Why the increase in Bitcoin transaction fees is not a big problem

The Bitcoin community has always been divided over the existence of a transaction fee market. In addition, the community has always been arguing about whether Bitcoin is essentially digital gold or a settlement system like VISA. When the 1MB block limit became insufficient and Bitcoin transaction fees gradually increased, discussions on this issue became more and more frequent.

However, contrary to what most people think, the current best Bitcoin transaction fee shown on 21st Century’s Bitcoin Fees platform is 31,640 satoshis, or 0.32美元. In other words, almost all Bitcoin transactions can be received in a timely manner by paying an additional $0.32.

Currently, most financial service providers such as Paypal or financial institutions that provide bank account or credit card services charge fees. If a Paypal user initiates a payment with a bank account or credit card, the fee may be as high as 10% of the total amount; and the single fee for bank transfer services is US$30 or even as high as US$50.

If a PayPal user initiates a payment of $1,000, he will likely have to pay a processing fee of $50 to $100. International credit card payment fees in stores or e-commerce platforms are similar, at least 6% of the transaction amount.

In contrast, Bitcoin’s average fee of $0.32 means that no matter how much a user initiates a transaction, it doesn’t matter. A user sending $100 and a user sending $30,000 may pay the same fee, and as long as they pay the same proportion of fees, their transactions will be verified and broadcast on the network.

A user shared a picture on a social media platform. The picture shows that the transaction fee (US$1) spent on broadcasting a transaction worth US$800,000 to the Bitcoin blockchain network is three times the optimal fee of US$0.32. If you want your transaction to be verified and broadcast by miners as soon as possible, you can choose to pay a higher fee. In addition, once the transaction capacity is expanded, the transaction fee may also be higher.

If the user chooses Paypal or other remittance networks to transfer $800,000, the transaction fee he has to pay may be between $40 and $50,000, which includes a large number of charges, such as initial transfer fees, exchange rates, credit card withdrawal fees, etc.

The dispute over Bitcoin transaction fees is ultimately a dispute between digital gold and settlement systems. As a settlement system, its main function is to settle transactions at a relatively fast speed and low cost; while digital gold is used to pay for previously unavailable payments. Currently, the Bitcoin network is more like a digital gold system. Bitcoin users use this network to conduct transactions that were previously impossible: in traditional payment networks, a transaction worth $800,000 cannot be completed in a few hours, and the required transaction fee cannot be just $1.

In the future, with the activation of Bitcoin's innovative expansion plan and micropayment technologies such as the Lightning Network, Bitcoin will have the dual identity of a settlement system and digital gold. Even then, Bitcoin's performance will always be based on users and their applications. If a user chooses to use Bitcoin as a safe-haven asset, a wealth protection tool, and digital gold, then this digital currency does not have to provide the function of a settlement system for this user; if another user prefers daily payments, such as using Bitcoin to buy coffee or make online purchases, then it is a settlement system.

Bitcoin is still in its early stages of development, and solutions such as Segwit, TumbleBit, and Lightning Network are being launched one after another. The activation of these three technologies can maximize the expansion of the Bitcoin network and turn it into an efficient settlement system. By then, Bitcoin transaction fees will no longer be a potential crisis.