1. http://hashingit.com/analysis/33-7-transactions-per-second
https://blockchain.info/charts/cost-per-transaction
Roughly, you're paying the miners. They (half of them) have to mine your transaction into the blockchain and they could be using that time to mine. So your transaction competes against mining time.
That's roughly why it's slow and expensive. I'd never use BTC unless the kidnappers demanded it.
This is slow. It's not cheap simply because it's done on cheaper HW.
Also, not every miner must do this work. The transaction "clears" as soon as ONE miner solves the puzzle then includes the transaction in that block. The other miners only have to verify it which takes a only a tiny fraction of the amount of work needed to solve the puzzle.
It is slow but it's almost always faster than international (as well as domestic for some of us) wire transfers. Also, there are a lot of people working to make it faster.
It's currently a pretty crap currency for most people in the world but it has potential to completely change the world. This potential is reflected in the market cap.
The actual transaction costs are way under a dollar, and it is, by far, the cheapest way to move the money, it's cheaper than the European SEPA, which is normally 0.9 EUR.
Bitcoin is a very expensive and inefficient way of transacting.
I've found that this would up the cost quite a bit but it's possible there are cheaper ways of doing it that I'm not yet aware of.
The 12.5 BTC per block is given to the miners as incentive to keep mining and verifying the transactions. Also, the cost of mining rapidly converges on 1 BTC per 1 BTC mined (both theoretically and in practice). Thus, that is actually the cost for the bitcoin system to process transactions.
(Ignoring for the moment the BIP66 incident and the discovery that many miners were literally not bothering to actually verify the previous block, in order to save a few seconds per block.)
When you remove the block reward of 25BTC, it's cheaper than most methods of money transfer.
I've transfered as much as $1000 for around 2.3c.
The network basically decides that providing the last 10 minutes worth of processing power is worth 12.5BTC and amount decreases every 4 years so the "group cost" will drop while the "individual cost" will rise.
This is why the "fees are high" issue has come up, Bitcoin just reduced the block subsidy to 12.5BTC as opposed to 25BTC, while in the 50BTC era, transactions were often free of any charges.
Even with all of that, an average user will pay less than the credit card fees charged to the shop so most shops would be wise to accept it, even if only to sell it for USD immediately.
If you're also counting the costs of running the network, you should call up Visa and ask them how much it costs them for you to be able to buy a cup of coffee with your credit card. The number will be so much higher.
I believe, though, that there will be an upper limit transaction speed on a decentralized network which will be slower than that possible on a centralized network. This is why folks have talked about using bitcoin as an end-of-day "settlement" currency and doing the day-to-day in your local fiat.
Here's the thing- Bitcoin will thrive whenever the shit hits the fan somewhere (see: Venezuela right now). A currency controlled by no government* and weighing 0% of gold while being completely electronic, suddenly becomes quite appealing under those circumstances. Which then makes it a pretty good hedge.
* arguments about chinese miners controlling most of the mining market are allowed
Not if "somewhere" is nearby elliptic curves
That could take the form of regulated exchanges (coinbase/poloniex) or decentralized networks like lightning.
Worst case, you could imagine most Bitcoin trading going through something like Paypal, which would have some advantages over USD (you can't print Bitcoin) but many obvious disadvantages.
Better though, Bitcoin has a built in scripting language that lets you implement more complicated logic on top. The lightning network is one way to do that, which coalesces payments into only a few on chain transactions, and allows instant confirmations, with the tradeoff that nodes must remain online part of the time (compared to Bitcoin where nodes never need to be online, other than to receive and send transactions).
Also not sure what you mean by "expensive". I think I pay about 11 cents per transaction. Way less than credit cards!
Yes but you're currently competing against a lumbering, outdated and over-regulated marketplace that's ripe for renovation.
What do you think will happen the minute these banks get real competition? They will update their network and make transactions cost 5c, or N-1 where N is the current BTC transaction cost. They will always be ahead because their limits are self-imposed and solved through simple software, not intentionally and computationally difficult.
And they already are! I can instantly send money to all of my friends with venmo paying no transaction fees. And I don't even have to argue with them about the inherent value of US dollars and the problems with fiat currencies!
But people might still use BTC and pay up that extra cost because of its special property: true ownership.
Bitcoin remains volatile as hell. The market is seriously thin, with single large trades sending it up or down $30. The "price" isn't one, which is why the whales can't realise the supposed valud of their holding except in a dribble.
The actual use case is 95% speculation. Next is drugs, next is ransomware. Even the actual market use case (drugs) hate using Bitcoin and find it a huge pain in the backside.
I don't think Bitcoin's delusion will last more than another decade. We'll probably find a way to design a delusion that distributes value "fairly" rather than to a class of nerd overlords. But until then, it's a fun story to watch.
If the only way to obtain water was through my exclusive 'magic beans' tokens, then they would have real value too.
Bitcoin ownership gives you nothing, except perhaps an increased risk of hacking losses...
Can you explain why gold is as valuable as it is? And no, the answer is not "you can use it in jewelery and circuits".
It's not a binary choice. Things don't have to be pure speculation or pure 'real' value.
Yes, and it's very very small.
https://www.quora.com/If-gold-werent-used-as-a-store-of-valu...
The vast majority of gold's value comes from its utility as a fungible, divisible, verifiable value store.
Even in worst case scenario that it's comparable in value to dull, metallic gray Rhenium for its industrial applications: $42 an ounce is better than BTC's worst case $0. You'll always be able to exchange gold for bread.
Yes, it's been around longer than Bitcoin. Not really sure what you're trying to indicate there.
> It's beautiful to look at.
Which is responsible for a very small fraction of its value. Most gold is not used in jewelry.
> It has inherent value
There is no such thing as "inherent value". Humans assign value to things. Most of the reasons that humans assign a high value to gold (fungibility, divisibility, unforgeability) also apply to Bitcoin, only more so.
Here's some additional benefits of gold:
* gold requires minimal knowledge to protect. To steal it you have to physically break into their home. They may be armed and they may kill you in the process. (My father can't protect his computer to save his life, but Lord save the poor soul who breaks into his home!)
* it's historically been very easy to trade gold for food.
* gold is worn on the body to show status and to look good. (Of course a software engineer is above such lofty extravagances which simply don't make sense)
* gold has industrial applications.
* you can look at gold and hold it in your hand. It's quite shiny and surprisingly shiny.
None of these things apply to BTC. Gold has inherent value because people inherently want it. Isn't 10,000 years of people digging it out of the ground evidence of that?
> gold requires minimal knowledge to protect.
That's true, but you also can't protect it very well. Governments have a bad tendency to take people's gold away at certain times (even the US has done it before), and good luck protecting against that. It's not exactly hard for standard-issue thieves to get away with either. Bitcoin may take slightly more effort to protect, but you get a lot more for your effort.
> it's historically been very easy to trade gold for food.
You're just re-stating the fact that it has value.
> gold is worn on the body to show status and to look good.
Yes, this is one use of gold, as I already mentioned, and as I also already mentioned, this only accounts for a small fraction of gold's value.
> gold has industrial applications.
While true, this again is a very small market compared to the use of gold as a value store.
> you can look at gold and hold it in your hand.
That's true, and convenient, but hardly a necessary feature of a store of value. I can't hold in my hand the money in my bank account or my copper holdings. I still value them.
> It's quite shiny and surprisingly shiny.
OK, I think you have a repetition problem.
> None of these things apply to BTC.
And none of them are particularly relevant.
> Gold has inherent value because people inherently want it.
People don't "inherently" want it any more than they inherently want rubidium. It's just a metal; and yet, due to a confluence of circumstances and the network effect, it's subjectively very valuable for pretty much everyone.
> 10,000 years of people digging it out of the ground
You're repeating the fact that gold has been around for a long time.
Fiat currencies aren't technically any different, but you can use them to pay taxes and their value is insisted on by armies, which does count for something.
Bitcoin's value is that it's
* Fungible
* Divisible
* Verifiable
(All qualities that gold has, but Bitcoin does them a lot better)
as well as being
* Stupidly easy to store and transport
* Extremely difficult/impossible to confiscate
* Not subject to devaluation due to an as-of-yet undiscovered deposit
> If there are no transactions,
There are, as of now, on the order of five transactions per second. How many times per second do you think people are trading gold?
> Fiat currencies aren't technically any different
Well, there's at least one difference; fiat currencies can be easily devalued by inflation. Gold can't be inflated by fiat, but it could be inflated by the discovery of a large deposit (or asteroid mining). Bitcoin can't be inflated at all, period.
> but you can use them to pay taxes
If you have an asset, you can sell the asses to pay taxes or court-ordered payments. The small friction involved in converting the asset to fiat money is factored into the price of the asset. (Incidentally, one of the benefits of Bitcoin is that it's less beholden to taxation than traditional clearing house/bank-held assets).
> and their value is insisted on by armies
I've seen this meme a few times, and I honestly don't understand how anyone can say or write this out and not think to themselves "Wait, this doesn't make any sense at all.". I'm pretty people started saying this as a joke.
What is this even supposed to mean? If I attempt to sell something for USD above a certain price, is the army going to kick down my door and threaten me until I place a higher value on the dollar?
Is this really true though? Couldn't a leap forward in quantum computing make mining BTC considerably "easier" and thus inflate and devalue the supply of BTC on the market?
Of course, a practical quantum computer would also likely break public key cryptography, so you could just take other people's coins instead of doing all that tedious hashing.
I agree with this. I also think it's one of the strongest arguments for participating in the bitcoin experiment.
Actually that's not really true, as we've seen with other crypto currency the stakeholders can simply vote to fork and thus invalidate the transactions of every other person.
Credit cards need velocity limits and insurance and fraud checks and all that stuff mostly because their actual security is godawful.
Anyways all I'm saying is that for certain people and certain transactions, Bitcoin is superior to credit cards. For everything else there's Mastercard.
Since it depends on the value transferred, you could say the opposite as well, that Bitcoin costs far more.
Lightning network doesn't exist yet!