TX fees on BTC need to increase by $27.66 to retain current security

3 178
Avatar for FUBAR-BDHR
4 years ago

There are only 2 ways to make up for the mining revenue loss to a coinbase halving. First is with an increase in the number of transactions per block. Historically this has happened. But with blocksize capped at 1 meg on the BTC chain this will be the first halving where the blocks are already full and there isno room for additional transactions. Those transactions are limited to about 2000 per block on the BTC chain. At current price of approximately $8850 the halving will cut $55312.50 from the coinbase reward. To keep the current miner rewards each of those 2000 transactions would need to pay $27.66 cents more to replace the amount lost to the halving of the coinbase reward. It's simple math.

The other way to retain rewards is for the price of the coin to increase. It has risen from the 2016 halving by over $8000. Some would say that this means there is no need for additional fees as miners have already increased their revenue. I would agree with that with the exception of one major thing. BTC price is down from it's highs and miners invested in equipment all the way up to those highs. They still need to maintain their profit margin or turn off the equipment they invested in expecting returns at those higher prices. Others would say BTC price can just moon and there is no issue. Well we are right back to no room for transactions. Without the ability for people to use it there is no real demand for it to push that price up. Even if there were demand fees would still go up due to the fee market that increase use would cause. It's a loose loose scenario to the users paying the fees.

This will be the first halving without room for growth. Growth is important for a blockchain. The coinbase reward was intended as a temporary incentive for miners that would be offset by growth and the transaction fees from that growth. No growth fees must skyrocket or miners must turn off their equipment or move to other chains. Mining that is left becomes more centralized to places of cheap electricity. Hash rate goes down. The security that shills and trolls love to tout goes down. Centralization increases.

Get that popcorn ready it's going to be an interesting couple of weeks. Don't worry about the salt I'm sure plenty will be provided by BTC maximalists.

6
$ 0.60
$ 0.50 from @scotty321
$ 0.10 from @unitedstatian
Avatar for FUBAR-BDHR
4 years ago

Comments

That will be suicide! The current transactions fee is nothing to write home about, we're now talking about additional $27.66!

$ 0.00
4 years ago

Well they said when they were $50 back in 2017 that $100 was desirable to secure the blockchain. Now you understand why.

$ 0.00
4 years ago

The ending was very salty 😂 Very good though, thank you.

$ 0.00
4 years ago