Avg. Transaction Fee of Bitcoin Surpassed the Peak from 2017
bitinfocharts.com
bitinfocharts.com
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...
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.
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.
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.
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...
I'm not American, but as far as I know you can't withdraw bitcoin from paypal, cash app or venmo.
> 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.
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.
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.
That's the current goal of the developers of these systems, anyway.
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.
>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?
Again, no need to keep track of every coffee transaction permanently forever on the blockchain, it's just not efficient.
You can't mint more bitcoins on the lightning network. There's a 1:1 relation between what's on the lightning network and what's on the blockchain. This is as opposed to fiat (zero relation, currency units can be generated at will), or gold standard in practice (the central bank only having enough gold for a fraction of the notes issued to be redeemed).
L2 is also shit for actual distribution and censorship resistance. Imagine a future where BTC is 100x the current price and the people who got in early are rich as heck and nobody else can afford even a single transaction and must instead rely entirely on L2 services, never actually owning their own wealth.
But that's literally not how the lightning network works? If some intermediary in the chain wants to accept IOUs in place of real bitcoins that's on them, but on both ends you're putting in and getting real bitcoins. By "real bitcoins" I mean they can be redeemed at any point in time by closing the channel, and there's no risk of a bank run (at least to the sender and receiver). If some intermediary decides to accept IOUs instead of real bitcoins, that's on them if it comes crashing down.
Each node can have a state with a total of 2 bitcoins. That's 6 bitcoins.
It'd be a race to close channels, and only if the channel value is above the fee-floor, else the settled value is $0.
>Each node can have a state with a total of 2 bitcoins. That's 6 bitcoins.
Well, no. If you want a channel between A and B with 1 BTC capacity in either direction, you'll need to deposit 2 BTC to fund the channel. Therefore there's 6 BTC total that's locked up. As for the rest of your comment, it's not really clear how it's "separated" from the on-chain value.
You are wrong on that. Every node locally applies all the rules to all transaction. There is no way a rule can be broken because your node listens to other who broke the rules. If all your trusted nodes would break the rule your node would simply stop and ask you to connect to proper nodes.
The consensus majority is only needed if there are 2 or more way to make valid (not breaking any rules) forward progress (aka a double spend attempt) Only in this case nodes side with the majority of their trusted nodes. There is no "wrong way" in this case its arbitrary which side the network goes the only thing that matter is that everyone goes the same way. Which is archives if everyone sided with their surrounding majority.
Its very important to understand that if someone would have the control over which side it goes in such a situation he could do absolutely nothing with this "power" as both ways must be valid in the first place.
The only person who "loses out" is the one who attempts a double spend because he has no way to know which Tx will success and which will fail. But no honest participants cares about that. If you attempt a double sends you voluntary let the network pick one.
>The consensus majority is only needed if there are 2 or more way to make valid (not breaking any rules) forward progress (aka a double spend attempt) Only in this case nodes side with the majority of their trusted nodes.
so basically "if there's a double spend just trust whatever the majority of the trusted nodes say"? It's better than trusting the entire state to the majority of nodes, but still quite centralized compared to other consensus mechanisms.
Yes but also no. There is no trust needed because what the other nodes say does not define whats correct its arbitrary. Its only relevant if 2 or more equal good AND correct ways exist. You aren't listing to others to find out the "right" way you solely listen to other so everyone choose the same.
>still quite centralized compared to other consensus mechanisms.
Not at all. If there is a double spend attempt your validator node picks one at "random" (the one it revived first) it then tells every node to include this one an discard the other. All other do that too completely on their own (decentral). Only if this does not lead to 80% agreement everyone is tasked to adjust and vote again. So your node looks what the nodes around them voted and switches if needed to the majority. There is no central anything that tells your node to switch. Your node does so solely because your node doesn't care which way to go but it wants to go the same way ass all others.
All this does it it breaks ties. If there would be a near 50/50 split or 33/33/33 for 3 conflicting transaction, this is guaranteed to shift to something near 100% after some re-voting. Because the existing "majority" grows faster with every re-vote if everyone adjust by these rules. And that's the sole goal. We want the network go agree.
the lightning network isn't going to freeze your funds for 180 days because they think your account is suspicious.
Blockchains or rather DLTs are here to stay - bitcoin probably not.
Not true, the block size was intended to deal with this exact issue.
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.
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.
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.
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.
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.
Just to clarify a bit further, this is true right now but the amount minted with each block isn't constant and decreases over time. More info on block rewards: https://www.bitcoinblockhalf.com/
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.
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.
If only there was a low fee way of doing bitcoin transactions without custodial intermediaries...
2017 was the previous Bitcoin pump and panic.
Granted, ethereum has its own fees. The less popular chains tend to have lower fees.