transaction fee

Bitcoin may have high valuation, but has become unusable.

December 8, 2017 Bitcoin No comments , , , , , , , , , , , , ,

There have been disagreements in the bitcoin development community about how to deal with scaling.  These have resulted in a number of currency forks or proposed forks in the recent past, including

Here’s what I think would have to happen for a bitcoin fork to be successful:

  • It can get itself onto most of the exchanges.
  • It solves enough of the core bitcoin problems that people will actually start using it.
  • Wallets are ubiquitously available (web wallets, full node wallets, mobile, …).
  • It gets the Bitcoin Brand(TM), and all the marketing clout that brand carries.

There are a number of problems that bitcoin-core has right now:

  • The scaling is absolutely abhorrent.
  • Transactions with default wallet fees get stuck in limbo.  Those fees are no longer pennies or fractions of pennies, but are dollars.
  • A full node wallet requires a massive amount of space.
  • It uses a public ledger without a built in mixer, so isn’t really anonymous, especially when the exchanges that so many transactions are occurring at have extensive personal info (drivers licences, passports, …).
  • Massive energy cost to maintaining the network.

Long term I think many of these issues are disastrous, but the scaling and fees are the killer issues, and I mean that literally.  If a solution to those problems is not incorporated into bitcoin core, then people will be forced to completely abandon bitcoin, and it will be left entirely to speculators (and then proceed to crash, after which it may become usable again for a while.)

Here’s a recent example that illustrates this.  I tried to send $150 USD equivalent to the Scott Horton show, which is hands down the most informative foreign policy show in existence.  I’d previously sent him a $200 USD equivalent donation in bitcoin (and got a listen and think audio lifetime subscription in exchange!), but I thought a signed copy of his book would be awesome, so decided to send some more.

  • At the time I did this, the market price of bitcoin was around $15k USD/bitcoin, so this was about a 10mBTC (0.01 BTC) transaction.
  • The wallet that I used to send the coin (electrum, which doesn’t require a full node) included a default fee of 0.392 mBTC (0.000392 BTC = ~$5.88 USD).

After 19 hours, this transaction still has zero confirmations, and my wallet is now showing this transaction as “Low Fee” with a hazard sign:

A 4% fee on $150 is no longer enough to successfully yield a single bitcoin transaction confirmation after almost a full day!  At this rate, will my attempted send to the Scott Horton show ever go through?  Have I lost the bitcoin I attempted to send?(*)  I don’t think there is any way to bump up the fee on an existing transaction attempt to force it through (**).

Bitcoin has been portrayed as a low fee system that will replace extortionist money transfer systems like Western union, kill the banks that are in bed with governments, enable billions of unbanked access to world finances, and facilitate micro-transactions for small services.  It certainly hasn’t met with these expectations if somebody fully banked can’t even send $150.

The days of being able to sent tips with bitcoin for services that seem desirable appear to be in the past.  I happen to have a tips page on this blog.  I’ve renamed it to ‘cryptocurrency tips’ from ‘bitcoin tips’, since bitcoin now appears to be effectively non-functional.

(This doesn’t change the fact that a blog about math, physics, programming and random incoherent ramblings isn’t monetizable, so nobody will ever likely sent me enough bit or alt coin to even cover hosting fees, let alone the academic fees that have been associated with a lot of the content).

I have had at various points some altcoin wallets including:

  • dashcoin (was darkcoin)
  • litecoin
  • dogecoin
  • ethereum
  • monero

I currently only have dashcoin and litecoin wallets with non-zero contents (and haven’t fired up my litecoin wallet in a long time … it’s sitting on a VM unused with a token amount in it.)

These coin implementations have a range of features (privacy, transaction rates, low fees, ASIC resistance, …).  I don’t think any of them deal with blockchain archiving that will be required for continuous future use, and think that it is fundamentally broken that a full node wallet cannot download only a working portion of the blockchain (or grab other subsets on demand).  However, if the coin implementation doesn’t handle scaling and low fees, I think it is going to be doomed.  I’m not seeing signs that bitcoin core is taking those issues seriously.


Footnotes and edits.


This particular transaction has now disappeared from my electrum wallet, although it is still visible on the network.

It appears that whether or not a transaction truly expires also depends on all the possible mining clients.  To protect myself against the Scott Horton show being paid twice should I resubmit my transaction with a higher fee, I’d have to generate a new wallet, and transfer all my funds into that.


It appears there are mechanisms to reset fees for transaction if they aren’t confirming, but they are wallet specific.  The electrum 2.8 wallet software I was using did not have such a mechanism, and the transaction itself disappeared from the electrum history after about 24hrs.  I upgraded my wallet to electrum 3.0.2, and the transaction showed up again, after which I was able to initiate a ‘child pays for parent’ transaction sending an additional fee (0.00178749 == $28 USD, another 18% fee, bringing the total fees to over 22%) to force my initial donation through.

[The electrum “child pays for parent” processing leaves a lot to be desired.  After submission, that dummy transaction does not show in the transaction history, and there is no indication on the original transaction, that it has been made.  I only knew that it worked the next morning, when my original transaction had confirmations.]

The moral of the story is that bitcoin can’t be used for small transactions anymore.  If you send any or try to cash it in, you better make sure your wallet software is up to date, and setting fees high enough that the transaction will be processed.  In the case of my donation to the Scott Horton show, where I asked for his $50 and $100 donation perks (signed copy of his book, and a QR silver respectively), despite paying additional fees, I may have gotten the better deal in the transaction, as I get two tangible items for bitcoin that is getting hard to spend (even if you can find somewhere that accepts it).

I don’t think it’s a surprise that dashcoin (and probably other altcoins) have gone up relative to bitcoin 25% in the last day, since bitcoin has hit this peak.  A lot of the alt-coins can be spent and the fees aren’t exorbitant.  It remains to see how some of these altcoins will do under the network pressure recently imposed on bitcoin.

Comparision of Canadian bitcoin exchanges

September 9, 2014 Bitcoin No comments , , , , , , , , , , , , , , , ,


I’ve made some small bitcoin purchases (an initial purchase at the decentral ATM, and a couple more at Quadriga CX.  I’ve noticed that there are often large splits between the buy and sell offers posted on the Quadriga trade page, which I suspect is due to low volumes.  Even factoring in the USD conversion costs their buy rates appear to higher than I’d expect comparing to the USD exchange prices.

Looking for options I’ve enumerated some of the features, limitations, and charges for the Canadian exchanges that I have stumbled upon.

Canadian exchanges

No Government ID/utility bill verification appears to be required.  They offer an interac online deposit, and I don’t see if they also impose a transaction fee.

Quickbt caps purchases at 0.2 BTC (about 50 CAD).

This “exchange” has a 10% transaction fee!  Like the decentral ATM on Spadina, this looks like a good way to make a very small initial bitcoin purchase, but not a good way to acquire any larger amount.

Requires Government ID and utility bill verification for deposit.

No fee for interac online deposit.

0.25 % BTC fee for purchase.

No mining fee for transfer of purchased bitcoin into an external wallet.  I am not sure if the exchange covers the mining fee, or it just isn’t included (if so, perhaps that is why a transfer out seems slow).

Requires ID verification.

There is a $1.5 CAD fee for fiat deposit using interac online.

0.4 % per trade (higher than Quadriga CX’s 0.25%)

Requires ID verification.

Appears that you can set up direct deposit for cashing out bitcoin sales.

$1.5 CAD fee for interac online deposit.

Buy rates with this exchange appears to be lower than Quadriga CX.  I don’t know if they also impose a transaction fee for purchase or wallet transfer.

Requires ID verification.

Looks like you can supply Canadian bank information for direct deposit after sale of bitcoin.

Buy/sell rates appears to be much higher than cavirtex.  For example when I looked the canadianbitcoins buy rate was $556 CAD when the cavirtex buy rate was $527 CAD.  This exchange also posts a very large split between buy and sell, with sell clocking in at the very low rate of $504 CAD (vs. their $556 CAD buy rate!)  I don’t intend to use this exchange.

Requires ID verification.

While this is a Vancouver company, they don’t appear to have a CAD funding option.  They charge a $2 fee for interac online, but I suspect there are probably USD conversion costs too.

Comparison of samples rates

Using rates/bid/ask/volumes sampled at about 9:15am on Sept 9, 2014, we can get a bit of an idea of how the exchanges compare

Last trade: $509.00 CAD Volume: 89.48651284 XBT Low: $503.65 CAD High: $523.52 CAD

Top buy order:
$510.93 CAD  0.15400000 XBT  $78.68 CAD

Top sell order:

$518.34 CAD  1.09959000 XBT  $569.96 CAD

BTC/CAD : 513.20
   DAILY             WEEKLY
HIGH  520.00 CAD  535.00 CAD
LOW   503.03 CAD  500.00 CAD
VOL   173.277 BTC 859.534 BTC

Top buy order:

09/09, 07:15   0.2500/0.2500  511.98704   128.00

Top sell order:

09/08, 14:55   4.3413/6.2000 513.29500   2228.37

last trade:

Sept. 9, 2014, 07:03 0.2218   113.83   513.19576

Last Price: 521.00000000   High: $530.50000000   Low: $514.50000001   24-hour Volume: 82.12   7 Day Volume: 465.50

top buy order:

521.00000000   0.03146457  16.39304
top sell order:
526.00000000   0.00382869  2.01389
Last Trade: 521.00000000 – 24 Hour Volume: 82.19054910

BTC Buy Rate:  $541.74     BTC Sell Rate: $502.91



First off, notice that canadianbitcoins has uniformly poorer rates than any of the other Canadian exchanges.  It looks like they impose both buy and sell fees that are significant.

The best exchange for volume appears to be cavirtex.  I haven’t used that exchange, since I didn’t want to eat any fees for deposit, and haven’t made any purchases larger than $50 CAD (so their interac fee was significant in comparison).  It looks like it would be worth my while if I were to commit to making a larger one time deposit (say $200 CAD) in order to spread that transaction fee.

Both vaultofsatoshi and quadrigacx have larger splits between their top buy and sell bids.  Looks like those would both be better places to sell bitcoin if that was desired.  I happen to be buying bitcoin because I am assuming that there will be more and more places to spend it, and want to have some to play with.  I don’t have any intention of trying to play a day trading game with buy and sell, and suspect that this would require both trading skill that I don’t have, and larger amounts of cash than I am willing to loose.

A first bitcoin purchase, at Decentral’s ATM

July 24, 2014 Bitcoin 1 comment , , , , , , ,


I went to the bitcoin ATM today at decentral, in Toronto, on 64 Spadina Ave just south of King St.  It has the following awesome sign:


I love their self description “Coworking Space For Disruptive Technology Innovation”.  I didn’t think of taking any picture of the ATM, but it worked nicely.  Here’s what was required.

First step to make a purchase was entering my phone number.  The ATM sends a text message with a verification code to the phone, and you have to enter that into the ATM once it’s received.  I am not sure how this would have worked should the battery in my phone have been dead, something happens too easily on my ancient phone these days.

Once the verification code from your phone is entered, you feed in a printout of your wallet’s QR code.  Something like:

photo (1)

I deposited $100 and the transaction appeared to go smoothly.  The ATM sends a receipt text message to your phone with your wallet and the amount that was deposited.  My phone is not a smart phone, something that a bitcoin using generation probably takes for granted, so I wasn’t able to login to and see the new bitcoins in my wallet.  The nice guy (who’s name I have now forgotten) at decentral showed me with an app on my phone that the transaction was on the blockchain.

He was able to do that by scanning my QR code, which was interesting.  I am surprised about the non-anonymous nature of that blockchain peek.  So, it appears that if you advertise your wallet address (which appears to function like a public key) so that you can accept payments, then does that mean somebody could sum the deposits to that address from info available on the blockchain.  The work required to do that could be significant, but if anonymity is what you are looking for, some additional steps must be required.

Note that decentral’s ATM does not (at least currently) have any sort of ATM transaction fees, however you still take a hit on the transaction, since the exchange is at a rate 5% greater than the cavirtex CAD/BTC exchange rate (conversely, bitcoin sales at the ATM are at 5% less than this rate).  For example, my purchase using $100 CAD was at a buy rate of $681.47/BTC.  I see that the cavirtex rate ranged from $636 to $659 today.  This must mean that I bought when the ATM believed the cavirtex rate to be $649.

The best way to obtain bitcoin appears that it would be direct person to person transactions for work done, but I don’t currently have any services that I am trying to sell.  The decentral “nice guy” suggested that I could potentially do contract work for bitcoin.  Since much of my free time has been occupied by studies for the physics courses I have taken, that doesn’t leave much time for moonlighting.  Unfortunately, I don’t think there’s much market for the course notes that I have prepared for the courses I have taken.  I’ve made all of those available for free.  Somebody could tip me bitcoin if they find it useful, but chances of that are pretty slim.  The market for this level of physics material is pretty small.  For example, when I did the relativistic electrodynamics course, I think there were about 13 people in the course by the time it was done (offered once per year).