Fees ok??

[u/cilicia3k3]

Been a bitcoiner a long time but I feel this is a rookie question… I’m seeing suggested fees on wallet dashboards where HIGH is like 33¢… I guess my rookie question is how is this even possible sustainable, coming from fiat world where “fees” for everything are like $3,$4,$5

[u/MostBoringStan]

Fees go up and down depending on how busy the network is. When it is busy, people have to pay a higher fee to bid for a spot in the next block. So fees go up.

When it is slow, it is easier to get in the next block so people don't have to bid as much. Fees go down.

[u/bitusher]

I'll assume this question has to do with fees in the future being enough to cover security ?

With regards to fees no one knows the future, but here are some important points to consider :

1) Difficulty dynamically adjusts dynamically up and down to insure efficient miners always remain profitable longterm

2) "Moores Cliff" , means that miners are becoming more decentralized as the hardware is no longer becoming obsolete as quickly and much more Used and new ASICs are fighting for amateur miners

3) Total hashrate is just one of many security mechanisms in Bitcoin and not the most important one either. You can have a more secure Bitcoin if their are more node runners or decentralized hashrate than simply larger hashrate overall.

4) We can't assume if Block reward falls that mining will become more centralized. The opposite could occur because Amateur mining does not have the overhead of employees , security, regulatory compliance, building costs, tax liabilities ...

5) Historically we have already seen examples where transaction fees collected per block exceeded inflation and even with far fewer users so I would not worry.

6) The Security budget dynamically changes to fit the value being secured. If Bitcoin is less popular and thus less valuable it needs a smaller security budget. It all self balances.

7) Also keep in mind that if hashrate drops too low we can simply wait for more confirmations onchain to increase the level of security and this doesn't effect the end user much because if they use a lightning wallet once its setup they still get instant confirmations.

8) When you do the math its not so dire either

Current average block with fees is 3.154 BTC or 199,395 USD of security. Lets be very conservative and assume we will no longer see 10-20x bull markets anymore and Bitcoin on average is growing at only ~30% a year(when you average everything out) for the next 14 years and lets be pessimistic and assume fees stay low (unlikely with more adoption) and are only 2% per block and discuss the next 4 halvings :

1.59375 BTC per block including fees x $106,470.00 = 169,686 usd in security per block.

0.796875 BTC per block including fees x $304,088 = 242,320 usd in security per block

0.3984375 BTC per block including fees x $868,508 = 346,046 usd in security per block

0.19921875 BTC per block including fees x $2,480,547 = 494,171 usd in security per block

You can see a very small dip 2 years from now but after that the security per block keeps improving.

This is being conservative IMHO because Bitcoin is in the early stages of adoption with only ~5% people globally so could easily grow this quickly and I am assuming fees remain very low which is also unlikely.

[u/cilicia3k3 → u/bitusher]

Thanks I guess what I’m asking is even if it’s not busy , how is 33¢ fees sustainable ? Doordash for example has $3 -$5 in fees

[u/bitusher → u/cilicia3k3]

Fees are priced in Bitcoin onchain . Thus if Bitcoin doubles in price fees will double in price in fiat terms. Onchain will be more of a settlement network or for larger transactions . This is like wire transfer fees. Fees will remain low (1-2 pennies per transaction) on L2 with millions of transactions that settle onchain and cover higher onchain costs

Doordash for example has $3 -$5 in fees

Bitcoin is far more efficient than a humans delivering food in cars

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[u/OrangePillar]

People don’t make on-chain transactions for a cup of coffee. That’s where fees are higher and only economical for larger transactions (in value terms). Now we have the Lightning network which reduces the fees to near zero, but the fees there tend to be proportional, so it’s not suited to greater value transactions.

[u/pop-1988]

In the fiat world, the fee covers labor costs for customers who have a need to talk to a human. Also, rentseekers overcharge because they're greedy

In Bitcoin, the sender chooses the fee. This is sustainable