Gavin Andresen, chief scientist at the Bitcoin Foundation, uncovered his thoughts on what will happen with bitcoin in the remote future, while having an on-stage conversation with Fred Wilson at a New York Public Library Live event on Tuesday.
Speaking to the founder of Union Square Ventures, Fred Wilson, he commented if bitcoin will manage to survive when all coins are issued.
“The easy answer, which may or may not be correct is that transaction volume will ramp up, we’ll scale the network and transaction fees will take over,” Andresen said. “Right now transaction fees are tiny because there aren’t that many transactions and because miners care about getting those new bitcoins, they don’t care about fees,” he added.
According to Andresen, transaction fees could be significantly raised without losing advantage of the high value of making transactions with the use of other technologies. If compared with interests received by traditional financial organizations, bitcoin fees are too low.
For example, PayPal’s typical fee is 2.9 percent plus $0.30 USD of the amount received. The fees charged by U.S. financial services provider Square amount to 2.75%, while the interest rate of credit card transactions total 13.02%.
The average sum earned from bitcoin transaction fees is 0.49 percent, according to Blockchain.info. With an estimated $46.6 million transaction volume at the time of publication. That’s about $22,000 in fees generated globally compared to $766,350 worth of bitcoins recently mined.
“But I think Satoshi [Nakamoto, bitcoin creator’s] vision was that we will transition as the block reward goes down to a world where there are a whole lot more transactions happening and even if it’s a penny per transaction, if there’s thousands or millions of transactions happening then that’s a significant revenue stream that will keep the network secure,” Andresen also stated.
“The more people continue to adopt it the price will continue to rise. Hopefully bitcoin, or some other crypto currency will become accepted world-wide. Since rising population means more and more people adopting it, the amount 1 bitcoin is worth will continue to rise, leaving more people using fractions of bit coins that will be worth what one bit coin was worth a few years before,” one of the posts reads.
Most users are sure the mining is unlikely to stop, as transaction fees will still exist and will be rewarded to miners. Moreover, the mining is necessary to build blocks for storing transactions.
“Regarding the mining I am not sure but it should still exist because it is needed to create new blocks in which transactions are stored, therefore, mining is always needed, but they could lower the difficulty. Even though this is speculation,” the other post stated.