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175 sats \ 2 replies \ @Scoresby OP 28 Aug \ parent \ on: Have we all been overpaying for Bitcoin transactions? bitcoin
  1. I agree that fiat-denominated fees have are not as low as btc-denominated fees. See the second chart in the OP.
  2. When it comes to miners who have fiat-denominated expenses, this argument may make sense: if they pay for power in dollars, but earn income in bitcoin, and the bitcoin exchange rate with dollars goes up, then miners don't need to make as much in fees.
  3. However, as far as the payer of the fee goes, I'm not sure I agree: If we imagine a 200vB transaction in 2011 and in 2025, 40 sat/vB is a higher percentage of that transaction than 0.4 sat/vB -- regardless of the bitcoin-dollar exchange rate. The transaction itself is moving bitcoin which is also affected by the change in exchange rates, and so it seems to me that they are moot.
  4. Where it really gets confusing to me is this: bitcoin fees are paid based on amount of data in the transaction not amount of bitcoin. So a fee rate of 40 sats/vB on a 200vB transaction implies that you need to be moving a lot more than 8000 sats. If you're moving 8 bitcoin, you might not be as concerned about paying 40 sats/vB, because I think it is likely that many people would pay more to move a large amount than to move a small amount (even if this is illogical). It may be the case that in 2024, the capital needed to open a lightning channel was actually higher than it is today because lower fees mean you can have smaller amounts of bitcoin in your utxo. However, I'm not really sure how much this changes things, because fees change and you don't want your utxo to get dustified.
  5. @murch made a very interesting point that where this change really lowers fees is in their increment. Prior to this recent wave of sub 1 sat/vB transactions, the default increment for changing a fee rate was 1 sat/vB. Now, it seems that people might do fee-bumping in much smaller increments because it is no longer the standard to bump by 1 sat/vB increments. So, in 2024 you might have needed to RBF from 1 sat/vB to 2 sats/vB to get your 200 vB transaction confirmed (a 100 sat difference), but now you can RBF by a fraction of 1 sat/vB -- potentially RBFing your whole transaction fee up by 1 sat. (There might be some rules around RBF that make me wrong on this, so take it with a grain of salt).
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100 sats \ 0 replies \ @Murch 20h
As pointed out elsewhere, we think of the minRelayTxFee as a minimum cost for the network to forward a transaction. When the minRelayTxFee was reduced recently, also the incrementalRelayTxFee was reduced, as it doesn’t make much difference whether you are sending a new transaction or use bandwidth to replace an existing transaction with an updated version of it. In the upcoming Bitcoin Core 30.0 release, they will both be 0.1 s/vB which means that you will need to pay at least 20 sats for the 200 vB transaction from your example for it to be relayed, and if you were to bump it, a replacement of the same size would need to increase the fee by at least 20 sats to be forwarded by nodes.
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75 sats \ 0 replies \ @CruncherDefi 28 Aug
I agree that fiat-denominated fees have are not as low as btc-denominated fees. See the second chart in the OP.
When it comes to miners who have fiat-denominated expenses, this argument may make sense (...)
(...) affected by the change in exchange rates, and so it seems to me that they are moot.
That's why I explicitly mentioned 'value' and differentiated it from 'price'. Your points seem to focus on 'price'. My whole reasoning focuses on 'value'.
A metaphor could be Mass vs Weight. Mass is inherent property of a body. Weight is a measurement you get using something else. And on different planet you will get different weights, while mass stays the same. Similarly, if you use different denominating assets (like dollar, euro, eggs or 1 kg of beef) you will also get different prices.
Value is like mass - it's an inherent property of an asset. Price is like a weight - it's a relative measurement when you express value of an asset denominated in a value of other asset (UsdBitcoinPrice == ValueOfBitcoinUnit / ValueOfDollarUnit).
My claim is that not only 'price' of bitcoin increased, but also 'value' of bitcoin increased. And it's obvious why is that the case - adoption is bigger, there are more use-cases, the track record is longer - those increase the inherent value of bitcoin unit.
Hope that clear things up. Todays sats have more value than 2011 sats, so we need to pay less of them for the same thing.
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