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Avg. Transaction Fee of Bitcoin Surpassed the Peak from 2017

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Re: Avg. Transaction Fee of Bitcoin Surpassed the Peak from 2017

#11

Post by gruez »

AlexandrB wrote: post #8
rawtxapp wrote: post #4

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 avera…

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 b…

>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.

Re: Avg. Transaction Fee of Bitcoin Surpassed the Peak from 2017

#12

Post by [deleted] »

AlexandrB wrote: post #8
rawtxapp wrote: post #4

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 avera…

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 b…

[deleted]

Re: Avg. Transaction Fee of Bitcoin Surpassed the Peak from 2017

#13

Post by rawtxapp »

AlexandrB wrote: post #8
rawtxapp wrote: post #4

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 avera…

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 b…

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.

Re: Avg. Transaction Fee of Bitcoin Surpassed the Peak from 2017

#14

Post by AlexandrB »

rawtxapp wrote: post #9
ccortes wrote: post #6

Earlier quoted context omitted.

> 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.

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…

> Regular people right now use it through Paypal, Cash app, Venmo, Coinbase, etc.

So people are using Bitcoin through trusted (in the security sense[1]) intermediaries. These intermediaries are basically banks, no? Aren't they subject to all the same bad incentives as a "traditional" bank? Except their deposit are (probably?) not insured against loss.

[1] https://en.wikipedia.org/wiki/Trusted_third_party

> 'Trusted' means that a system needs to be trusted to act in your interests, but it has the option (either at will or involuntarily) to act against your interests.

Re: Avg. Transaction Fee of Bitcoin Surpassed the Peak from 2017

#15

Post by X6S1x6Okd1st »

swinglock wrote: post #5

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…

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/

Re: Avg. Transaction Fee of Bitcoin Surpassed the Peak from 2017

#17

Post by [deleted] »

rawtxapp wrote: post #9
ccortes wrote: post #6

Earlier quoted context omitted.

> 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.

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…

[deleted]

Re: Avg. Transaction Fee of Bitcoin Surpassed the Peak from 2017

#18

Post by rawtxapp »

AlexandrB wrote: post #14
rawtxapp wrote: post #9

Earlier quoted context omitted.

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…

> Regular people right now use it through Paypal, Cash app, Venmo, Coinbase, etc. So people are using Bitcoin through trusted (in the security sense[1]) intermediaries. These intermediaries are basically banks, no? Aren't they subject to all the same bad incentives as a "traditional" bank? Except their deposit are (probably?) not insured against loss. [1] https://en.wikipedia.org/wiki/Trusted_third_party > 'Trusted'…

It's the short term option, yes. Well, they have to hold on to the coins, because once they lose it, they can't turn to Fed for a bailout. Lots of custodians have insurance in place [1].

In the long term, lightning is here and works, as exchanges keep integrating it, that's where most of the end-user funds for small amounts would live.

1: https://finance.yahoo.com/finance/news/bitgo-expands-cold-st...

Re: Avg. Transaction Fee of Bitcoin Surpassed the Peak from 2017

#19

Post by noxer »

rawtxapp wrote: post #4

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 avera…

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?

Re: Avg. Transaction Fee of Bitcoin Surpassed the Peak from 2017

#20

Post by X6S1x6Okd1st »

ahelwer wrote: post #7
swinglock wrote: post #5

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…

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?

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.

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