I am reading an article on bitcoin wiki about bitcoin block size https://en.bitcoin.it/wiki/Block_size_limit_controversy and it says that increasing block size will lead to "Bitcoin competitors will have lower fees" so fees will increase if we increase block size. But also it says that decreasing block size will lead to "Fees will not be zero. This is eventually a necessity in order to incentivize miners and secure the mining ecosystem" so fees increase again. It is very strange that no matter what we do transaction fees always increase. What am I missing?


1 Answer 1


What any particular change will do to fees is mostly speculation.

A larger block size will not necessarily reduce fees, however, given the current fee model is an auction for limited bandwidth model, it is likely that selling pressure in the auction would be reduced if block sizes were increased. The inverse would be expected initially if blocksize was smaller although, if transaction bandwidth is stifled significantly it also seems likely that consumers may then seek an alternative to Bitcoin since their demand cannot be satisfied. Block size is a delicate balancing act.

Larger block size and a corresponding reduction in fees, if attained, may also harm the mining effort and force miners to seek an alternative as block rewards further reduce in the future. Mining may then no longer be viable even with ASIC hardware.

As I say, much is to speculation.

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