$82,982,977 USD: $ 0.04 Transaction Fee | Hacker News Reader

$82,982,977 USD: $ 0.04 Transaction Fee

blockchain.info

88 pointscyphersanctus56 comments

This is great. I think the downside, though, is the $0.04 transaction that incurs a $0.04 transaction fee.

For instance, there's this transaction for .02 BTC that incurred a $0.19 fee. https://blockchain.info/tx/a2933a1dc53361a7770c2a9d998c1fe30...

I'm not sure why this tiny transaction cost so much more than the huge one, but being able to support 0.00045 BTC transactions at reasonable cost is the challenge.

This isn't just a fee challenge, but a blockchain-bloat challenge as well.

But if it can be solved, I think it would be a turning point for BTC.

Transactions without fees will eventually be processed and normally within 24 hours in my experience.

On top of that miners are currently processing transactions with fees of 1000 satoshis with no delay. That's about $0.004 with the current exchange.

Is this an artifact of current network dynamics or is it explicit in the protocol?

In other words, can I, today, send zero-fee transactions and reasonably (99.99% of the time or something) expect them to be processed by some _known_ deadline? (Be it 24 hours or a week or whatever)

It is just current network dynamics. Confirmation times in general are unknown as blocks are produced on an arbitrary timescale that the software attempts to trend to a 10 minute average by actively changing the difficulty of the proof-of-work mechanism to match the entire hash power of the network.

For transactions without fees there is no way to guarantee anything.

It's not that transactions "incur" a fee. You pay the fee you want, and miners prioritize transactions accordingly. Because transactions take up space in the block chain (and everyone's hard drives), small transactions are given less priority. Large transactions usually don't need to pay fees to be mined, small transactions may take a long time to be mined (or in the case of "dust" not be mined at all) unless you pay the recommended fee.

https://en.bitcoin.it/wiki/Transaction_fees

Generally the very large transactions are even cheaper because transactions are prioritiezed based off of (BTC * time spent sitting)/bytes.

It's a very regressive system, but is entirely about ensuring that 'dust' doesn't clog up the blockchain.

I think this is a non-issue since you're not even able to make such small value transations with traditional banking tools.

There was once optimism that bitcoin would allow easy micropayments. This seems to be an issue with that, though I believe it's one that has been long recognized by those actually doing much with bitcoin.

I think because of the design of bitcoin $0.04 transactions are something they want to actively discourage. From what I understand of Bitcoin, the future will hold only large-scale transactions like this one, and as little sub-dollar transactions as possible. (because the network load of the system scales with the transaction quantity)

This, along with regulatory challenges, has hinted to me for at least a few years now that if bitcoin has any long term future at all, it will be as an exchange currency.

Its destiny is cryptogold where the store of value is in the security of sha256. In the future they will probably adopt new cryptography standards into the protocol as current encryption standards are broken down (ie, sha1 was used at first but you should not use it anymore due to its growing leakiness).

> But if it can be solved, I think it would be a turning point for BTC.

Really? I find it hard to believe that the thing preventing widespread bitcoin adoption at the moment is transaction fees.

Having been recently charged a 4% worse FX rate than the going rate in an 5-figure international wire transfer, a world where the current financial transaction system is torn apart cannot come fast enough!

If you do this transfer often I recommend moving your currency to a brokerage and then doing a FX trade. You will often get close to BBG spot rate using IB.

I'd also recommend this approach. FX is a cash cow business for banks. Money changing is one thing, where the business has cash management risks and cost, but FX on a wire transfer is close to 100% profit for the institution. They trade at mid and keep that 4%.

As the parent poster commented, Interactive Brokers will give you rates close enough to mid as to not matter (e.g. the current rate to buy/sell EUR with USD is 1.2313/1.2312, plus a few dollars commission).

Hell, even Transferwise would be < 1%

How would you go about setting something like that up?

I assume this comes with quite a few caveats?

Sign up with a brokerage account, there are many. interactive brokers is one of the cheapest (I'm not affiliated). Then, link your two bank accounts with the brokerage. Buy/Sell you currency then transfer the funds via wire/ach...

Seems awesome for personal uses (which I expect to be doing on a fairly regular basis). I persume this might make business tax compliance a bit more complex, but at some point it may be worthwhile for me in that realm as well.

Thanks!

With price fluctuations of Bitcoin, 4% could be a pretty good deal!

For this kind of transfer I recently discovered and have saved tons of money using TransferWise. Their model is to charge a moderate upfront fee (0.5% for £200 and up), but then after that they complete the currency conversion always at the exact mid-market rate. The fee may sound like a lot at first, but as you discovered, all the banks "hide" their fee in atrocious exchange rates, such as the 4% mark-up you experienced.

Some downsides are that they don't support every currency yet (cf. https://transferwise.com/support/customer/en/portal/articles...), and they can be significantly slower than banks.

Anyway, here, use my link and I get some money. (and you get a free transfer up to £3000): https://transferwise.com/u/85ec4

Hey this looks great! Getting gouged for 4% on a recurring basis was stomach churning for me, so I'll definitely look into this more (and will use your link when doing so).

Anything below 1% and I'm totally happy.

I've never moved around tens of millions of dollars, so I don't know what the usual procedures and fees are. I have moved thousands around between accounts, and the fee is a couple of dollars, a tenth of a percent. It's hard to believe that the fee percentage for a normal wire transfer for those amounts is higher than that.

Given that, this doesn't seem like much of a big deal. I suppose it's neat, but when you're working with that much money, does a few tens of dollars matter?

Considering also that moving any significant amount of this money to Fiat to actually purchase anything will likely be massively difficult, involve huge fees and delays, and may even distort the entire exchange market, and it seems even less useful.

Infact, the largest USD exchange seems to be https://www.bitfinex.com right now, and this transaction represents around 2 weeks of their volume. It might well take months to convert this to USD without causing too much market distortion.

On an unrelated note, damn the CNY exchange volume is massive, and seems to dwarf the total USD volume. I wonder what's up with that?

CNY has currency controls on moving money into and out of the country. Bitcoin, less so.

Most CNY exchanges don't have trading fees. As a result, comparing their volumes to USD exchanges isn't really meaningful.

For those here who are wondering if bitcoin use is growing, here is a graph of transactions over time:

https://blockchain.info/charts/n-transactions?timespan=all

How come that doesn't correlate with this graph showing the dollar value of transactions:

https://blockchain.info/charts/estimated-transaction-volume-...

Because https://blockchain.info/charts/market-price

The decreased US$:BTC exchange rate doesn't appear to be sufficient to counteract almost exactly the increased volume of BTC traded.

Because BTC and blockchain utility do not need to correlate to the exchange rate against USD for the system to have massive inherent value.

[Edit: removed redundant 'correlate']

People are spending less in smaller transactions more often, indicating people are actually using btc for exchange of goods and services rather than as an investment. The spikes in dollar volume were when the market was making major movements, and people were moving USD into and out of BTC in huge quantities.

The fact that btc generation slows down over time also means that while transaction volume will go up total monetary exchange won't go up as fast because its limited more by the size of the economy (how much money people have in btc to spend) than in how they are using it.

The number of transactions is probably proportional to something like the absolute value of the first derivative of the change in value. So basically, when the value is fluctuating quickly, there are more trades/transactions.

I hope that the recipient intends to use those funds on the darknet or overstock.com, otherwise the fees for converting even a fraction of that sum into usable money will greatly exceed $0.04.

Does bitcoin have the kind of volume/liquidity to make that kind of exchange without causing a significant disturbance in the exchange rate?

No, it would cause a pretty big swing. Large sums like this are unlikely to be put on an exchange, though - they'd be done through a private sale.

You are misinformed. 217k BTC is only a fraction of the monthly volume traded on some of the largest exchanges: they trade 3-6 million BTC per month (http://bitcoinity.org/markets/list?currency=ALL&span=30d), so one could trade 217k spread over 30 days without causing swings. (Only if you did the trade at once, it would cause one sudden swing.)

Dumping it all at once is what I had in mind.

Well, I wouldn't expect someone to try cashing out such a large sum at once. I assume they'd just cash out a few thousand here and there as needed.

In other words, dollars weren't actually moved, 217.5k BTC were. I like Bitcoin, but you're right, and I'm getting annoyed with Bitcoiners' self-congratulation over things like this. Moving millions isn't exactly an every-day problem for most people, and even in more realistic scenarios, network transaction fees aren't the only cost and are much smaller than the other costs.

Any guesses if this is related to the Silk Road coins the feds auctioned off not too long ago? Or the even more recent second auction?

unlikely since the bidding is still going/just-started.

Who has $82M in Bitcoins?

Lots of early adopters (used to) have thousands of btc.

At least one of the earlier transactions I found browsing around was involved in the BitStamp audit.

Keep in mind that some companies keep all their customers' BTC in one big "account".

If it was a credit card transaction, it'd be 2,406,506.

If it were a credit card transaction, money would have changed hands.

Care to elaborate?

The implication is that Bitcoin isn't "real" money.

Never mind that money is a social construct and is useful whenever two parties agree on a common value.

I think the implication is actually that the person sending this transaction was also the recipient.

Good point; your explanation makes more sense. I pretty much only use Bitcoin to buy lunch and laptop stickers, so I forget that people with significant amounts of it have to shuffle it like this.

This was pretty obviously some internal accounting shuffling and not some kind of payment processing. If your bank charges a fee to move funds between accounts your bank sucks.

Probably not, it would have likely been netted between the banks without requirement a settlement.

Anyone doing that volume in credit card transactions isn't paying a 2.9% rate like you and I would selling trinkets... and the fee's paying for a variety of protections not present in a Bitcoin transaction.

If grandma had balls she'd be grampa. Nobody moves 82 million with a credit card, that's not even what they're for.

A whole $.10 cheaper than sending a FedWire! that's <insert really small percent that I'm too lazy to do the math on>% cheaper!

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