Our latest eBook – Miner Economics: A New Paradigm for Bitcoin Transaction Fees – is now available to pre-order.
The first edition in the series, ‘The Next Era in Miner Economics: Embracing Coopetition and Infrastructure’ was written by SmartLedger as an exploration of the history and current state of miner incentives, from the race for hash power to the upcoming reward halving events.
In the follow up – which has been co-written by the teams at SmartLedger, GorillaPool and Elas – explores the transaction fee structures of Bitcoin (BTC) and the BSV blockchain (BSV). It also delves into the transaction validation process, fee calculation based on size and complexity, and the differences between BTC’s and BSV’s approaches to transaction fees and block size limitations.
The paper proposes a new classification system for Bitcoin transaction fees based on computational intensity, aiming for fairer and more predictable costs. It also discusses the impact of these fee structures on network security, miner incentives, and the viability of microtransactions, highlighting the contrast between BTC and BSV in terms of blockchain utility, scalability, and economic models for miners.
Pre-order: Miner Economics: A New Paradigm for Bitcoin Transaction Fees.
The intricate world of transaction fees
In the intricate world of blockchain, Bitcoin stands out not only for its pioneering presence but also for its complex yet robust transactional framework. At the heart of this framework lies the concept of transaction fees. Much like tolls on a highway, Bitcoin fees play a pivotal role in maintaining the speed, efficiency, and reliability of the blockchain network.
For miners, these fees represent more than just a technical necessity; they are a form of compensation for their computational efforts and resources spent in validating and adding transactions to the blockchain. This reward system ensures that miners remain incentivised to participate honestly and actively, thereby securing the network against potential threats.
A new discussion surrounding transaction fees is needed
“Arising from the foundational discussions surrounding the fundamental distinctions in transaction fees between BTC and BSV, it becomes apparent that BSV’s approach to scalability and transaction variety necessitates a more sophisticated fee structure,” said Bryan Daugherty (Public Policy Director for the Americas at BSV Blockchain).
While BTC has traditionally prioritised a fee arrangement to address its limited block size and resultant congestion, BSV’s expansive block capacity and dedication to diverse transaction types warrant a reevaluation of transaction fees, he said.
“The diverse range of transactions within the BSV network, spanning from straightforward wallet transfers to intricate smart contract executions, calls for a fee system that is equitable and mirrors the computational resources utilized. In light of this, we advocate for the implementation of a transaction classification system for BSV, intricately designed to harmonise fees with the actual computational intensity inherent in each transaction type.”
