COST OF DECENTRALIZATION: BITCOIN TRANSACTION COST

Bitcoin was created with the goal of becoming an “electronic cash”. In addition to the excellent security features, most people assume that the cost of transferring Bitcoin is very small. Excluding the irregular wave of late 2017, the cost of Bitcoin transfers is only a few cents per transaction, regardless of the transaction value. The cost of a transaction is tiny, at least until now, in the fall of 2018.

But the truth is not so simple!

The cost of BTC transaction is really huge. The cost we pay is only a small part of the total cost of a transaction. There are other hidden costs that we do not normally consider: the cost of mining.

According to Digiconomist statistics in May 2018, the annual cost for Bitcoin mining is estimated at $ 3,656,073,069. That’s the money!

By the time of this article, one day there were about 185,046 transactions taking place. Multiplied by 365 days, we have a total number of transactions per year: 67,541,790 transactions.

Allocation of costs dug into the number of transactions made, we get the number: $ 54.23 — More than $ 50 for 1 transaction!

So why do we only pay less than $ 1 for a Bitcoin transfer? Where do “Bitcoin miners” get $ 50 off each Bitcoin transaction?

The simple answer is that “miners” are rewarded for each transaction they verified. In other words, the hidden costs are being allocated to the inflation program of the Bitcoin system. And the miners’ bonus is decreased 50% every four years. After 2140, there will be no inflation for Bitcoin reward for “miners” anymore.

So what will happen then? Who will pay for Bitcoin transactions? Is it possible that we will have to pay thousands of dollars for a Bitcoin transaction?