
Skyrocketing Bitcoin Fees Hit Carders in Wallet - wglb
https://krebsonsecurity.com/2017/12/skyrocketing-bitcoin-fees-hit-carders-in-wallet/
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csours
Carder in this context refers to people who trade in stolen credit card
information.

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jgord
High BTC Fees are hitting lots of legit businesses who were previously making
the move to support Bitcoin. If they are halfway thru the rollout, its not a
lot of work to switch to supporting BitcoinCash instead, due to the similarity
of the apis & protocol.

Median BTC fee has been $10 to $25 USD over the past couple weeks. Meanwhile,
median BCH fee is under 10c.

Regardless of small-block vs big-block ideology, its pretty clear that a 25
dollar transaction fee rules out a lot of business use cases.

From where I sit, we are witnessing the birthing pains, not of the Internet of
Things, but of the Internet of Money.

~~~
waytogo
> High BTC Fees are hitting lots of legit businesses

Why do people always think that BTC—only because it has started as a p2p cash
system—needs to stay there?

From my point of view BTC evolved to the best value storage system available:

\- Limited supply

\- Easily available in any country without a bank as an intermediary (try to
purchase or sell gold without a bank, good luck and real, physical gold as an
value storage is just cumbersome)

\- Probably a good value storage when the stock markets crashes (because again
no banks are involved which might also go bankrupt, in particular in countries
with a weak economy/currency/infrastructure)

\- The strongest brand and most popular with mainstream and retail investors,
just go to Google Trends and you see that the search volume of Bitcoin is
insanely high (~50% of 'iphone' just to stress how much mainstream bitcoin
went); just imagine: which crypto people will choose to put a large part of
their money first when a crash comes? To the biggest brand I guess

\- Biggest ecosystem around (wallets, etc.) + high reliability even if slow
(just look at some other coins with a huge market cap where people even
struggle to send and receive coins)

\- Highest liquidity

This is a very strong use case for me to buy and hold BTC. If there is any
other coin better as an value storage please let me know.

~~~
pjc50
> best value storage system available

Except that nobody has any idea how much value it will have next week, let
alone next year. The variance is just too high.

~~~
waytogo
As long as it's growing on a yearly base (which Bitcoin does for years and
significantly) a high volatility shouldn't hurt any value store.

~~~
tscs37
As long as it's growing, correct.

But if you want to get that value, then bitcoin is unreliable in the amount
you get. And that is only if it has grown over the period you stored your
value for.

~~~
waytogo
Disagree. Every currently available value store is volatile, even gold (which
is highly volatile):
[http://finance.google.com/finance?q=NYSEARCA%3AGLD&sq=gold&s...](http://finance.google.com/finance?q=NYSEARCA%3AGLD&sq=gold&sp=1&ei=g3dGWsm4D8iKswHlhYTgDQ)

I still don't see any other value store better than BTC considering my prior
bullets.

~~~
tscs37
Well, for one, if someone tells you Gold is an excellent store of value, it's
probably bad advice, there are better places to put your money (like a bank
account or ETF)

Plus, Gold might be highly volatile by some stock standards but it barely
moved a percent over the last 24h while Bitcoin does percent movements on the
hour mark.

Stores of value require a predictable purchasing power to be useful, bitcoin
does not have predictable purchasing power. Or the guarantee that in 20 years
I'll still be able to use bitcoin at all.

The major difference here is that gold has been used for about 2000 years plus
now and has proven to be somewhat valuable in a functioning society. Bitcoin
hasn't been around for a full percent of this time and nobody knows if it'll
be around for another percent to begin with.

Ring me up though if Bitcoin will survive the next 100 years for sure.

~~~
waytogo
> Stores of value require a predictable purchasing power to be useful

Think you confuse matters: A currency should have "a predictable purchasing
power", not a store of value. Latter should rather grow (which requires a
deflationary nature/limited supply) and offer stability in times when stocks
and/or currencies nosedive. Gold is not that bad for this use case and BTC is
even better.

But instead of so much meta talk I would be happy if you let me know which
asset is a better store of value than BTC and why (for all kind of countries,
also those with weak economies/currencies/infrastructures).

~~~
tscs37
A well aged wine is usually not a bad idea if you have some money.

In a deep crisis, cigarettes aren't a bad idea, they usually end up being a
black market currency. In other regions of crisis bullets might also be a good
idea.

For a proper financial market with money, a good store of value might just be
a long term savings account in a bank, that's a very stable value store and
usually those keep up with inflation pretty well. If you can have a bit more
risk there are index fonds and ETFs but those are more money making than store
of value.

In places with weak economies it usually doesn't make sense to establish much
of a store of value, bartering is more common and people just live with what
they have, the accumulation of wealth beyond the daily necessary can be rare
in some african countries.

BTC is also a bad solution since it's rather expensive, weak economies have
more people who can't afford the rather extreme transaction fees (which are
laughably high compared to EU SEPA transactions even at comparable
confirmation times)

~~~
waytogo
> For a proper financial market with money, a good store of value might just
> be a long term savings account in a bank

Not sure. Look what 2008 happened: States had to rescue banks which would have
gone bankrupt otherwise and because of this the entire economy/currency
suffered. A FIAT saving account—even in a developed country/financial
market—is a terrible store of value.

> weak economies have more people who can't afford the rather extreme
> transaction fees

When I look at Google Trends
[https://trends.google.com/trends/explore?q=bitcoin](https://trends.google.com/trends/explore?q=bitcoin)
I see many weaker countries or low-income countries (South America, Russia)
which have a quite high interest in BTC.

The transaction fees don't hurt if it's just about putting your savings in a
safe spot. The people are not going to buy groceries with BTC.

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nextstep
Surprised they don’t switch to monero if they’re switching cryptocurrency.
Fast and cheap (like litecoin) but also many added privacy benefits.

~~~
waytogo
Looked really deep into alt coins the last few days, I checked also XMR which
isn't fast or scalable. It's now fast because of the little use compared to
BTC and ETH.

Highly scalable because of their centralized nature are Ripple (XRP) and
Stellar (XLM), Stellar started as a Ripple fork. I finally went for Stellar
because of the founder (he founded and sold MtGox and founded Ripple), more
potential to grow because of lower cap, the complete feature set and some
recent announcements (such as Kik/Kin moving from ETH to XLM, Singal-founder
will use XLM for his MobileCoin).

I might buy Ripple after some correction though. Ripple has a different
positioning but a good setup too. The cap is already very high, close to
ETH's.

Edit: Why the downvote?

Edit2: changed that Stellar started as a Ripple fork

~~~
Casseres
I haven't voted on your comment in either direction, but if I had to guess why
someone else did, maybe it's because you're speculating about what coin to buy
in order to make a profit.

HN seems to me like the place to discuss the tech behind a coin, not whether
or not to speculate on it for monetary gain.

Personally, I wouldn't say Monero "isn't fast or scalable." Perhaps it's not
compared to other coins, but compared to Bitcoin it sure seems fast and
scaleable. (Again, I didn't downvote your comment for disagreeing with that.)

~~~
oleganza
Monero is less scalable because you have to store all tx outputs (key images)
instead of just unspent tx outputs, since Monero does not know which outputs
are fully spent (for larger ring sizes). And these must all be stored in fast
random access memory for double spend prevention. That’s an ever-growing pile
of data!

While in Bitcoin you can offload older utxos to a slower memory, because the
access pattern is “utxos die young”. Also, utxo set grows much slower or even
can be stable (“1 utxo per person”) while tx volume grows forever.

Bitcoin scales way better than Monero or Zcash (that has the same requirement
to store all “nullifiers” to prevent double spending).

~~~
polarized
> fast random access memory

That term is misleading and implies actual RAM-type memory is needed, which is
untrue. Monero scales quite well using a database on SSD up to transaction
rates far in excess of anything Bitcoin can or will realistically handle now
or any time soon (certainly hundreds and possibly thousands of tx/sec).

Likewise the total data that needs to be stored grows slowly at realistic tx
rates, roughly 80 GB/year at 10 tx/sec. That's similar to the rate of growth
of the bitcoin blockchain (unpruned) and well within the hardware capabilities
of both existing cheap SSDs and even more so the visible trajectory for future
cheap SSDs.

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djsumdog
Where exactly do the transaction fees go in the blockchain? Are they used to
bid-on/confirm the next block? Are those mBTC in the transaction fee gone
forever once the transaction is confirmed?

~~~
21
They go to the miner of the block, which is incentivized to pick the highest
paying transactions to put inside the limited block.

So yeah, you bid with your fee against everyone else wanting a transaction in.

~~~
ianai
Does the cost of a transaction increase as more blocks are found? What makes
the transaction fee minimal?

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21
There are 100 MB of transactions which want to get in the next block:
[https://blockchain.info/charts/mempool-
size?timespan=all](https://blockchain.info/charts/mempool-size?timespan=all)

But the block is only 1 MB. So 100 times more transactions want in than there
is space, thus you need to pay $10 to secure a place for your transaction.

Fewer transactions or increased block size would decrease the transaction fee.

~~~
Empact
More than 100 megs according to this, which also shows the fee strata:
[https://dedi.jochen-hoenicke.de/queue/more/#24h](https://dedi.jochen-
hoenicke.de/queue/more/#24h)

The good news is that at current volumes, the miners are making progress
clearing the lower fee transactions. In the next day or two we should start
clearing transactions at < 100 satoshis/B.

That's one way that average / median transaction fees are misleading in
Bitcoin: people paying much lower fees are making transactions, but traders
and those moving large sums seem to be willing to over-pay to move their
money.

In some ways the minimum transaction fee processed is more instructive than
the median, because it shows how much did one have to pay to get processed, vs
how much dod people in general overpay to ensure their payment was processed.

~~~
icelancer
Furthermore, tons of "exchanges" in Korea were spamming the mempool with 0-fee
transactions, as were some other notorious figures, driving these relatively
false mempool statistics way up in order drive up the value of other coins.

~~~
oh_sigh
What benefit do they get from spamming the exchanges? Is there ever an reason
to mine 0-fee transactions?

~~~
ncallaway
I don't know the answer to the first question. The second question (Is there
ever an reason to mine 0-fee transactions?) is "yes, for a while".

Until approximately 2040 new Bitcoin are introduced into the system as a
reward to the miner who discovers a block. So, even if a miner mines a block
with only 0-fee transactions, they are still rewarded with a small amount of
Bitcoin "from nowhere".

Bitcoin will be introduced in this manner until there are 21 million BTC in
existence, at which point they will stop being introduced "from nowhere". This
is expected to take until about 2040 (though I don't know how that projection
is made). After that point there won't be much of an incentive to mine 0-fee
transactions.

~~~
tlrobinson
> So, even if a miner mines a block with only 0-fee transactions, they are
> still rewarded with a small amount of Bitcoin "from nowhere".

Sure, but as long as there are transactions with fees in the mempool, then
mining 0-fee transactions has an opportunity cost. Currently that's about 5
BTC per block, compared to the 12.5 BTC reward
([https://www.smartbit.com.au/charts/transaction-fees-per-
bloc...](https://www.smartbit.com.au/charts/transaction-fees-per-block)). It's
possible that forgoing the transaction fees will make mining for you
unprofitable if margins are thin.

Also, larger blocks are more likely to be orphaned, so including 0-transaction
fees increases that risk (very slightly) with no additional reward (though
currently the orphan rate appears to be basically zero, even with full blocks)

