Why Bitcoin transaction fee’s are actually low when you put things into perspective.
People often talk about the cost of Bitcoin transactions and how, at times, these costs can be perceived as high within their respective contexts. This then leads to the perception that Bitcoin is not suitable for microtransactions. An often touted solution is to then use L2 scaling options like Lightning, and while I do agree these are perfectly suitable for certain use cases and help to then effectively scale the chain(albeit with compromise)… the cost of the equivalent tx on the mainnet can’t instantly be dismissed as ‘high’ in my opinion. I have a different take on what constitutes a ‘Micro Transaction’
I think we’re all very entitled at times and often have very conflicting aspirations. For example, saving the environment, but also wanting absolute rock bottom prices for products or services from places like Amazon, or Coffee as a convenient drive through rather than something a bit more environmentally conscious, or heck.. Even better for your local community like a local business! I think we’re all guilty of it(the counter-intuitive behaviour) sometimes.
My argument is that the cost can’t simply be summed up by it’s monetary value alone. Similarly the perceptibly free and instant end user experience of traditional banking(which keeps users just happy enough not to care) isn’t free, nor instant either! Far from it. People can complain about confirmation times on Bitcoin, but let’s look at this differently.
The footprint of banking(both in money and environmental terms) is MASSIVE!
Hello CHAPS!
In 2005, I had the opportunity to work in the banking industry as a temp, specifically in the CHAPS department(initially) of a major UK bank. CHAPS, which stands for Clearing House Automated Payment System, is a “same-day” electronic funds transfer system widely used in the UK for high-value transactions(since the 1980s).
Customers often assume that their banking transactions are not only free but also executed instantaneously(or same day as was more common in 2005). However, make no mistake, this was a super manual process, involving faxes and data entry! Not free at all!
In the CHAPS department, Everything relied on manual key entry. Faxes were common!
Inter-Bank Loans:
I later worked on processing LIBOR loans. LIBOR, or the London Interbank Offered Rate, was a benchmark interest rate at which major global banks would lend to one another. These loans were substantial, often amounting to hundreds of millions or even several billion pounds.
What struck me was the intricate network of banks required to facilitate these loans. These transactions were not simply about moving money; they were often linked to massive projects, including defence contracts. The complexity and risk management involved in these loans were immense.
The banking sector’s ability to provide the perception of free and instant transactions keep us content. However, beneath this public image, it’s a different story.
#bitcoin
