You still don't get it. Transaction fees != fees for using services (btc mixing, exchange, stock ex etc..)

The day bitcoin is truly mature is when there are enough services accepting them so that you would never have to convert to and from official currencies. Paypal sucks in many ways, but I love the fact that I can sell one thing for paypal and then spend it in various places without ever having to meddle with bank accounts and credit cards. When bitcoin is there, third party fees are irrelevant, because you wouldn't have to use any.

If bitcoin is what it's cracked up to be ( and it probably is ) then soon we won't be using fiat at all. Goods and services for fiat will move to bitcoin one by one. Every time a new business accepts bitcoins, bitcoins become more attractive, more business are encouraged to accept bitcoins.

Once this happens, all transactions will be bitcon transactions with 1/2 cent fees. Services converting between fiat will be redundant.

He clearly isn't talking about transaction fees. A lot of you need to go back and read what he actually is talking about.

He makes some good points. I agree that sombunall ( 'some but not all' ) new Bitcoin businesses are missing a great
opportunity by seeming to go after the quick buck rather than having a more long term vision which would help not
only their own business but Bitcoin as a whole.  

I stated a similar view when I saw how much money some people were asking for their music on the coindl site.  

What is the incentive for someone to buy something with this weird bitcoin stuff on some dodgy
and ugly(imo) website if they can get something just as good, or better, for the same price at itunes?  

A lot of newbie Bitcoiner merchants seemingly can't see how they may make more money by selling a song
hundreds of times for nickels and dimes rather than a few songs for a $1.  

Bitcoin is perfect for microtransactions because all the profit doesn't get eaten up in paypal or CC fees...
and everyone here no doubt knows of the other advantages for consumers and merchants.

A lot of people still don't get that average people don't give a crap about the advanced crypto tech
or egalitarian philosophy of bitcoin, but if they can save a significant amount of money then they
surely would consider using it.

It's a combination of cost and convenience.  $4 per month gets me unlimited transactions on my bank account, I can transfer small amounts, and the charge for overseas transactions is trivial (I used my debit Mastercard to pay Amazon $27 last month and my bank charged me a whole 6 cents for making an international transaction).  I'm willing to pay $4 per month for that level of convenience.

don't forget that you're dealing in a currency whose price is going UP.

Ahhhhhh, thank you.

So, Proudhon, and others, argue that the service fees are, in part, due to transferring wealth in and out of bitcoin-dom (e.g. €1 SEPA transfer etc).  If that were the case, then (and I choose MtGox only as a representative example) MtGox would have smaller fees for changing a USD MtGox balance into a BTC MtGox balance - no external bank transactions necessary.  But the fee is 1.2%.  Is 1.2% of some 50,000 bitcoins per day a reasonalbe amount?  Or, again only a representative example, look at TorWallet.  It exists only in bitcoin-dom with no external bank involvement.  Nobody has refuted my estimate for server and admin costs which would be much smaller than the actual fee.

Therefore, Proudhon and others, I reject the claim that bitcoin service fees are related to moving money in and out of the bitcoin economy.  If that were so, then, not only would TorWallet have lower fees (or I've grossly underestimated their costs), but also asdf's hypothesis will come to pass, but I'm not so hopeful:


You're oversimplifying.  It's not a black-and-white situation.  If my food and shelter costs were $1000 per month, then it's not like charging $1500 or $2000 is grossly unreasonable.  But suppose I were one of the usual cronies milking the system for what it's worth - a doctor, a lawyer, a politicial, a banker, etc.  And I ask for $10000 per day (think about bankers with $5M yearly bonuses, on top of their salary), is that still reasonable?  Is it reasonable to insist on being paid an enormous amount just because people are willing to pay?  Does it never become "greed"?

I've had a similar argument on this forum about the cost of digital goods, e.g. an mp3. My argument was similar to Portnoy's - should I pay $1 for an mp3 because I consider it worth that much to me, or should I pay $0.001 because if 1,000,000 people buy it, then the author will have been abundantly well paid?  Why is it that big-name musicians earn tens of millions of dollars per year, while less known musicians, often of a much superior quality, barely scrape a living?  I am fully aware that this is the free market, but, bearing in mind the root causes of the current economic mess, can't any of you capitalists stop for a moment to thiink: is it fair?  Really - try to think if greed is truly the best way for humanity to shine.  Think about whether rewarding people with fabulous wealth is the best way to attract the best people for a job (be that politician, or banker, etc), or if it's the best way to attract the greediest people.

Then why does an e-book, or an mp3 on itunes, have a price which is comparable to the physical book or CD on high-street?  I agree, in an ideal world prices would come down, but I'm just a born sceptic.

Centralized services do tend to accumulate fees and policies, those actors then often try and raise barriers to entry. It's one of the reasons banking is so messed up today. So I don't think the original complaint is meritless.

The solution to many of these problems is to design entirely decentralized P2P equivalents of popular services like exchanges.

Without any service fees to fund them, we must first solve the problem of creating public goods via assurance contracts. That would let people easily pledge, Kickstarter style, to the development of new P2P systems to replace popular services.

The limiting factors today are:

• Lack of a solid Kickstarter style system. Of course, somebody could throw up a website and make one very easy, but then we're back to having a centralized service that would charge fees A decentralized assurance contract protocol is possible (see the wiki), but hasn't been built yet.
• Lack of enough people with the credibility, skills, passion and time to do an excellent job of fulfilling the assurance contracts. Building these systems is not easy, in fact it's almost always much harder than doing a centralized service. So a huge bottleneck is insufficient skilled engineers in the community.
• Lack of documentation, libraries, examples and experience to make building Satoshi-style decentralized services easy.

I think all these will get resolved with time as the community grows. I have the interest and ability to tackle many of these problems, but right now I'm pretty happy with my current job, and it's unclear how much money could really be raised to develop P2P solutions for all these markets. Also, I'm busy ensuring that mobile wallets can work purely P2P (and therefore fee-less). That's a 2 year project already, but it lays the groundwork for many other things.

Agreed...  a bitcoin-denominated kickstarter seemed like a natural early-stage service.  Surprised it has not appeared.

It is natural, moral, legitimate, efficient, and productive to seek the highest profit one can obtain, so long as one doesn't resort to fraud, deception, trickery, or theft in order to obtain it. It is by the mechanism of each individual seeking to maximize profit (so long as it's done honestly) by which proper market price discovery occurs, and resources are allocated most effectively. If you charge below what you can otherwise obtain, you are sending a signal that the service you're providing is less valuable than otherwise, meaning production of that service will be lower than otherwise, meaning other market participants will be misled by a price signal that was distorted.

Indeed, one could make the argument that charging less than you can, while being good for the person on the other side of the transaction, is in fact harmful in aggregate to those around you.