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There are now more than 200k pending Bitcoin transactions (blockchain.info)
192 points by OyoKooN on Dec 19, 2017 | hide | past | web | favorite | 142 comments

You'll notice the entire Bitcoin community has changed tone. It used to be "this is the currency of the future, down with cash/Visa!" but now you hear "Bitcoin is not a currency, it's a store of value".

The wild price swings, slow transactions, high fees, and loq merchant acceptance make it complete garbage as a currency. But as a store of value, none of those arguments apply. It only has to compete with gold bars, which are crappy in their own ways.

Gold bars are only a store of value if they're in your possession. A gold bar in the hand is worth two in the bush as they say.

To be a good store of value its not enough that it exists and people value it, you have to be able to call upon it when you need it. That's where its back to approximating currency, and where Bitcoin's weakest link seems to be. This is probably just the beginning of the bad news.

King George used to lay claim to every pine in North America, to be called upon when he needed them for ship masts. For some reason or another he couldn't do that anymore. Historical examples abound, if you look for them, and they're not tulips: https://hackernoon.com/the-guns-of-bitcoin-1f779309a718 (disclaimer: I wrote that, which dances around a few historical reasons why bitcoin's value might not be so peachy)

How does the volatility not make it a bad store of value?! Surely by definition that is exactly why it is a bad store of value!

But that would mean it's good for nothing except warming the planet!

It’s really sad that so much power will be wasted on mining Bitcoin.

“How can Bitcoin be a good store of value if its price is so volatile?” http://marginalrevolution.com/marginalrevolution/2017/12/can...

Quoting some articles does not an argument make. The summary argument:

> Volatility is a feature of Bitcoin, not a bug, and that is in part for reasons that have nothing to do with speculation or bubbliness, but rather follow from the contours of the utility function. It’s that latter point that hardly anyone understands.

I'd argue this is might be correct, but also irrelevant, as many people involved in bitcoin either wanted to use it as a payment method, or are only in it for speculation, or money laundering/covert transferring of wealth.

How useful is a value store where it's very difficult to actually get the value out remains to be seen, or what effect such a realisation will have on the price.

I'm not intimately familiar with BTC prices, but they seem to have lots of high frequency volatility while the low frequency price changes are close to monotonic. If that's the case then it makes sense as a long term store of value.

Yes. The number of bitcoins increases roughly linearly over time and will continue to do so for another few years. At that time, the bitcoin protocol will need to change or there will be no new bitcoins circulating. This leads to almost endless deflation, as long as bitcoin doesn't change from its current structure.

There really is no asset "there" when talking about Bitcoin. Bitcoin acts purely technically and can be traded that way. Unless Bitcoin's structure changes the price will either continue to rise as a trend, or it will crash forever. Long positions and scalpers do great with Bitcoin.

"Store of value" here means "investment", but people are trying to keep the veneer of currency definition. And of course it's a highly speculative investment, although whose wild volatility contains a rare spice cherished by asset managers, "high alpha", meaning that it is not related to the broader markets. In musical terms, Bitcoin sings its own song, or dances to its own beat.

To diversify, as modern portfolio theory prescribes, investors seek assets whose prices don't change in relation to other prices, are uncorrelated. In today's world, most markets are highly correlated with each other, they are almost like separate instruments playing in a huge symphony.

But not Bitcoin. Not for now. Bitcoin moves according to bitcoin.

If bitcoin becomes more and more like "digital gold" and loses some of the volatility, however, it will also start to act more and more like physical gold on the world markets. Gold moves as a safe haven asset, and so will Bitcoin, and thereby lose its status as an investment uncorrelated to the broader markets.

If you're involved in trading, you can pretty much be given a single market quote like the S&P or gold, and generally guess the direction and possibly the amount of price changes in many or most other world markets, unless there were events specific to one or another market. Usually if gold went up, for example, the Japanese yen also gained. These relationships change over time, but they are very pronounced. You can ask maybe three questions and generally extrapolate what happened over the entire world except for cases where a local event in India caused its bourse to move independently, or for example a weather event moved an agricultural commodity. Even real estate does not escape the bonds of market correlation.

But... Bitcoin. Without a very large move in other assets, I doubt a well-versed market participant could tell you what happened to Bitcoin without hearing about Bitcoin itself (or maybe Ethereum...). To repeat myself, I believe this will change if BTC becomes established as a "store of value", it will join the symphony, but for that reason it will also lose its great appeal to institutional investors -- its uncorrelated quality, "pure alpha" as one well-known asset manager recently termed it (where alpha is independent returns and beta is benchmarked correlated returns).

So, with its volatility, Bitcoin is maybe being thought of by institutional investors as a kind of extreme spice that can add a bit of diversified risk into their larger stew. Just dab will do ya. But as more dabs are added, the "alpha" quality will wear off and it will begin to move more and more like plain old gold. Maybe less lustrous...

So maybe in investment terms as well, Bitcoin might have a scaling problem.

I don't see it as a store of value. It's just a very reliable network for sending very big transactions.

If you send 1 million dollars in Bitcoin, a $20 fee is negligible - The reliability of the Bitcoin network makes it worth it.

For smaller transactions you should just use a different coin.

If you're in good standing with the various governmental authorities, what are the scenarios that make it worthwhile to convert to some cryptocoin, "send a transaction," then convert back on the other end? There are traditional channels for sending money to various places, what do these extra steps get me?

You may feel a $20 fee is negligible, how about a 1% price move? 10%?

It's funny how often one sees these sort of high-dollar scenarios described for this "decentralized"! "currency of the people"!

Like, sending million dollar wires is a fairly niche market, and to my knowledge people regularly engaging in such things seem to be getting along just fine, there not crying out desperately for a better solution. And how exactly is bitcoin better for doing this if your million dollar transactions don't consist of the spoils from an exchange hack, exit scam or the like?

It's just a very reliable network for sending very big transactions.

Do you think the traditional channels for sending million dollar wires are unreliable? This seems like an area where the market is likely to converge on the very most reliable options and any service provider in this area with even a hint of unreliability would rapidly fade away.

If you send 1 million dollars in bitcoin, the crazy volatility may mean that you only sent $950,000 by the time your transaction was confirmed.

The bitcoin blockchain is a great way to transfer a fixed amount of bitcoin. It is an awful, awful way to transfer a fixed amount of wealth.

If it costs $20 to move a million dollars, then why not use a $30 wire transfer? The way I see it is that Bitcoin's advantage should be to move any amount of value across the internet for a low flat fee; anything less then the hassle of using the Bitcoin network outweighs the benefit.

The volatility affects all sizes of transactions in the same way. So sure, transactions with Bitcoin may be reliable. But converting them is not.

Unless your million $ is dirty you would be stupid to not use proper channels for the transfer.

Beginning with a knock on the door and two gentlemen with badges asking why you transfer so much money over - well - unconventional channels.

The goal posts will stop moving in time with the music.

Thanks. But no thanks. Even as a store of value it's crappy because of the public ledger. I would rather have some semblance of privacy in terms of my wealth.

It has become a store of value, and there is nothing wrong to see it as a new asset class because of the attention it has been getting. IMO, bitcoin will rise till it finds an equivalent place like gold. Because of the limit, the value of bitcoin can technically reach anywhere between 400K to a million dollars. If they really wanted to see this as a currency, you would never design this to have an upper bound. You cannot realistically support or even augment the world exonomy with just 21 million bitcoins.

Cool. What I'm saying is that it lacks privacy, and therefore is a poor store of value.

As for it being a store of value akin to gold? I don't think so. For various reason, even disregarding the historicity, and the physical nature of gold, the primarily reason I think it won't be comparable to gold will be because of the nature of technology. That being the lack of long term, and I'm talking centuries, hell even a few decades out, type of stability, and I just don't see Bitcoin being stable for such a long period of time. Technologies improve, and fundamentally demand constant change,and so superior competitors will emerge. Hell if anything even a state sanctioned E-Coin system would obliterate Bitcoin.

Fundamentally at this point Bitcoin is reliant on the network effect. As of even today the technology behind it is in constant flux, experimentation, and competition, what keeps bitcoin afloat is that it's a first mover, and a lot of people use it. The network effect is really a short term moat for most technologies, including Bitcoin, and as such it will not last long enough to be a Long Term store of value. So any sort of comparable "Long term store" of value in any comparable to gold is out of the question.

a state sanctioned E-Coin system

We have these, they're called debit cards, credit cards, paypal, etc.

For anything "state-sanctioned," centralized and "trustful" systems are always going to be more efficient, and chosen over less efficient and inferior options.

This is why it's hard to see where something like bitcoin would ever find widespread use, it's only good for non-"state-sanctioned" things.

If large numbers of people were to start doing non-"state-sanctioned" things, they wouldn't start using bitcoin, they would change the laws of the state.

Well yes, but fundamentally it's backed and guaranteed by physical paper bills. So when I say E-Coin I mean a purely digital/mathematical abstraction like Bitcoin, or other Cryptocurrencies.

I think it's an organic reaction that makes a lot of sense. A distributed deflationary currency not run by any central authority is a dangerous concept. Another volatile store of value that might not be very liquid is a lot less dangerous. (Imagine cashing a 10th of the float, say) The forces of the status quo(or is it the invisible hand?) has responded to the threat, for now, by blowing this up to the stratosphere and making it impractical as a currency; it's even a better move than making it illegal. There will be more chapters to this, especially smart contracts. Interesting developments.

Even a $1 bitcoin transaction costs $25 in TX fees to send. At least I can pick up a gold bar myself for free. And price volatility makes it a terrible store of value. Let’s face it: in its current state bitcoin is pretty much useless except if you hold it and the price goes up. I own some Bitcoin and plan on holding it but there’s no denying the software in its state is not usable for anything. If the devs could figure out how to make it work like Venmo, that would be absolutely huge. Perhaps another implementation will get it right first, or already has.

> But as a store of value, none of those arguments apply. It only has to compete with gold bars, which are crappy in their own ways.

There are lots of stores of value besides gold bars and Bitcoin; real estate, business equity, business and government debt instruments,...

Actually there's been a vigorous enough debate happening in the community about how to fix some of these problems and how to move forward toward what Bitcoin will ultimately be that the community and blockchain split.

Yes but these debates have been going on for years with very little progress being made. Bitcoin is growing faster than it can keep up with, it seems.

I mean, segwit was activated. That doubles the capacity of blocks. People just need to upgrade.

Lightning Network is moving quickly. It is live on mainnet, tho still considered unstable.

Schnorr signatures are in development. This will further compress transactions.

Seems like progress is happening to me...

why would it be a (good) store of value? there are countless crytocurrencies. The only reason people think bitcoin is rare is a (blind) leap of faith

It’s the first and one of the simplest with the biggest brand. Those things matter somewhat.

Gold bars don't require the electricity output of a small country to keep running.

Although I suppose digging them up also has serious environmental consequences.

One might research the effects of cyanide byproducts from gold mining, and the lives lost harvesting it.

This made me briefly consider the real-world environmental impact of the automated mining operation on my Minecraft server. :)

>Bitcoin community has changed tone.

> It used to be "this is the currency of the future, down with cash/Visa!"

> but now you hear "Bitcoin is not a currency, it's a store of value".

This is referring to the minimum cost in fees for a transaction to get copied from the mempool to a block. Only when a transaction is in a block is it a valid transfer of bitcoin. Its nothing to do with trading or exchange rates or energy costs or fiat.

Bitcoin is working exactly the same as it has always, however now because of the backlog, transaction fees are very high. In the order of Western Union + Visa Fees + Bank Wire fees all at the same time!

I made a very small transaction for a friend a week ago (~$50) and paid $2 USD in fees. That is not enough and the transaction will sit waiting until the backlog decreases, it may never clear.

Bitcoin is kind of broken right now.

Most wallets allow you get out of this situation with a clever feature.

What you do is raise the insufficient fee after the fact by issuing a new transaction that is dependent on the first one, and adding a large enough fee to the second one. This is known as "child pays for parent" in BTC lingo.

That being said, the fee for a good transaction now is around $22 so it might not be worth doing for your $50 send.

Unfortunately in a child pays for parent scenario you need to pay double fees. Otherwise it's not worthwhile for the miner to confirm both transactions in order to only get one fee. So they'd need to pay $44 in fees in order to free their $50.

The miner only needs to confirm the replacement transaction as the parent will get purged from the mempool. There’s still only one transaction recorded on the blockchain.

Wouldn't it be simpler to send another transaction with identical inputs, but with a higher fee? I haven't tested this, but I'd expect it to replace the old (conflicting) transaction in the mempool.

I think if you just naively did that, you would risk the funds being spent twice if both transactions are included in the block (unlikely, but possible).

There is an implementation of essentially the same concept that you are describing called "replace by fee". I haven't seen it implemented in any wallet software, but apparently it's in Bitcoin Core.

I think the tricky part is getting nodes to relay transactions that can look like double spending.

This is exactly how replace by fee works. If you use the same inputs, only one of the transactions can be included. The reason it's called replace by fee is that unlike Satoshi's original design for transaction replacement, which he disabled because it could be abused to waste node resources for free by repeatedly replacing transactions, it requires a higher fee for each replacement to discourage abuse. (Bitcoin Cash subsequently removed replace by fee out of some weird belief it was an attack on Satoshi's vision; this was of course nonsense, since he specifically designed transactions to be replaceable. It was also pointless, since it's a voluntary miner policy rather than a consensus rule and there's economic incentive for them to support it.)

It's not possible for a valid block to include multiple transactions spending the same input. All full nodes will reject such a block as invalid.

Thanks, I didn't know that.

If your fee was so low that it has not cleared in many days then it is probably not being included in any blocks. Especially in a time like now when fees are increasing, putting in another identical transaction with a high enough fee to get confirmed should work fine. I'm not sure how your wallet software will deal with it though.

Where does this $22 go? What hard ware do I need to set up my own machine to process these transactions and get the fees to keep?

All fees go to the person who mines the next block, so in order to guarantee you get the fees, you need a mining machine that wins every time (in which case you'd be in control of way more than just the fees). Basically, you can't.

Transaction fees go to the miners. Lookup Bitcoin mining.

You'll probably find it's not worth it...

You're still paying a huge fee, though.

I recently made a transaction in bitcoin basically cashing out some change that had dramatically increased in value. I made a $150-ish purchase and paid a $15 transaction fee. It took about 90 seconds for my transaction to be broadcast to the network and confirmed by multiple nodes. Yes, a 10% transaction fee is incredibly high, but I was spending essentially free money, and the utility provided to my by the vendor I chose is high.

It would seem that getting your transactions confirmed is an auction of sorts at this point. While this is certainly not optimal for a currency, it seems like a problem with a solution somewhere.

People who actually use bitcoin must be ignorant of all the much more usable and useful alt-coins. Can anyone think of a good reason to actually use bitcoin vs. ripple/stellar/dash/zcash/monero/nem/...? Maybe it's just cause so many platforms have been built around bitcoin?

Because your drug dealer only accepts bitcoin? Does anyone else actually use it? Other than as a get rich quick scheme?

Craigslist now allows people to mark their posts as crypto-friendly.

Anyone who accepts Bitcoin runs into the problem where others can know their balance by looking up the address (and thus could be at risk for theft/mugging).

If people want to keep their balances private and not share their transaction history (or later transactions), they should use a coin that's private by default such as Monero.

Additionally, Monero has a dynamic blocksize, so as usage increases it won't experience the transaction backlog that Bitcoin faces.

You should create a different address for each post on Craigslist. It is pretty easy and prevents this problem. If you have a website and have an address displayed for donations, then you will get multiple donations to the same address. With any one-off just make a new address in your wallet. (I use bitcoin core wallet. Not sure how others work.)

And then later on transfer it to your main wallet and pay another fee, and trust that whomever your first address still isn't paying attention to it, or hope they didn't get their coins from a tainted source?

It’s all the same wallet just a different address, no transfer needed.

That is how it works for me.

Monero now supports multi address.

No, you are wrong, Monero has merged in MultiSig which is something unlike what it sounds, it basically means you can now make a wallet where several people hold a piece of a key and a majority agreement is required to spend.

Subaddresses have not been integrated into a tagged release yet. We can discuss hypotheticals though, if you prefer.

Isnt it the same for multisig?

You didnt say it is not yet in a tagged release, just mentioned no it isnt subadress but multisig, ehich tells me you had no idea

Either way, it doesnt matter.

> Additionally, Monero has a dynamic blocksize, so as usage increases it won't experience the transaction backlog that Bitcoin faces.

I am kind of confused with the block size thing. Sure, increasing the size means more transactions can be added into the problem. Bu, as far as I know bigger block size has it's own share of problems - block propagation is slower which can cause double spending and frequent orphans means the blockchain has to keep re-organising frequently too.

Drug dealers use Monero, not Bitcoin.

Darknet sites accept litecoin and monero now. At least some do. The BTC transaction fees are hitting a large percentage of their customers (people making sub $200 dollar transactions). That plus monero is better for their purposes anyway.

I don’t think your average drug dealer would accept 0.001 BTC for a dime bag

None of the coins mentioned above can scale to become a mainstream currency. They're just the most hyped ones.

Blockchain-based coins are hard to scale. The most scalable ones at the moment use a Directed Acyclic Graph (DAG) instead of a blockchain.

I think that IOTA and Byteball (both DAGs) are the most advanced at the moment in terms of scalability.

In the long term, Ethereum may have potential if they manage to implement sharding.

Another good long term bet is Lisk which aims to scale using sidechains.

Last I heard, IOTA had collapsed under the load of all the transactions from speculators, with people complaining it took days to get transactions to confirm. A blog post about this even made it to HN a few days ago: https://news.ycombinator.com/item?id=15944112 (As far as I can tell it took a much lower transaction volume than the Bitcoin one to cause this too, though there doesn't seem to be that much in the way of useful stats out there.)

This isn't terribly surprising because from the discussions I saw, the entire justification for why it could scale infinitely seemed to boil down to the creator accusing anyone who questioned this of spreading FUD. Byteball may be doing better, but on the other hand it hasn't had the same kind of speculative bubble that's done Bitcoin and IOTA in yet.

I think it was because IOTA experienced an influx of spam transactions which were not dealt with properly.

I'm sure that IOTA still has issues but I think that the core DAG/tangle concept is sound. Unlike with most other tokens, these problems should be relatively easy to fix... My bet is that it's much easier to scale a DAG than a Blockchain. But I'm sure that some blockchain-based tokens will also scale eventually.

A lot of these are only faster to transact because they have nowhere near the volume of transactions that BTC has. BTC is also much more widely accepted and understood.

> much more usable and useful alt-coins

I agree. I researched Ripple a lot and am sold on it, since it's not just a crytocurrency (XRP Ticker) but is also a protocol that Gates Foundation, AMEX and other banks are using to perform cross-border payments almost instantly and with a lot lower fees and overheads.

Are any of the others you mentioned, ex : stellar, dash, monero etc similar to Ripple? If not, what are their use cases? Any links you can point me to would be helpful thank you. (I know I can google this, but google is full of SEO-ed promotional and pump-and-dump posts, so can't really rely on that info).

Ripple relies on a set of hardcoded trusted nodes to validate all the transactions. This makes it very interesting to banks, since they can just set up their own set of nodes and use the Ripple protocol for transaction settlement between them. It's less appealing to people who're attracted to cryptocurrency as an alternative to trusting banks.

Stellar is the most similar to Ripple (I think they had code in common at some point). Dash and Monero are a little older, and I don't think they solve the scalability issue in any special way, but are definitely less popular and therefore more usable.

I recommend reading forum posts about these different currencies to get an idea of what people think are the most competitive features/pitfalls. You could google something like "most scalable alt-coins" and then read stuff from reddit and bitcointalk.org. When a few of them have gotten your attention, do a "x vs. y vs. z" search and read more forums. You kinda have to feel it out!

Here is how I would suggest "feeling it out", if you are more technically inclined. Once you think you might want to buy some of a coin buy doing the above, first read a coin's whitepaper to give you a good idea of how it works and if it is just a scam. Then google around for other technical blog posts explaining how that other person, who hopefully has been using it, thinks how it works. Finally set up a node on your home machine (for bitcoin you need to download a ~165 GB blockchain, which is huge, but others are in the few GB to 100 MB range) so you can work with it directly. Then make some small transactions so you know how to do it before you make any large ones. If transacting goes easy with small fees and there are lots of sites using the coin, maybe it has a future.

Ripple is a pre mined token that has central control. It's not really comparable to Bitcoin.

I mean... Satoshi had a stash too. That said, i like monero extra because of that too.

Stellar is very similar to Ripple

Or even Bitcoin Cash...

Yea, no.

Alt-Coins don't have astronomic price increases, are far less accepted by merchants and have far less backing from the finance industry.

In short, most altcoins are neither useful for investment nor payment. Which is a shame, because there are some coins that have substantial technical improvements over bitcoin, and nearly all of them can handle more transactions/second than bitcoin

> Alt-Coins don't have astronomic price increases

The really big multipliers have been in so called alt-coins for years. This statement is flat out wrong.

Pretty much every altcoin parent mentioned has outperformed Bitcoin YTD

I've had a couple of thousand dollars "stuck" across several bitcoin transactions for over four days now (106 hours+), due to low fees suggested by my wallet/exchange. Something needs to change, because it's currently unusable.

Yes, your wallet/exchange needs to change because it's giving you incorrect suggestions.

How does this impact buy/sell orders? If I place a buy order at t = 0 where btc = 10, but the order isn't processed until t + 3hours where btc = 15, do I pay 10 or 15?

Exchanges (where trades like the one you describe happen) operate outside of the blockchain. You only transact with them on the blockchain when depositing or withdrawing money from the exchange.

Thanks, and just so I understand correctly, these pending orders are waiting within the blockchain to be executed, similar(ish) to a task queue?

Yes. They are waiting to be picked up by a miner, based on the fee that the transaction has paid to be included in the blockchain. You can still make a quick (by BTC standards) transaction in these scenarios, it's just more expensive to do so. Right now, a regular simple transaction would have to pay USD 22 to be included in the next block (i.e. within 10 minutes).

Here's the reference website for BTC blockchain backlog. It allows you to understand what a good fee is at a given time.


Awesome, makes sense - thanks for your help!

Yes, it's called the "mempool". A higher fee means it'll be executed more quickly, because miners prioritise transactions with higher fees for obvious reasons.

It's possible for a transaction to get stuck and never be confirmed if it's fee is low enough. If that happens, then you'd need to send a new transaction, which cancels out the stuck one.

If you're exchanging money for bitcoin, it happens within an exchange. No public transfer between wallets needs to happen. (Only when you actually deposit / withdraw the bitcoin)

At most (all?) exchanges you trade with currency that's already deposited at the exchange. So you can only create a buy/sell order if you gave them the coins to fulfill the order instantly.

The current situation makes arbitrage less effective and slows down trade because it's more expensive to move bitcoins to an exchange though

The miners are greedy bastards. They will be the ones to run this thing into the ground and Kill the Goose that Laid the Golden Egg.

ShapeShift.io is charging an unprecedented 0.003 per transaction. The Coinomi Android wallet is listing their minimum transaction fee (the "LOW" fee) at 0.002 as of last week. The Mycelium Android wallet is trying to scavenge about 0.0025 per transaction at the high end.

And the reason for the high fees IS NOT because of the network congestion: It's because so far the greedy bastard miners are finding where they can get away with it. Probably in fact they purposely slowing down the network to cause the congestion as a ruse in claiming it for an excuse to charge exorbitant fees. This is also an age-old trick that union workers use to get more money for doing nothing on the job by just purposely slowing down the work pace.

Right now anyway, I've seen where the average Bitcoin ATM machines are quite busy with greenhorns who are shoving their cash bills into the machines for a little dab of Bitcoin here and there. Most of those people are buying it to hold it for awhile with the idea in mind of selling it back to the same ATM machine they bought it from and turn a profit. So about the time more and more and more people begin to understand that they are being fleeced for exorbitant transaction fees that dramatically cut into any gains they would have made off of typically small investments, then they will STOP buying Bitcoin from the ATM machines.

Bitcoin will be all washed up within a couple years if for no other reason than these greedy bastard miners who are going to find out that although they made more money in a shorter period of time with their greed, they WOULD have ended up making more money over the long term if they hadn't been the greedy bastards that they are.

Greedy bastards. All of them. Greedy bastards.

Also $4.3m worth of pending transaction fees.

Does the number of pending transactions impact Bitcoin in any way? If so, what happens if users create large numbers of transactions with low/0 fees attached?

I believe it doesn't. All the miners will just ignore the transactions that don't have a large enough fee attached.

Bitcoin Cash is now trading on GDAX/Coinbase, it probably will help alleviate the burden a bit.


Chicken and egg: Are the unconfirmed transactions because people are selling? Or are people selling because there are so many unconfirmed transactions?

Looks a bit like a bank run, complete with the lines at the teller.

If bitcoin is becoming even more successful (in the sense of high transactions number) and if blocksize remains at ~1 MB, what will be the impact on fees? And could we imagine unsustainable fees?

The utility of bitcoin depends on your perspective. As a means of value exchange, high fees make it less useful. But as a store of value, high fees matter little.

As an example, wasn't there an $80m transaction the other day, where the fee was $20? I wonder what banks would charge to facilitate that?

As far as I know, even for very big payments, most banks charge either no fee or a flat fee for SEPA. My bank charges nothing for normal SEPA transfers or 20 euro for expedited ones (or it did a couple of years ago; I think there’s some new regulation reducing max times for transfers, making expedited less relevant). No upper limit mentioned on the forms. Of course, that’s only relevant within the EU.

EU is WAY ahead of the US in many areas. I daresay that's because corporate monopolies have a bit less power here (Europe).

The older folks in the US (the same group who put the US in the situation it's in now) are still writing paper checks, putting them in envelopes, and sending them through the postal service. Sure, you can send a bank wire, but the sender will pay $15-30 for the privilege, and the receiver often has to pay $15 or more as well. Oh, and it can take 1-2 business days; and the receiving bank may decide, based on whatever reason, to hold the funds for 10 business days.

Things are slowly changing with US banking, becoming slightly more modern; but it's still the dark ages.

I'm amused when I visit family in the US and hear local people expressing superiority over the rest of the world, while Kenya has been doing mobile banking for 10 years.

Anyway, until you've lived in the US, you don't know how sucky banking is. Any extra-bank financial system in the US is better than what they have now!

To clarify for non-Eurozoners: SEPA is the Single European Payment Area. All bank transfers denominated in euros within the EU, EEA, San Marino and Monaco must cost the same regardless of destination bank or country. In the eurozone that cost is usually zero.

In Australia, my bank charges $10.50 for a domestic RTGS (Real-time gross settlement) transfer. That system is only for payments over $100,000 and usually clears within 120 minutes. Not sure what it would cost for an international transfer - the SWIFT fee seems to be a flat $30 - it doesn't specify any maximums but I'm not sure if that still applies when you're talking tens of millions of dollars...

Why cant something be both a store of value and be medium of transaction?

I never said it couldn't be :). But with bitcoin's significant transaction fees, it's much less useful as a medium of transaction (for small value transactions).

Remember just a year or two ago when it was cool to buy your coffee at a shop that took bitcoin? You wouldn't do that now, since your coffee would cost the equivalent of $20 ($4 for the coffee, $16 for the transaction fee).

It's also painful to realize how much bitcoin some of us have spent on little things in the past. I've had some coffees that are now worth $300 a cup had I treated the btc as value store rather than currency ;).

Sure but hopefully if all this nonsense ends with couple stable currencies, the price will stabilize and younwill be able tobuy your coffee with bitcoins again or moneroj, or hell if i know.

I think it will. The internet has been around for 20 years, and we're only just figuring out some of the good things to do with it (and stumbling over a million crappy ways to use it).

I see bitcoin as a proof of concept that was much needed, so it grew legs and became a "real thing". Something better will replace it (and I wish I knew for sure which it would be so I could "bet" on it now! ;) ).

That's why I use Litecoin. Transactions fee are one of the lowest in all of crypto and it's transactions speeds are acceptable. Always within a couple of minutes.

Litecoin is essentially the same as bitcoin with slightly different chosen constants. Bitcoin is optimizing for decentralization, Litecoin is not.

If people actually used litecoin it’d have the same exact problems.

I think this is what people don't fully understand. Bitcoin is not the exception, it's just the first to hit this wall. Even if Bitcoin Cash were to take over with larger block sizes, we'll see the same problem just further down the line.

Ripple transactions are cheaper.

Making bitcoin transactions is digital equivalent of melting and recasting gold bars. You should not try this at home if you don't know what you are doing. This base-layer Bitcoin is not suitable for average Joe and I doubt it will ever be. Average people will have to move to upper layers where they will work with something more convenient backed by those gold bars. Hence Lighting Networks and/or Sidechains.

Basically BTC dropped 10% of it's value in 24 hours.

I wonder if this set off a bunch of triggers to sell BTC.

Bitcoin gains or loses more than 10% in a day quite often.

Bitcoin goes up and down by 10% several times per day.

And more increasing by the second... will it ever catch up?

At 20 transactions per second it's a delay of 3 hours. (200000/20/60/60)

"The bitcoin network's theoretical maximum capacity sits between 3.3 to 7 transactions per second."


The OT link does say "Transactions Per Second 22.54".

The solutions for this 3 hour backlog of unconfirmed transactions include: implementing SegWit, increasing the blocksize, and Lightning Network.

I think the link counts incoming transactions. I.e. you can always schedule more, but it doesn't mean they're going to be acted on in a reasonable timeframe.

And the website provided in the link shows 4.42 transactions per second. Which at the current ~220k pending transactions, that's ~14hrs.

Edit: after refreshing the page it still had about 220k pending transactions but was doing ~11.34 transactions per second. Equating to ~5hrs.

Edit 2: Again refreshing it went to 24.61 (2.5 hrs). Another refresh went to 11.56 (5hrs). So there are some clear stability issues. But your max of 7transactions/second comes into question, or this site.

Yet, all other transactions won't stop for these 200,000 transactions. There are constantly more transactions, so the wait exceeds three hours...

That sounds like an absurdly flawed currency if that's the case.

It's kind of inherent to the "everyone validates all the transactions" model, unfortunately. You can increase the exact number of transactions a little at the expense of making transaction validation more expensive for everyone, but it still won't get you to Visa scale. That's why the Bitcoin developers are so keen on off-chain transactions in the form of the Lightning Network.

Unfortunately, it gets even worse if you want any kind of anonymity - all the techniques for that lead to much bigger, much more computationally expensive transactions.

I think something that consistently deflates is already an absurdly flawed currency. It's not exactly an exchange medium if it's better to hold on to it than do something meaningful with it.

It’s not a currency. It’s digital gold. Gold isn’t easy to exchange and it’s deflationary but it’s a good place to store your money for the long term, especially if you live in an unstable country.

What makes bitcoin valuable is that it’s gold without any of the downsides of gold. Hop in an airplane with the equivalent of millions of dollars in your pocket without having to trust or ask permission from anyone.

>the equivalent of millions of dollars in your pocket

Not really. Bitcoin is totally useless in most places especially outside of the developed world, you depend on the ability to find someone to trade you spendable money if you hope to make practical use of those "millions".

> What makes bitcoin valuable is that it’s gold without any of the downsides of gold.

Bitcoin has pretty much all the downsides that gold has, the main one being that despite its value its generally not accepted as a form of payment for goods and services, but even if you intend to barter, gold is much more practical because the transaction can be executed in real-time, offline, and isn't hindered by network congestion or limited access to computers/electricity/internet/technical-literacy etc etc. If are living in Puerto Rico the day before Irma hits, are you better off with 1kg of gold coins or 2 bitcoins?

>It’s not a currency. It’s digital gold.

Abstract: A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.


In fact gold does not compare favorably to US equity markets as far as saving your money goes. An investment in an S&P500 index fund in late 2007 (right before the crash) would be worth more today than an investment in gold. An investment in the Dow Jones index in 1900 would be worth about six times as much as an equivalent investment in gold (assuming you held for 117 years, and not counting dividends).

Granted, people in unstable countries may have difficulty investing in the US stock market.

> Granted, people in unstable countries may have difficulty investing in the US stock market.

People in unstable countries may have trouble safeguarding gold stockpiles, as well.

> People in unstable countries may have trouble safeguarding gold stockpiles, as well.

Hence Bitcoin. cf. Zimbabwe

The fact that you can buy a similar amount of gold now for the same price as 2007 would indicate that it is currently at a better entry point. That this reasoning must be explained underlines a flaw in current investment sentiment. A 10-year horizon also is too short. A 100- or 500-year horizon is more typical for gold investment.

Like I said, on a 100-year timeline, the Dow Jones index outperformed gold -- with and without the gold standard, through booms and busts, through the great depression, through the oil crisis, etc. Since 1900, an investment tracking the DJIA would have gained 6x the value of a gold investment.

One day this will be true for Bitcoin, once it reaches a stable value.

As a store of value, Bitcoin is 100% a play on trust. Bitcoin's scarcity is based on consensus-- in an entirely decentralized network no less! Gold's scarcity is based on physical laws. I don't agree with Jamie Dimon much, but if folks think Bitcoin or any other cryptocurrency is digital "gold," well there are a lot of people buying on a mistaken premise.

Meh, this is essentially a consensus argument which falls flat because gold’s value is ultimately based on consensus.

In the real world you cannot invent new elements, so it's hard to find an alternative for gold. Unfortunately everybody can create Bitcoin alternatives. That's the big difference between gold and Bitcoin.

Another consensus argument. There is more of a consensus around bitcoin than other cryptos and you can’t “invent” consensus either.

You need a consensus about what software to run, what it does, what version, and you need the consensus of the community to run nodes and mine.

Imagine that a large majority of miners bet the wrong way on Bitcoin at the CME and go in hoc up to their eyeballs short BTC. Let's say 80% of the BTC mining community is short big and they need BTC for delivery now. As a general proposition, that community could reach a consensus to modify the software they are running to inflate away their debt. The consensus is just like any other fiat currency, and it is very unlike the core nature of gold. The very scarcity is determined by consensus.

I see your point, theoretically majority miners could manipulate BTC supply. The major difference is that with fiat currency control of the money supply is centralized, while with Bitcoin it is distributed.

In addition, at the point that miners reached consensus for new BTC rules, arguably it would no longer be BTC.

Bitcoin’s qualities today make it more like gold than fiat, but in reality it’s neither. “Digital gold” is just an analogy.

I think everyone downvoted this because it is advertised as currency, but I think this person actually hit the nail on the head. Bitcoin does have value, but not as a currency because it doesn't actually inflate enough to make it bad to hoard. Instead its value (dubious, but I'll allow it) is essentially as a commodity, with all the rollercoaster that a commodity is. This is much more honest I think.

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