Now that the number of Bitcoin transactions is increasing for an unknown reason, a new debate has started to form on Reddit. Is it harder to increase the number of transactions on the Bitcoin network compared to increasing the transaction fees, or vice versa? On paper, the second option will meet a lot more resistance from the community, but as displayed by the current state of the network, people will pay higher fees to move funds.
Also read: Bitcoin Classic Targeted by DDoS Attacks
Higher Transaction Fees Serve No Purpose
Hardly anyone in the Bitcoin community looks forward to seeing transaction fees go up, even if that means this will ensure faster confirmations. Things worked just fine until a few days ago, and no one is even close to figuring out what caused this major backlog of Bitcoin transactions, other than full blocks.
Even if the transaction fees were set to increase, it would not be of much benefit to the miners themselves. Compared to the 25 BTC reward per mined block, raising the fees would not make much sense right now. However, as we get closer to the block halving in a few months, that may start to change.
Until transaction fees per block reach a level of 20% or more of the block value itself, there is no incentive for miners to change anything they have been doing. At the same time, community members are not happy when they have to pay a lot more for moving funds around.
In fact, the big question is whether or not anyone benefits from the increase in transaction fees at this stage. Although the high priority fee is still below the $2 USD mark, it has significantly increased from the $0.43 it used to be a few days ago. Considering how many people tout Bitcoin as a much cheaper way to move funds around the world, fee increases like these certainly undermine what is possibly one of Bitcoin’s biggest selling points.
Keeping the block size at the 1MB mark while inflating transaction fees will not sit well with the overall community long term. Increasing the fees will only be tolerated up to a certain level until the majority of people start hoarding Bitcoin again rather than spending the funds. The only real solution seems to be increasing the block size, although that is not as easy either as we have seen.
Back to Increasing the Block Size Then?
On paper, it would be much easier to reach a majority consensus on exponential block size increases compared to exponential transaction fee growth. In reality, however, that theory might turn out quite differently. Let’s just hope it will never come to that point, as enough bright minds are focusing on Bitcoin’s code to ensure the ecosystem can accommodate growth.
Founder of Bitcoin Classic, Justin Toomin, recently stated:
“I personally think that miners’ best bet for achieving long-term survival is increasing the block size to about 10 MB over 4 years while keeping fee/kB about the same as it is now. I think that it will be easier to increase the volume of transactions 10x than it will be to increase the cost per transaction 10x.”
Bitcoin Classic might have a leg up over Bitcoin Core in this regard, as the solution is developed by people who have a Bitcoin mining background. A higher transaction fee makes Bitcoin less appealing to users, investors and companies, which will undoubtedly lead to a Bitcoin price decline if the situation does not improve. A quick solution to increase the block size — assuming it will not harm the network — is needed right now, and Bitcoin Classic is willing to provide that.
What are your thoughts on this flood of transactions? Is this the deciding factor between Bitcoin Core and Bitcoin Classic? Let us know in the comments below!