms of USD, the average transaction fee is a drop in the bucket compared to the average transaction value [4], which to me says that it's becoming the settlement layer as expected.

1: https://statoshi.info/d/000000017/fee-estimates?orgId=1&from...

2: https://www.coindesk.com/okex-exchange-to-integrate-bitcoins...

3: https://www.bitcoinfees.info/

4: https://bitinfocharts.com/comparison/transactionvalue-btc-xr...

ccortes2• 5 years ago

which to me says that it's becoming the settlement layer as expected

To me it says that only rich whales get to transact in bitcoin.

Pretty sad that now regular people get excluded from something that was conceived as p2p internet cash.

rawtxapp6• 5 years ago

Not really, it just means big centralized companies are settling their end-users funds on the blockchain while providing them access to it practically free. Regular people right now use it through Paypal, Cash app, Venmo, Coinbase, etc.

And soon enough channel factories should make it possible to create multiple lightning channels at once, so an end-user will never pay the whole channel opening fee by themselves.

As long as Bitcoin's layer 1 stays secure/open/decentralized, the average non-whale user will be able to use it through these other layers just as easily.

AlexandrB3• 5 years ago

I'm a long-time bitcoin skeptic, and I don't really understand the lightning network. If the lightning network doesn't depend on PoW for every transaction then how is it different than a normal database-backed payment network? I read that it involves smart contracts, have those been sufficiently audited against bugs?

That's because you're looking at it in terms of USD, when you look at it in terms of satoshis per byte, it's actually much lower [1][3].

This is meaningless to me. Why would I care about transaction costs in satoshis per byte? I thought bitcoin is supposed to be a currency that replaces USD. At the current transaction fees bitcoin is not usable as a currency unless you're buying very expensive items.

gruez11• 5 years ago

I'm a long-time bitcoin skeptic, and I don't really understand the lightning network. If the lightning network doesn't depend on PoW for every transaction then how is it different than a normal database-backed payment network? I read that it involves smart contracts, have those been sufficiently audited against bugs?

https://wiki.ion.radar.tech/tech/lightning/lightning-network

tl;dr: you and the counterparty negotiate a series of transactions that represent the final closing balance. As funds are sent/received the transaction is updated. There's various mechanisms in there to prevent a misbehaving peer from broadcasting an older transaction, running away with the funds, or having your funds frozen if they ghost you.

rawtxapp6• 5 years ago

A transaction is essentially just a signed cryptographic message broadcast to the network, just imagine that instead of broadcasting it, you keep iterating on it, you pass funds around, keep signing these messages, etc. There are measures to make sure you don't broadcast an old/outdated transaction to the network.

It's not meant for buying coffee, for those you would use layer 2 or centralized entities like Paypal, etc. The blockchain contains every single transaction ever made forever, people in 100 years from now don't need to be aware of every coffee transaction, that just wouldn't be efficient.

hapticmonkey2• 5 years ago

Bitcoin in the Lightning Network are backed by the bitcoin blockchain. Bitcoin get committed to the Lightning Network (using an on-chain transaction) and can then move between users of the network. There is no central database of all Lighting users or transactions. Transactions are done directly between users, or by routing payments through other users.

It's kept trustless, because people trying to cheat can get their bitcoin stolen. This is done using fancy bitcoin multi-signature scripts. Closing a Lighting Channel using an old state (ie: being dishonest) reveals keys that can be used by the other (honest) party to take your funds.

noxer8• 5 years ago

I knew this would be posted. Such an absurdly stupid reasoning. You wanna pay for your coffee or buy car or whatever and the fee is slapped on top of the price. Who the heck would care about satishis per byte. Its % of the transacted value that matters. High fees means low value Tx are no longer "possible".

which to me says that it's becoming the settlement layer as expected.

So it went from p2p cash to store of value to a settlement layer in just 10 years. What is it expected to be in the next 10 years?

rawtxapp6• 5 years ago

In 10 years from now, everyone would have easy to use/intuitive lightning network wallets and all exchanges would have integrated it.

Again, no need to keep track of every coffee transaction permanently forever on the blockchain, it's just not efficient.

this_user• 5 years ago

The conundrum at the heart of BTC is that you have to introduce a second layer in order to work around the inherent limitations of the first. But at that point you may as well do away with that first layer, and then will have simply re-invented PayPay, which only goes to show how "blockchain technology" is almost entirely useless.

CyberDildonics• 5 years ago

The lightning network has been promised for 7 years now. Exactly what people predicted has happened. It doesn't work, no one wants it, it tries to solve a problem that is already solved by not using a crippled crypto currency with the transaction bandwidth of a dial up modem.

Ethereum is multiple times btc in transaction throughput. Bitcoin cash has had higher transaction throughput for a while now too.

The people that made bitcoin originally were geniuses. The dunces that made the lightning network are nonsense charlatans. Go to /r/bitcoin and start asking questions, then see how long it takes to banned.

Anything other than btc and ethereum works for avoiding high transaction fees. Why would someone use a hacky second layer and defeat the purpose of crypto currencies when even a joke clone like dogecoin works better? Crypto currency works so well it has to be purposely broken like bitcoin to stop working well.

Right now the commonly accepted cryptocurrencies with reasonable transaction fees are litecoin and bitcoin cash with dogecoin being around $1 USD. That isn't impossible to work with but it isn't necessary.

BLanen• 5 years ago

Lightning network is a non-workable piece of shit that REQUIRES AN ON-CHAIN TRANSACTION TO SET UP A DEBIT CHANNEL BETWEEN WALLETS

swinglock2• 5 years ago

This is the consequence of the sudden loss of mining power. The increased usage of Bitcoin transactions while the blockchain is now processing fewer transactions means the fees increase, because users are willing to pay that much to transact faster.

Ideally market powers would offset this by people with spare CPU time beginning to mine to pick up the slack, since profitability is up. However due to the development of specialized mining hardware, mining isn't elastic anymore and so it doesn't happen.

Because of that the fees will not decrease until the next difficulty adjustment which is every two weeks, or until the miners come back online.

ahelwer• 5 years ago

Here's a gap in my understanding: why does bitcoin mining explode so much when the price goes up? With all the new miners, doesn't the difficulty adjustment kick in after two weeks and largely negate the price increase? Or does the difficulty scaling not quite work like that?

X6S1x6Okd1st2• 5 years ago

The difficulty adjustment only goes up by a certain amount, and you'd only expect mining and difficulty to normalize when it's a margin driven business. If there is some limiting factor (e.g. not enough hardware, not enough power etc) or if price is increasing faster than bitcoin mines can come online then the difficulty adjustment can't keep up.

Other coins have solved this, in fact bitcoin cash had to solve it as soon as the fork happened because it would have taken too long to hit an adjustment period.

swinglock2• 5 years ago

The difficulty is what adjusts the distributed time function of the network to stay on target, so that the inflation is controlled, measured in Bitcoins. The Bitcoin network only knows about Bitcoins, not how much USD it trades for.

When the blocks being mined approximately every 10 minutes is valued higher in USD, naturally more people want more of those blocks. So the miners expand simply to compete, since what they compete for is worth more.

noxer8• 5 years ago

With the current price large miner make huge profits anyway. Mining a bitcoin on average coasts way way less then its worth so obviously if the price increases the profit does too and the difficultly adjustment doesn't take that all away.

ufo• 5 years ago

The difficulty adjustment ensures that, on average, there will always be 6 bitcoins minted every 10 minutes. If the price of the bitcoin increases, miners will be willing to spend more energy to chase those 6 bitcoins. The end result is the network becomes less efficient, as more energy is burned to confirm the same number of transactions.

If difficulty adjustment didn't exist then mining would still be as easy as it was in the satoshi days. The current ASICs would have already finished mining all 21M bitcoins several times over.

X6S1x6Okd1st2• 5 years ago

Looks like next difficulty adjustment is estimated to be in ~11 days, also in the last 24h there's been an average of a block every 10 minutes, so it's possible more mining power has already come back online.

https://blockchair.com/bitcoin/

haolez• 5 years ago

I wonder what would happen with bigger blocks besides making the blockchain use more disk space. We have BCH and BSV to compare, but not in BTC's scale, I believe.

gruez11• 5 years ago

initially? lower fees. eventually it will be offset by the induced demand and we'll be back to square one.

nivexous2• 5 years ago

By that argument, we should have capped Internet bandwidth at 56kbps.

bavell2• 5 years ago

We won't be back at square one even if the fees end up the same, since the transaction thoroughput would be higher.

Bigger blocks means more transactions per block and at a constant rate of 6 blocks/hr that means the network can handle more TPS before fees rise. As long as the mempool remains relatively empty, fees will be low.

wmf2• 5 years ago

Imagine if they increased the block size and developed Lightning in parallel. On-chain fees would be low until Lightning becomes mainstream then Lightning fees would be even lower.

devname5• 5 years ago

Bitcoin Cash has handled more transactions than small-block core for two months now. https://bitinfocharts.com/comparison/transactions-btc-bch.ht...

Read the first page of the Bitcoin whitepaper: https://www.bitcoin.com/bitcoin.pdf.

It's a protest against fees and intermediaries. Now we see BTC claim to be Bitcoin, but it is crippled by high fees and custodial intermediaries.

gruez11• 5 years ago

Now we see BTC claim to be Bitcoin, but it is crippled by high fees and custodial intermediaries.

If only there was a low fee way of doing bitcoin transactions without custodial intermediaries...

https://lightning.network/

CameronNemo2• 5 years ago

That's great to hear. I was following BCH back when their transactions were just a trickle. I was afraid the Craig Wright nonsense was going to completely end the chain. Refreshing to know that they are not just surviving, but thriving.

pfundstein3• 5 years ago

Intersting to see the downvotes, looks like the BTC vs BCH is quite polarizing even on HN

diego• 5 years ago

All this means is that moving Bitcoin in the main blockchain is not practical for most people. Bitcoin is an asset for an elite. Those who are interested in frequent cryptocurrency transactions should not be even paying attention to Bitcoin.

nivexous2• 5 years ago

It's worse. How do people think this will work? You will keep your money in institutions. Transfers will be settled in databases. There will be management fees, insurance requirements, dispute costs, censorship, and surveillance. Read the 1st page of whitepaper folks. High fees bring about the same trusted third-parties that Bitcoin was built to avoid.

etaioinshrdlu• 5 years ago

It seems like Wrapped Bitcoin (WBTC), a token on the Ethereum chain, could also be used instead to avoid transaction fees.

Granted, ethereum has its own fees. The less popular chains tend to have lower fees.

devname5• 5 years ago

Less popular? Bitcoin Cash BCH is handling more transactions than BTC, with insignificant fees.

Avg. Transaction Fee of Bitcoin Surpassed the Peak from 2017

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