Bitcoin Wallets Changing Fee Structures to Speed Transactions Through Network Delays

Bitcoin Magazine
Bitcoin Wallets Changing Fee Structures to Speed Transactions Through Network Delays

Due to the continued spam attack on the blockchain network that Bitcoin Magazine has previously reported on, multiple bitcoin wallets have implemented either increased fees or the ability for individuals to increase the fees paid for a given transaction. Based on the nature of the software, miners prioritize which transaction to process first based on the fees associated with it, among other factors. The standard bitcoin fee is 0.0001 BTC per kilobyte. However, with so many spam transactions occurring, the standard transaction fee is not sufficient to ensure quick confirmations.

BitGo announced what it is calling its surge pricing —named after Uber’s surge pricing—which stipulates that the fees will vary depending on how congested the network is. In times of low congestion, the fees will remain low; whereas, in times of high congestion, the fees will be boosted. The company’s goal is to see transactions verified in roughly 2 blocks.

Ledger, the hardware wallet, deployed its 1.3.12 version of the Chrome application, which includes dynamic fees. Based on the speed in which users want the transaction to be confirmed, the software will calculate how much in fees they should pay. By allowing users to decide, they can dictate whether speed is more important or an overall decreased cost.

BTCJam, a peer-to-peer lending platform, announced today that it would be waiving any late fees & late payment penalties for payments that come within 48 hours of the payment’s due date.

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Nasdaq Dives Deeper into Bitcoin Research and Blockchain Partnerships

In May, Bitcoin Magazine reported that the leading stock exchange Nasdaq would begin experimenting with the blockchain technology that powers Bitcoin. In June, Nasdaq announced a partnership with San Francisco-based Bitcoin API startup Chain to implement the first blockchain technology pilot projects in Nasdaq Private Market, a recently launched marketplace that handles pre-IPO trading among private companies.

In a recent analysis, the prestigious MIT Technology Review notes that, though it’s much too early to tell whether bitcoin is the future of money, the Nasdaq experiment will test whether it can be the future of financial record-keeping.

In the Nasdaq Private Market pilot project, record-keeping via the blockchain will complement a cloud-based data management tool that tracks who owns shares of a given company, and how much they own. Besides the existing record-keeping tool, corresponding entries in the blockchain will contain certain important information about the transaction, such as the timing and number of shares involved.

Errors in financial record-keeping can be costly. “There’s really no great system in place to ensure that this is done accurately along the way and is auditable to the beginning of time,” said Nasdaq’s CIO Brad Peterson. He and his colleagues at Nasdaq think the blockchain can be essential to such a system.

Nasdaq Private Market is not a stock exchange open to the public, but a service that connects private companies with investors. However, Nasdaq stated that the blockchain initiative could ultimately be extended to record trades of stocks in public firms listed on its exchange.

Nasdaq will explore opportunities to implement blockchain technology in other areas of its business, a large part of which is supplying the underlying technologies that run various securities exchanges around the world. However, Peterson is worried about the current uncertainty and controversy over how Bitcoin should evolve to better handle growing transaction volumes.

Current proposals include increasing block size to 20 megabytes, or 8 megabytes, suitably tweaked Sidechains separate from the main Bitcoin blockchain but interoperable with it by means of two-way pegs, or Lightning Networks, where related transactions can take place instantly on “micropayment channels” off-chain, and only the final settlement is processed by the blockchain. Lightning networks could enable bitcoin scalability, efficient micropayments and near-instant transactions.

Once these issues are settled, the Bitcoin blockchain could be an excellent record-keeping tool for Nasdaq private and public exchanges alike. But in the meantime, according to Nasdaq writer David Floyd, Bitcoin has already found a very important real-world application. “Bitcoin is the new safe haven,” Floyd writes on the Nasdaq blog. Referring to the crisis in Greece, he notes that the possibility that a potential Greek default would drive nervous capital into bitcoin is perfectly plausible.

“Rather than buying [bitcoin] solely because it might one day go ‘to the moon,’ topple the global financial infrastructure or any number of other speculative scenarios, people are now using it as they would another risky alternative to fiat currencies – gold, for example,” says Floyd. “In short, Bitcoin is beginning to make sense.”

Floyd adds that the more it becomes compatible with real-world, here-and-now investment strategies, the more likely Bitcoin is to achieve wider adoption and play a role in ordinary people’s financial lives.

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