The actual cost of a Bitcoin transaction (when not socialized via inflation, or block rewards in the parlance) is ~the electricity cost of 700kWh, or $50, plus the cost of developing, building, and maintaining the miners. Each transaction also generates 87g of e-waste so that's gotta be non-trivial.
I'd suspect each BTC payment is actually $60-70. When block rewards end, someone's gonna have to pay that.
Ignoring the fact that's going to occur in 2140, what you've stated is simply not true, users decide what fees to pay, no one else determines the price.
I send zero fee tx's regularly. If you are in no rush the cost ranges from tiny to non-existent sending money across the planet.
It's never going to be used for micro transactions without a second layer but the whole premise of this comment is out of whack with the reality.
As I stated, right now, the direct transaction fees are low because the total fees are socialized. Miners make that back in block reward. Recently, people refused to pay more for transactions and BTC price remained constant-ish after the halving so hash power went down.
The actual cost of a transaction can be represented as the following equilibrium:
(E * pkWh) = F + (R * pBTC)
- E is the average amount of power required to process one transaction, a function of hash rate (~700kWh)
- pkWh is the average price paid by miners for power (~0.08 $/kWh)
- F is the average fee paid for a transaction directly (~5)
- R is the average block reward per transaction (6.25/3500)
- pBTC is the market price of a Bitcoin (~9500)
If (F + (R * pBTC)) is ever less than (E * pkWh) as happened after the halving, something's gotta give. Either the fee has to go up, the price of a Bitcoin has to go up, or the hash rate will drop. The halving demonstrated (3).
Make no mistake, though, the cost of a bitcoin payment is ~$50, you just have to distribute it over the parameters.
You didn't think miners were given you "almost free" transactions for their health or something did you? Your very-low transaction fee is the tip of a giant cost-burg.
As models go this is ok to highlight the cost/reward incentive to mine at all, but with the original whitepaper we all already knew that full network hash rate depended on cost of electricity, the block reward, the fees of transactions in the block, and the purchasing power of bitcoin. What's new, other than an incorrect focus on "per transaction" when the real cost is system-wide and depends on different/more parameters (sum of F, difficulty rather than hash rate, and transactions per block which individually contribute arbitrary amounts including 0s to the sum of F)? It just seems like another tiresome way to make the years-old remark of "wow look how much electricity the full system (a decentralized trustless ledger) consumes and how few transactions per second it supports!"
> It just seems like another tiresome way to make the years-old remark of "wow look how much electricity the full system (a decentralized trustless ledger) consumes and how few transactions per second it supports!"
The only way it doesn't waste inordinate amounts of power and support a reasonable number of transactions is if you pretend.
It is an inordinate amount of power relatively speaking and the transaction throughput is sad (though not sad enough to get people to use other versions that make different tradeoffs, apart from the obvious one of mainstream finance with Visa, Paypal, et al.) So what?
Waste? It's evidently not waste, because miners are compensated. Missed opportunities for that energy to have done work on something else, or at least done more efficiently so the surplus could do something else? Perhaps, but that can be said of anything. I'd instead criticize the far greater missed opportunities of not coating deserts with solar panels, not peppering the world with nuclear reactors, not having satellites beaming microwaves down, etc. etc. We'll never become a Type 1 civilization with attitudes suggesting we lower global energy consumption or try to allocate it only in approved ways.
> It is an inordinate amount of power relatively speaking and the transaction throughput is sad (though not sad enough to get people to use other versions that make different tradeoffs, apart from the obvious one of mainstream finance with Visa, Paypal, et al.) So what?
Well, I mean, if you're trying to launder money or manage a ransomware product, PayPal and Visa aren't great candidates.
> Waste? It's evidently not waste, because miners are compensated.
People are compensated for all sorts of wasteful garbage. I could pay some dude to dump gasoline directly into the rain gutters. Or move a mountain 6 feet to the left using only a shovel. That doesn't instantly turn it into a productive activity.
> Missed opportunities for that energy to have done work on something else, or at least done more efficiently so the surplus could do something else? Perhaps, but that can be said of anything.
There's no massive energy surplus. If we turned off the 55TWh/yr that's being burned on multiplayer Excel, it would stop a non-trivial percentage of our greenhouse gas emissions.
> I'd instead criticize the far greater missed opportunities of not coating deserts with solar panels, not peppering the world with nuclear reactors, not having satellites beaming microwaves down, etc. etc.
Sure, I'm down. Sounds great!
> We'll never become a Type 1 civilization with attitudes suggesting we lower global energy consumption or try to allocate it only in approved ways.
Not with that attitude :)
To me, it's like there's a giant smoldering tire fire in the town square, and everyone's walking around praising the tire fire for the nice warm glow it creates.
How did you arrive at these numbers? By comparing # of transactions in a block, to the block reward + fees paid for that block? Or by comparing the amount of energy consumed by the network in total and the number of transactions processed by the network?
I'd suspect each BTC payment is actually $60-70. When block rewards end, someone's gonna have to pay that.