Fees for Bitcoin transactions are cheaper than they've been in a long time...
It's official. The days of ridiculous fees for sending Bitcoin are over.
A couple months ago, if you had made a small purchase of $100 worth of BTC on Coinbase, and attempted to send it to a wallet, you might have spent around half of the purchase value in fees. Not only that, receiving your Bitcoin in a separate wallet might have taken more than a day. So, leaving your BTC sitting in the Coinbase exchange service's wallets was pretty much your only choice.
Either that, or you could exchange the BTC for other coins that offered cheaper fees and faster transactions, like Litecoin or Bitcoin Cash, for example, on GDAX. But then, what was the point of buying the Bitcoin in the first place?
So instead, people interested in buying Bitcoin, but not wanting to pay huge fees, would choose the cheaper-to-send alternatives. Who could blame them? It made no sense to buy a currency that couldn't be moved from one place to another.
The argument that Bitcoin is a "store of value" only held so much water. Sure, this could be true if you already were sitting on a bunch of Bitcoin in cold storage, not intending to touch it for the foreseeable future. But buying any as a store of value, and losing half the value in transaction fees put a real damper on your investment.
So, other currencies began to look more appealing. Able to store value and be transacted quickly and cheaply - now that's a useful currency!
A recent article from bitcoinist.com tested the new, improved transaction fees of Bitcoin, now that SegWit is becoming more widespread. They were able to successfully send $10 000 USD worth of BTC at a transaction fee of 1 satoshi per byte - working out to about one cent. One cent for $10 000. Pretty darn cheap. I mean, you can't really get much cheaper, can you?
So, that's settled then. Low fees are back. So, why does this high-fee reputation still seem to linger?
It has to do with the fact that Bitcoin is experiencing pretty low volumes compared to its peak back in December when prices were crazy. At its peak, the extreme volume in transactions was causing the backlog and the excessive fees for transactions. Now, volumes are low. So, it's all well and good that Bitcoin fees are low now, but it's not yet been proven in battle, so to speak.
This is true of many competing currencies, actually. Sure, it's easy for "Coin B" to be faster than Bitcoin when it simply does not have the traffic issues that Bitcoin has endured due to its dominating popularity. But we don't really know how some alternative coin would hold up in the same situation, either.
Bitcoin will get the chance to prove itself again. But it's going to take time for people to come back on board. People don't like wasting their money, understandably, so it might take a little time and convincing for people to try buying and using or storing Bitcoin again in the near future, especially if their recent experience with it involved unpleasantly high fees and multiple day waits for completed transactions.
But, rest assured: The days of $50 Bitcoin transaction fees are behind us. It's just going to take some time before everyone believes it.
*This is not professional trading advice - it's just my opinion!
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source:
http://bitcoinist.com/bitcoin-transaction-fees-new-low/
image source:
https://medium.com/@ed_resende/why-are-bitcoin-transaction-fees-so-high-f6dea69e7db7
thanks for this. I believe it was the traffic/transactions that caused the fees to skyrocket and unless we can see more of that same traffic, we won't know if problem is really solved.
It's true, @daddynifort. We can't really know with certainty that Bitcoin can handle high volumes until we experience it. I'm hoping by summer we will see a strong return to Bitcoin.
Back in January, I predicted a return of Bitcoin dominance to the crypto market. At the time, BTC was down to about 35% of the market. Now, it 's around 45%. It will be above 50% in a month's time, in my opinion. Competing currencies need to offer something uniquely better, or investors and traders will simply return their funds to Bitcoin. Just being faster and cheaper than the old Bitcoin is not enough of a reason to buy a competing currency.
This is very informational. Thank you @xsid . I would like to follow you for more. @jsantos17
Thanks, @jsantos17. Glad to have another follower. Thanks for your support!
Don't mention it. You just deserve it. And that what steemians do, support each other.
Thanks for the post @xsid
Learn something new every day. I was not even focused on the transaction costs but it is true. It scares away investors and hurts the industry to an extent.
To bad we don't hear about this in MSM it would paint a whole different picture on BTC and the like.
Thanks, @dpl. High fees were tremendously detrimental to Bitcoin's reputation. It will take a while for people to get back on board, but it will happen. Then we can test how much better BTC handles high traffic!
Agreed.
What is your take on the the harmful potential of single instances of objectionable content being saved on the blockchain? I know it may only be links at this stage but it does pose a risk if someone really wants to do damage.
Thanks, this was a great article!
I never understood how SegWit worked, could you give a quick explanation of the idea behind it?
Essentially, SegWit sends some of the information to a separate "chain", off the main Bitcoin blockchain, which frees up space and speeds up on-chain transactions.
That's a super-simplified explanation heh.
this is great information. thanks for this.