BITCOIN: What I've been thinking "It's gotta go up", and now what I am seeing...
Now with the adoption of bitcoin and the limit on the number of coins it only makes sense that it has to go up. At least that is what I've been thinking and I've got about $9000 sitting in it on an exchange. That's not much compared to a lot of people. It has been going up, and I've thought it is probably a good investment.
However, there is one big skeleton in the closet that I believe hurts bitcoin a lot. The miner fees are nuts with the current value of a bitcoin.
I use a Bitpay VISA debit card to convert bitcoin to fiat when I needed to spend it. At least I did. Recently they stopped accepting direct adding of funds to that card via sending to a bitcoin address. They require a copay compliant wallet such as Mycelium and their own Bitpay Wallet.
That can add some steps, and can be a bit of a pain. Yet they have their reasons.
The miners fees are getting to be so ridiculous that if they refund an improper deposit that was off by a bit, or something of that nature often the fee is more than the refund.
Right now if I had to say the bitcoin network has one major flaw it is these fees. They could kill this network just because it become extremely wasteful and expensive to try to use the network for anything. Now these fees usually are actually in what is known as sat/byte which is a fee in satoshis per byte.
A super economy slow fee on the network at the moment is around 575 sat/byte. That is for a SLOW delivery that could take 4 hours or so. Basically you could look at these much like a STAMP paid for to deliver a letter. POSTAGE.
The problem is that these stamps are LARGE sums of money when one considers what they actually are doing.
This is also why places often have insane fees to withdraw from an exchange. A 0.001 BTC withdraw fee is not uncommon and a little over a year ago that would be much like a $0.50 ATM fee. Now that can in the worst case I've seen when BTC hit $20,000/coin briefly be a $20 ATM fee.
Yet that is just one fee. Now if you have to start moving your money from an exchange into one of these copay wallets you pay the fee to get it there.
Yet you're not done. You're going to have to pay double the fees now just to get your money to something like a bitpay debit card. Why?
Well I have a bitpay wallet with $16 worth of bitcoin which is about 0.00097 bitcoin last time I checked. I didn't put more into it until I'd determined how to use it.
So it won't let me add that to my bitpay card. It says it is insufficient to withdraw. It won't let me transfer it anywhere else due to being insufficient to cover any fees.
So what do I have?
I have $16 (and growing as bitcoin increases in value) that I can't actually do a damn thing with.
This problem is a big one as far as I am concerned. I see this a barrier for bitcoin being considered as a viable long term investment. I also do not see it being able to reach the vaunted predictions of many people if these problems continue.
Should we consider it realistic to be paying insane mining fees to use this money? If the fees were dropped significantly that'd postpone this issue. Let's face it they charge the fees to prioritize payments because the bitcoin network is slow. Yet the fees they are charging now are insane. They are extortion as far as I am concerned. "You must pay the troll at the bridge X to be allowed to move your money".
This makes things like Steem (no fees) way more attractive. Yet with no easy way to convert steem to fiat we end up with using bitcoin as the middle man in terms of exchange. In fact, with the slowness of bitcoin I really only see it persisting due to its position as the medium of exchange from one crypto to another to fiat.
What do the rest of you think about this? Have you solved any of these problems? Is it worth sitting on bitcoin longer and watching it go up? What methods have you found that work best for converting to fiat?
I am thinking of picking up a SHIFT card and if I do that I am not sure if it has that same double dipping into the mining fees that the bitpay wallet seems to have.
Also, please don't recommend Poloniex. While their fee of 0.0001 BTC is the lowest I've found that is absolutely worthless if they decide to not deposit something you send them and not respond to support requests, and perhaps in 5 to 6 months your currency might suddenly appear after any benefit in selling it on the high is gone. This has happened to me twice now. While their fee is way better, their support makes that not a benefit.
Edit/Update
Bit pay wallet... I had some poloniex that I hadn't pulled out... so now I have $138.29 in that wallet and it still says it is too low to spend.
So how can Bitcoin be expected to be a viable currency when it is only useful for large transactions?
Thanks for this analysis.
Well, it looks like bitcoin is no longer crypto-currency.
It is long term crypto-wealth-storage and investment vehicle.
Litecoin, dash and bitcoin cash look to be having inroads made on CCs and such. They are also positioned for use as a payment medium. Whereas bitcoin seems to have walked away from that.
I believe bitcoin will continue to be the name brand, and thus will be the thing that people who want security (of it still being around next year) will pay for. When buying a house, the bitcoin fees are tiny, and will probably be considered worth it to buyers and sellers.
Sure... yet even then those fees can make it unattractive. Which could decelerate its rise. As that happens it'll potentially lose a lot of that interest.
I mean wealth storage that costs you large fees whenever you wish to withdraw your money is pretty crazy.
I do believe you are correct. The only path to fiat I've been using is my bitpay card. With their change to how they demand you add funds to it that just became pretty much unusable by me and all the people I convinced to get the card.
So I am checking into others... I plan to order a shift card and see how that works out with other currencies like litecoin or bitcoin cash as soon as this SLOW transfer from Bitpay Waller that cost me $30+ fee happens...
Please write a post about it. I am interested in what solutions there are too.
I will once I have the card and can try it out.
I was listening to an interview with Roger Ver last week and he called out Luke Dashjr as claiming to want high fees and slow transaction times. Might have been on the Vin Armani podcast from a few months back.
It's something I've thought about vetting, but haven't yet. Interesting though, and it does take Bitcoin out of the running.
They may not be able to tank Bitcoin by negative PR for long. Yet if they can control a lot of miners and set high fees that'd have the same effect.
The last several transactions I attempted seem to have disappeared. The Bitpay timer runs out and the money never makes it to my card. Their support is horrible it takes days to get back to you. I just started an Electrum wallet and am waiting for my Bitcoin to confirm before I try another transaction.
Let me know how that goes for you. Also the address they've been listing for a couple of days isn't an actual bitcoin address so sending deposits to that address would result in it not getting there.
The addresses have been the same as always but the money doesn't get there. They're "looking into it" but you know how good their customer support is! Can you get a Shift card without using coinbase?
I don't know... it connects to coinbase. Which my BTC wallet has been at $0 for a long time there... so it was asking to order the card for $10 in BTC from there and I don't have that there yet.
Dan at Blocktrades told me a while back that BTC is taking a long time to confirm transactions and to try other cryptos (LTC, Dash, etc). My problem is that Bitpay only accepts BTC. I think what may be happening is that it takes so long that the Bitpay timer expires before confirmation... but the money shouldn't disappear.
A deposit I made on the 18th confirmed today, but I have no idea where the money went (I can tell you where it DIDN'T go)
Their fees for the Bitpay Wallet are extreme to withdraw so don't use it... I'm thinking of getting a Shift card for use with coinbase which can link to Bitcoin, Litecoin, Ethereum, or Bitcoin Cash
I managed to pull my money off of that Bitpay Wallet by setting the fee to SUPER ECONOMY which It still cost me a $36 fee to get my money off of there and onto Coinbase so I can order a shift card. I had $138 worth of BTC on my Bitpay Wallet. It wouldn't even let me send that at a normal rate as it said I didn't have sufficient funds to pay the fee to put it on my bitpay. That means the fees were more than $138... They can shove that where the sun doesn't shine.
So I did manage to pull it off using super economy which was still the worst fee I've ever paid.
My words! Today I wanted to send 100 USD worth in bitcoin and the displayed transaction fee was over 33 USD 😱
I then ended up sending it via DASH with a fee of 0.03 USD 😆
My new wallet is on Electrum, they only take BTC. I don't mind the fees so much as I do my $$$ disappearing!
Is there a good DASH to USD Visa Debit Card or anything like that?
I just saw something about litepay.us on Twitter... I'm going to check it out tomorrow. Seems to work just like Bitpay but with LTC.
Which will suck if they have this same wallet crap they just introduced. Right now their fee to put money from bitpay wallet onto my bitpay card would have been more than $130 that is just insane. Litepay looks like might be the same company... layout etc looks the same.
If I can send to an address and not have to jump through their hoops for a wallet I might consider it.
They don't start until february anyway. According to what I've seen you can direct transfer, but who knows.
The SHIFT card should work with Bitcoin, Litecoin, Bitcoin Cash, and Ethereum. I plan to get one once my deposit to coinbase clears. I'll let you know how it goes.
Does coinbase require ID? Because of my situation with med ins I need to stay way under the radar or I lose my med ins (my insulin is over $600 a month).
Also, seeing that you're much more knowledgeable than I about these matters... Let's say I transfer $350 to Bitpay using Blocktrades and the timer runs down before the transaction confirms. Then several days later it confirms. Bitpay says that "the bitcoin should be spendable in your BTC wallet." But since no wallet was involved (direct transfer) where is the $$$?
Well your blocktrades method won't work with bitpay anymore now that they require a copay wallet. That's kind of what caused me to start writing these posts.
I do believe Coinbase was one of the first to require an ID.
My funds are finally no longer pending on coinbase. So I am getting a SHIFT card. It asks for SSN and DOB when applying for the card.
So yeah your identity is not safe from IRS and such if that is your concern on Coinbase.
My problem is that my SSN and Dob don't match... I don't know how but I've been fighting them for 25 years.
My question about what happened to my funds that I tried to transfer is still up in the air. Blocktrades says Bitp[ay has it and they say it should be in my wallet. But there was no wallet involved because it was a direct transfer (and I know Blocktrades transfers don't work anymore)
I have a wallet that is fee-locked as well. Basically more money is needed to transfer the money out then there is money in there. I'm just sitting around hoping fees are reduced and Bitcoin rises in value enough to have it be worth something
Good discussion. I'm a buy and hold investor so I don't experience so much of the compounded fees trading in an out and honestly no one can effectively trade these things consistently. I build $1,000 positions and by the time I get the BTC into an exchange it's usually more than $20 in fees. Then you pay to buy an alt crypto (0.15%) and if you sell for some reason pay again. If you ever convert back to US, bam, another fee. Maybe we should be investing into the exchanges:)
This is a real issue and the exchanges and the whole chain don't have much incentive to change this when they are making a killing. I think it only changes when the alt coins move up in market cap and Bitcoin is seen teetering on its existence.
Bitcoin Jesus did an interview where he talked about the slow transactions, high fees and scaling issues. He traded his entire $342M BTC position into Bitcoin Cash and said it costs a Penney to transact. Bitcoin Cash also changed their block size from 1MB (BTC) to 8MB, so they can handle 8X more transactions.
My recommendation is to buy a position and hold it as an investment. When you want to buy an alt coin, just include the fees into the cost of your position. I maintain only a small 0.3272 BTC position for investment purpose and just convert new dollars to BTC when needed as a transition to buying the other coins. Usually $1,000 positions. Then I hold. I can tell you this strategy has worked. My portfolio is up >12x and if a single position goes to zero, it will have no meaningful effect on the portfolio.
For those who want a stock market play without the hassle of direct buying cryptos, read my article: https://steemit.com/investing/@morseke1/an-incredible-investment-with-maximum-leverage-to-blockchain-growth
I am holding some as investment but I actually NEED some of the funds occasionally too. It turns out Bitcoin really is only good for large investments. This means it sucks at being an actual currency for transactions and such. These fees are getting ridiculously expensive and they will only get worse as the value goes up. So if it hits $50K/coin by the end of 2018 do you think a $100 ATM fee is acceptable?
The 0.001 BTC fees and such don't make sense to remain IF the value is as high as it is. The higher it gets the less people will be interested. If they start leaving using it as a currency then it will begin to lose its value. A big part of the reason it has value is that it is the exchange currency for converting between cryptos, and between crypto to fiat. As these fees increase though it becomes much more attractive for another crypto to fill that void. When one does so well enough Bitcoin will likely plummet in value. If people really want it to remain and continue to increase then they should be reducing their fees as the value of bitcoin increases. Otherwise, it becomes unusable as a currency.
I couldn't agree more. I'm not even sure why the fees are a % of the value. Does it actually cost more time or effort or computer power to transact BTC at $1000 per coin or at $50,000 per coin. It's just a ledger entry of with a code. I certainly don't think so unless you consider that the mining difficulty increases over time.
Correct. If they decided 0.001 BTC was a good enough fee when it was $500 / bitcoin and electricity prices have not changed dramatically then if they want bitcoin to remain useable by people if it increases 10x in value they should be fine with 0.0001 BTC. IT has actually increased 30x in value but they've kept the fee at 0.001 BTC or higher.
I saw Poloniex who was charging 0.0001 BTC and was the main reason I used them other than their customer service sucks and I've had currency in limbo for months before. I saw today that their fees are 0.0002 BTC.
So if bitcoin is going UP in value WHY would anyone increase their fees other than to gouge their customers? If you want bitcoin to be mass adopted and the price to go up then you should keep your fees about constant with what you believe you need. So if the value is going up it should take less BTC fees.
As I understand it a lot of the fees are set by miners. If the fee is too low they may not process it, so a lot of this is not on the exchanges.
Yet those miners are going to kill bitcoin's longevity with their greed.
HODL until the lightning strikes.
That page and video were created in 2015. Any update to when it is happening, if it is happening, etc? Essentially that is older than steem/steemit :)
yup..odd that.
I seem to recall seeing something recently that in effect said
real soon now
Merry Xmas!
Oh yes you can't see this, so Merry Xmas to everyone who hasn't muted me :)
I think this is the biggest problem that Bitcoin currently has to increase its use, imagine a world where the BTC is accepted in all shops, but must pay a crazy rate to buy anything, it does not matter if it is a simple cola, You must pay more than $ 20. Totally wrong.
I personally was very annoyed by the problem of the fees, because as the local currency of my country devalues too quickly, I must sell the BTC to get just the money that I am going to use and keep the other in the Exchange, because If I sell a lot at once, then the money is devalued in my hands. Imagine, sometimes I need to take out less money than what I have to pay per fees.
In my case I found an Exchange (MonkeyCoin) that does not charge commission when it comes to selling my BTC to FIAT, which makes me a lot easier, but the only FIAT that manages is VEF.
Right now it's going down hard, I'm glad I sold it last week, and I'm waiting for it to bottom and start climbing before I buy back in. Fingers crossed for $5000!
Yeah I bought it higher than this mostly.
I thought it was an expensive gamble at $1000!
Realistically I think the old flogger is worth about $10000 now so I want it well below that ideally.