The economics of Bitcoin transaction fees
AbstractWe study the economics of Bitcoin transaction fees in a simple static partial equilibrium model with the specificity that the system security is directly linked to the total computational power of miners. We show that any situation with a fixed fee is equivalent to another situation with a limited block size. In both cases, we give the optimal value of the transaction fee or of the block size. We also show that making the block size a non binding constraint and, in the same time, letting the fee be fixed as the outcome of a decentralized competitive market cannot guarantee the very existence of Bitcoin in the long-term.
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Bibliographic InfoPaper provided by HAL in its series Working Papers with number halshs-00951358.
Date of creation: 24 Feb 2014
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Bitcoin; transaction fee; mining; crypto-currency;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-03-08 (All new papers)
- NEP-COM-2014-03-08 (Industrial Competition)
- NEP-MON-2014-03-08 (Monetary Economics)
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