Bitcoin reaches historical maximum in commissions accrued by transactions

Key facts:

Bitcoin transaction fees reached record highs.

Since 2009, 204,808,3479 BTC have been distributed among miners, for transaction fees.

On October 30, 2019, the bitcoin blockchain reached a record high of USD 1 billion accumulated in transaction fees.

"This milestone is really great, just because it shows how much people value the blockchains ecosystem," said Bryan Aulds, founder of the Billfold bitcoin management portfolio. "And this is something that people don't mind paying, which I think is something really important to keep moving forward."

According to information from BlockChair, the amount of commissions accumulated annually for bitcoin transactions has decreased in recent years, despite the increases that have occurred at specific times. This is due to the arrival of Bitcoin scalability solutions, including SegWit (Segregated Witness) and Lightning Network.

While the cumulative amount of commissions for bitcoin transactions is roughly equivalent to USD billion. The amount of fact is even greater if you consider the valuation of bitcoin in the market for October 30. According to the information of Coin Metrics, since 2009, 204,808,3479 BTC have been distributed among miners for transaction fees. Taking into account the price of bitcoin for October 30, this amount equals USD 1.86 billion.

It's official. The Bitcoin network has surpassed 1 billion USD in cumulative fee revenue. pic.twitter.com/lKzstEX3eI

— Yassine Elmandjra (@yassineARK) 30 de octubre de 2019

The cumulative size of transaction fees in the bitcoin network is set to grow more in the coming years, especially as this is an alternative mechanism to reward miners as the subsidies for gradually mining blocks decrease.

"In the long term, transaction fees will have to replace block [rewards]," said Jameson Lopp, CTO de Casa, a startup focused on bitcoin management. “There is a reason why [the reward] is called block subsidy in the code. This is because it is subsidizing network security, ”he added:

We have long understood that this subsidy through inflation will have to be replaced by people who pay to use the network through transaction fees.

Jameson Lopp, CTO of House.

Securing the Bitcoin network

Taking a step back, transaction fees play a fundamental role in the Bitcoin blockchain, as these serve to ensure the integrity and resistance to network censorship.

First, annexing commissions to Bitcoin transactions discourages those who contemplate the possibility of carrying out denial of service (DoS) attacks, also called “spam” attacks, which aim to delay the overall operation of the network.

"When you create a transaction, you can use bandwidth and write data to the hard drive of anyone running a node on the network," Loop said. "If there is no cost to do that then you can saturate the bandwidth and fill anyone's hard drive."

Second, the commissions serve to prioritize which transactions are confirmed and recorded in blocks before others. In this regard, David Steinberg, vice president of cryptocurrency mining consultancy Navier, said:

It's quite simple: if you pay more, you will have your transaction confirmation faster. So this mechanism is a fair way to participate in a pool of pending transactions.

David Steinberg, vice president of Navier.

Finally, and perhaps most importantly, transaction fees also ensure the objective of Bitcoin in terms of security. Together with the Bitcoin block reward, which is currently at 12.5 BTC and decreases 50% every four years, transaction fees encourage miners not to intentionally stop or edit the blockchain.

Without this monetary incentive, miners could easily be bribed by malicious actors so that they unfairly prevent any or all transactions from being added to the blockchain.


"Together, transaction fees plus block subsidy provide the probabilistic resolution of Bitcoin system transactions," said Pierre Rochard, founder of the Advisory consultancy, adding:

The larger the resolution, the less time those responsible for making the transaction will have to wait before having the confidence that the transactions will not be censored or double spending.

Pierre Rochard, founder of Advisory.

What is coming in the future?

"We have another 10 or 13 years of decent subsidies [or rewards] before it fades to a fairly insignificant amount," said Billfodl Alud.

When this happens, miners will have to start adjusting profitability measures around comparatively more volatile values of transaction fees, as opposed to block subsidies.


"You have to start thinking more about game theory about the profitability of the miners and what could happen if the profitability of the miners becomes more volatile every hour and day," said Lopp. "For example, we already know that there are daily and weekly cycles of demand for the space of the blocks."

New milestone for bitcoin after mining 18 million

Key facts:

With this Friday's broadcast, 85% of the total available BTC has been mined.

There are still 3 million bitcoins left to be mined and to complete the total of 21 million.

More than 18 million bitcoins are already in circulation after the night of this Friday, October 18, the BTC was issued that represents this milestone for the main cryptocurrency in the market. The figure means that so far 85% of the total 21 million bitcoins available have been mined. That is, only 3 million BTC remains to be mined.

As for the block in which the event was recorded, there are those who claim that it was reached in block 600.014, while others point out that bitcoin 18 million was achieved in block 600.002. In any case, the milestone occurred seven months after the next halving on the network, scheduled for May 14, 2020, which will reduce the mining reward from 12.5 BTC to 6.25 BTC.

According to Bitcoin Block Half figures, the hash rate or processing power of the network was approximately 96.54 trillion hashes per second (Eh / s) at the time the incident occurred, with a difficulty of 13.008.091.666.972 . In the register that statoshi.info bears it is indicated that the 18 million bitcoin was issued around 11:00 at night on Friday.

Active community

The bitcoiner community remained active in social networks to announce the expected figure and exchange opinions on what bitcoin currently represents. Both on twitter and reddit the comments revolved around adoption, its price and the energy consumption of mining.

For the Reddit user OzzTechnoHead, the bitcoin market has evolved over the years, but believes that greater use of this cryptocurrency could boost its price in the future.

“Bitcoin was new before, which attracted more and more people. Now it is well established and you have to do other things to see it increase (its price). I would say that adoption will be the biggest driver, ”he said.

On twitter @GenesisRipple raised the debate about the amount of energy used to mine bitcoins and if this will continue like this in the future. “How much time and how much power does this have / will it consume? I am beginning to think that Satoshi is really just the energy companies in a crazy plot to make money, ”it was published in the aforementioned account referring to Satoshi Nakamoto the creator of Bitcoin.

It is important to comment that every day around 1,800 bitcoins are generated at a rate of 144 blocks every 24 hours. Each block occurs approximately every 10 minutes. It is estimated that the last bitcoin will be mined in the year 2140.

This fact comes days after Wang Shenlin, sales director of Innosilicon, one of the leading mining equipment manufacturing companies, said the bitcoin mining market could demand an additional 1.5 million of equipment from the four million teams. operational today.

At the time of writing this article, the price of bitcoin was US $ 8,493, according to the Crypto News market section.