There exist numerous complaints by customers of Bitcoin over the speed of transactions. Protracted delays have been a key aspect within the scalability debate because it concerns the most suitable method in resolving the block size issue. Even as some transactions are delayed, preferential treatments have been given to transactions in which fees are relevant, thereby chipping into one of the acclaimed benefits of peer-to-peer transactions that are the absence of expenses.
Michael Vogel, the chief executive Officer of Netcoins, says:
“You can try sending a Bitcoin transaction without a fee. Probabilities are that you’ll find that zero fee transaction will hang for days without confirmation.”
Transaction fees had been criticized by a huge segment of the Bitcoin community with many critics condemning any kind of expenses, while others appear to be more involved at the fee costs. However, most essential are the motives for transaction fees and the way it is to charge customers of the cryptocurrency when transactions are completed.
Michael Vogel noted that the motive for transactions fees in Bitcoin is to serve as an incentive for miners to verify transactions. Vogel additionally stated that it comes down to the will of a miner to verify a transaction that is not related to any fees. Moreover, he mentioned that the quantity of Bitcoin fees and confirmation time is actually the crux of the block size and forking debate, stating that if fees are set too high, then it alienates those interested in the usage of Bitcoin for micro-transactions. Alternatively, very low fees will danger decreasing the quantity of miners on the Bitcoin network. Therefore, it is all about balance.
President of Bitwage Jonathan Chester said that the only way for any system to exist necessitates an incentive to keep it going. Commonly, this comes within the type of both reputation and financial value. Chester mentioned that for mining and transaction addition, this incentive is the fee. However, transaction addition for any payment platforms is quite essential to incentivize effectively. In truth, whether it be a centralized system like PayPal, a financial institution or a decentralized system like Bitcoin, fees are required to hold transaction addition transferring easily.
Jonathan Chester cited that, the fewer fees there are the less miners there can be, which in turn has a centralizing impact on transaction addition and verification.
Jonathan Chester says:
“Decentralization is a main benefit for Bitcoin, because it makes the technology less coercible. That is crucial for Bitcoin to work as a check towards terrible financial policy on behalf of governments. If a central authority is not able to manage Bitcoin, which means the people in power must usually fear whether authorities-induced inflation will cause citizens to move to Bitcoin. However if it turns out that a government can control Bitcoin because of a centralization of mining, no such check towards corrupt government money manufacturing would exist.”
However, Jonathan Chester stated that excessive expenses and variable fees could have an effect on the Bitcoin business in a large number of ways. High fees make micro transactions harder to control. This means that systems like Twenty-one and Brave are affected. With variable fees, exchanges that don’t comply with appropriate fee tactics may send out payments to clients with main delays, that can have rippling results when combined with solutions constructed on top of exchanges, including the numerous Bitcoin remittance organizations.