Do high fees make Bitcoin unusable as a medium of exchange?
2702 sats \ 19 comments \ @Danny_stacks_sats 9 Nov 2023 bitcoin
The fees are wild right now I was wondering what SN thought about the viability of Bitcoin for small payments. Is lightning the only existing solution to the high fees if someone wants to send 1000 sats.
And note that if the fees are high it's expensive to open new channels and add liquidity to the lightning network.
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468 sats \ 0 replies \ @antic 9 Nov 2023
I still got a zero-fee transaction from cashapp to an offline, distributed multisig that nobody can touch without invoking security protocols. Seems like it’s still working great for primary use-case ATM.
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500 sats \ 1 reply \ @0xbitcoiner 9 Nov 2023
High fees are bad for everything and are really a problem. Bitcoin (L1) is more for storing value and non-urgent transactions. I'm not an expert on the subject, but wouldn't the Liquid Network be an alternative to the Lightning Network ?
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9 sats \ 0 replies \ @jk_14 10 Nov 2023
let me translate, then:
(destructive) halvings are bad for everything and are really a problem (haha)
#291420
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393 sats \ 0 replies \ @SimpleStacker 9 Nov 2023
whoo whee, didn't realize the fees were so high right now.
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160 sats \ 0 replies \ @BitcoinIsTheFuture 10 Nov 2023
This is why we scale to lightning. Next question
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71 sats \ 0 replies \ @notgeld 9 Nov 2023
Liquid and Lightning Network still work.
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201 sats \ 1 reply \ @DarthCoin 9 Nov 2023
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21 sats \ 0 replies \ @0xbitcoiner 9 Nov 2023
me ⚡ miners and LN node operators
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30 sats \ 1 reply \ @Nuttall 9 Nov 2023
I don't like it but I'm pretending that it doesn't bother me. I still have lightning channels that haven'tb settled after closing. One channel is a year old from the last high fee thing. It's my fault because I don't know how to increase the fee when the channel closing doesn't support RBF.
As I clutch my pearls I weep for my ignorance.
Kind of reminds me of when I was a shitcoiner dealing with sTaBlECoinS on etherium.
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10 sats \ 0 replies \ @jeff 10 Nov 2023
#reckless
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84 sats \ 0 replies \ @Atreus 10 Nov 2023
Oh I didn't even notice the fees. It's just because of the rising price movements lately, that always gets traffic flowing.
Bottom line, you're not supposed to use the L1 for regular spending. For coffee, groceries, dog food, whatever, eat the fee for now and send X amount over to Lightning so you don't have to do it again. Wait for a good time of day to make the send.
The L1 fees will probably calm down soon, but someday they'll be permanently high.
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21 sats \ 0 replies \ @fredosha 10 Nov 2023
Yes.
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21 sats \ 0 replies \ @ssaurel 10 Nov 2023
The Lightning Network was created to address this issue.
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21 sats \ 2 replies \ @Athena_Alpha 10 Nov 2023
Do high fees make Bitcoin unusable as a medium of exchange?
No.
It's likely that you're aware that money in general goes through three stages of monetization:
As a money “monetizes” or moves through the various stages outlined above, its value as compared to other monies increases. Specifically, in the first stage “Store Of Value” which is where Bitcoin is now, the price increases in bursts as adoption of the money happens in cascading waves over time.
These waves of new people usually get on-boarded during crypto bull markets and can result in the price being highly volatile. Maybe there’s a huge influx of new people wanting to buy bitcoins, but due to low liquidity there’s not enough to go around. Supply drops, demand increases and you get a bubble that eventually bursts.
The result of this process is that you have a new money that’s increasing in value, but is highly volatile. Due to most people not understanding money properly, they focus on the volatility side of things claiming that people don’t want to buy their coffee with bitcoins because it goes up and down. While this is partly true, the ongoing increasing value is actually the main reason why no one buys things with it yet. There’s even a fancy “law” for it!
Gresham’s Law
Officially it states that “bad money drives out good” meaning that in an economy with two monies, the good one will be held as savings (bitcoins) while the bad one will be spent day to day (USD).
If everyone in the economy does this, then you end up having everyone holding bitcoin and never actually using it as a medium of exchange! Not spending bitcoins is just the financially sensible thing to do right now. The only way that people will ever start using it to buy and sell goods and services is if the value of it stabilizes for a long period of time.
This price stabilization comes naturally once everyone, everywhere has all the bitcoins they can afford and the waves of on-boarding slows down and then, stops. At this point holding onto your bitcoins for a year or more won’t really make much of a difference and so people won’t mind spending it to buy groceries or other things. This stability will then reduce speculation as there will no longer be the needed volatility to make a quick buck. The money will have finished the Store of Value stage.
People should note three important things here:
  1. We are still horrendously early regarding Bitcoin. It's likely that Bitcoin will continue its monetization process in the Store Of Value state for a good 10 more years. That's YEARS. Could even be more than that. In that time who knows what Lightning will evolve to, maybe something entirely different will debut and over take it
  2. The more trouble people have with transacting on the L1 due to high fees, the more incentive it gives for them and others to invent a solution. While that happens, Bitcoin continues to monetize and the security of the general overall network is kept high
  3. Even if in 10 years time fees are 0 sat/vB for all L1 transactions somehow, people still would be economically stupid to use it as a Medium Of Exchange if it hasn't fully finished its SoV stage. No one will spend the hard money that keeps going up
For the high L1 fee issue to be a REAL problem, Bitcoin must have completed it's SoV stage of monetization and be holding for a long time at a stable exchange rate. Only then will owners be comfortable with using it as a MoE. If by that point there's no L2 alternative AND L1 fees are still high... then we have a problem!
Also we have a guide on how to best deal with high L1 fees if people are interested 🙂 How Bitcoin Transaction Fees Work + How To Make Them Cheap & Fast
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0 sats \ 1 reply \ @jk_14 10 Nov 2023
There is no such thing as Gresham's Law... The proper name is: Copernicus' Law: #128857
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21 sats \ 0 replies \ @Athena_Alpha 10 Nov 2023
Very interesting thank you! :)
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0 sats \ 0 replies \ @beorange 10 Nov 2023
Lightning is the way for quick and small payments.
In the Bitcoin world, LN should be used for transacting (unless the amount the too big) and the chain should be used for settling things.
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0 sats \ 0 replies \ @tnuts420 10 Nov 2023
according to this https://geniidata.com/user/orddata/ordinals-transaction-share over half of the transactions on the network yesterday were ordinal inscriptions.
i understand that any transaction that pays its fees is just as valid as any other, that's kind of the whole point, but i'm also not a fan of seeing fees skyrocket for the sake of minting shitcoins on the bitcoin network.
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0 sats \ 0 replies \ @BitB21 10 Nov 2023
I’ve had this fear for a bit, sure hope the fees come down as it’s not sustainable when it’s costlier than CC payments and the fiat peer to peer apps like Venmo/CashApp.
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