Re: Răspuns: Personal opinion on the fee market from a worried local trader‏

Re: Răspuns: Personal opinion on the fee market from a worried local trader‏
2015-07-31 14:29 ` Dave
  
From: Un Ix @ 2015-07-31 13:59 UTC (permalink / raw)
  To: thomas;  Bitcoin Dev

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+1 on the comments below by Thomas. 

"Fee market" is not a 
binary option, either on or off.  Like all markets it exists in varying 
degrees over time and with more or less influence on the process of which it is 
part of.  As it stands now, and likely for another decade at least, the 
fee per tx constitutes a very, very weak market signal for the miners since it 
makes up less than 0.5% of the rewards paid for mining a full block. This is the normal and expected scenario, aimed at driving use of Bitcoin 
as widely and cheaply as possible so that network effects will cement 
Bitcoin for the future, for all users.

As a comparison, how many people would have
 taken up using email if there had been a per-message fee and hourly 
sending limits with only the highest-fee messages being delivered? And 
how would it look if the email protocol developers imposing fees 
& hourly sending limits were pushing hard for use of another email-delivery protocol on
 top of the existing one?

> To: bitcoin-dev@lists•linuxfoundation.org
> Date: Fri, 31 Jul 2015 11:56:48 +0200
> Subject: Re: [bitcoin-dev]	Răspuns: Personal opinion on the fee market from a worried local trader
> From: bitcoin-dev@lists•linuxfoundation.org
> 
> On Friday 31. July 2015 03.21.07 Jorge Timón via bitcoin-dev wrote:
> > If I was a miner and you want me to include your transaction for free,
> > you're asking me to give you money
> 
> What?
> 
> Ask yourself; why do miners include transactions at all? What it the incentive 
> if there really is only less than 0.8% of income to be derived from fees?
> 
> Miners don't get payed by fees.  They won't need to get payed by fees for 
> decades to come. Maybe you want to re-do your math, it seems off.
> -- 
> Thomas Zander





 		 	   		  

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2015-07-31 13:59 [bitcoin-dev] Răspuns: Personal opinion on the fee market from a worried local trader‏ Un Ix

  
From: Dave @ 2015-07-31 14:29 UTC (permalink / raw)
  To: Un Ix;  Bitcoin Dev

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> On 31 Jul 2015, at 06:59, Un Ix via bitcoin-dev <bitcoin-dev@lists•linuxfoundation.org> wrote:
> 
> +1 on the comments below by Thomas. 
> 
> "Fee market" is not a binary option, either on or off.  Like all markets it exists in varying degrees over time and with more or less influence on the process of which it is part of.  As it stands now, and likely for another decade at least, the fee per tx constitutes a very, very weak market signal for the miners since it makes up less than 0.5% of the rewards paid for mining a full block. This is the normal and expected scenario, aimed at driving use of Bitcoin as widely and cheaply as possible so that network effects will cement  Bitcoin for the future, for all users.
> 
> As a comparison, how many people would have taken up using email if there had been a per-message fee and hourly sending limits with only the highest-fee messages being delivered? And how would it look if the email protocol developers imposing fees & hourly sending limits were pushing hard for use of another email-delivery protocol on top of the existing one?
> 
How would email have looked if it required 300 MW of power to support it for "free" for 10 years?

In practice email was never free- it was paid for by the payments users made to ISPs. ISPs paid for email and network infrastructure from that.

The equivalent analogy here would be to drop fees completely and pay a specific miner to mine all of your transactions as a monthly subscription (which of course doesn't work in a non-permission-based network).

Miners have real (huge) costs - they will be in a lot of pain with reward halving if a few model does not replace that. That in turn poses a huge risk of smaller miners shutting down, which in turn centralises things even more. I would argue that the lack of pool diversity and thus lack of block makers is already the single biggest risk for a decentralised system; avoiding the issue of fees just accelerates this.

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