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0 pointsdavnicwil8y ago0 comments

Yes. There is no such thing as a free transaction, because payment methods and networks take work to administrate. I mean, take cash. It's expensive to make, to process, to transport, to safely store. These costs are, obviously, passed on to the users of cash in the aggregate.

Cryptocurrency transaction fees are just very direct, but it's the same deal. The difference is that clearly inefficient transaction costs, like centralised middlemen with limited competition skimming a cut from all transactions, can be eliminated. Remember that bitcoin transaction fees are a completely open market.

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horsawlarway8y ago

But the price you pay for removing those middle men is forcing the network to perform a truly astounding amount of computational work to verify the same transactions.

There's an efficiency trade-off here, and I think for at least many of the older crypto currencies, the amount of work to process transactions is literally unsustainable without some additional tech or service layer.

Which often leads us right back to clearly inefficient transaction costs.

resf8y ago

Centralized payment networks will always be cheaper to administer than blockchains.

The only reason that Visa and Mastercard have such high fees is because it's a duopoly.

vkou8y ago

The only other reason they have such high fees is because those fees pay for dealing with fraud.

Bitcoin makes the user deal with fraud, with predictable results.

QML8y ago

Harder to get access to a centralized payment network though, right?

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