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In order to maintain its security, Bitcoin needs high transaction fees on the base layer. Wait, what?!

As the mining reward gets reduced in half after every 210.000 blocks (~4 years), the miners need to get paid in order to afford sustaining their security service.

As outlined in the Bitcoin whitepaper and according to the inflation schedule to 21 million coins, mining will at one point get paid entirety by transaction fees.

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Discussion

8358732a... 2y ago

My off the cuff feeling is that Bitcoin fees should rise and fall organically based on supply and demand. Rather than some artificial manipulation.

Bitcoin seeks purity in its monetary policy. Rather than inflation, debasement and violations of trust..🤔

Melvin Carvalho 2y ago

Miners dont really offer a security service. They offer an ordering service. They also, through proof of work, ensure a fair distribution (92% complete), not including Satoshi's gifts.

815f2598... 1y ago

Whitepaper also says transactions should be cheap.

Anyone who chooses to pay more is a fool.

ETH Classic might be one example of a reorder / double spend but Litecoin and other smaller coins have not had that problem.

The whitepaper design, with halvings and all, may be flawed. But even if it isn't, it's obvious that the fees would be a greater source of income over time because there would be more transactions, not more expensive transactions.

The difficulty adjustment plays a bigger part in the security than fees. If fees drop, there will still be incentive to mine, likely from a more diverse pool of miners as operating expensive machines would not be cost efficient.