Bitcoin Q&A: Governance and the Transaction Fee Market
Channel: aantonop
Date: 2017-01-10

Paris Merkle Conference

Keywords/phrases: Establishing a transaction fee market. There is, and has been, a fee market for Bitcoin; it was not important until we reached critical capacity. Once you reach a point were capacity is constrained, fee markets come into play. Fee markets will happen, and if you don't build a primary fee market, people are going to build a secondary fee market. How do we create the possibility of fulfilling transactions at much greater volume for people who can't afford the current level of fee? Or if it continues to rise? The answer we seem to be arriving at is: secondary and tertiary layers above Bitcoin, the most promising of which is Lightning Network at the moment. Micro-transactions, nano-transactions.The Bitcoin blockchain is a very valuable commodity for applications; the fees make it so that it is not economical for everyone to use it as a back-up platform. No matter what capacity you create, an engineer will create an application to fill it. Fee markets help us make choices about which transactions are important. There are two ways to make choices: through authority or through a market. The market says "if the person sending the transaction thinks it's worth paying a fee, then it's a legitimate transaction." Because of this, adoption in some areas will require higher-level algorithms.
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Chapters
0:00 Establishing a transaction fee market
1:30 How do we fulfill a much greater volume of transactions for people who can't afford the current level of fees, or if they continue to rise?
2:41 The Bitcoin blockchain is a very valuable commodity for applications
5:03 There are two ways to make choices: through authority or through a market