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The economics of Bitcoin transaction fees

Abstract : We 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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https://halshs.archives-ouvertes.fr/halshs-00951358
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Submitted on : Monday, February 24, 2014 - 3:59:59 PM
Last modification on : Thursday, April 30, 2020 - 3:12:05 PM
Long-term archiving on: : Sunday, April 9, 2017 - 5:37:05 PM

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  • HAL Id : halshs-00951358, version 1

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Nicolas Houy. The economics of Bitcoin transaction fees. 2014. ⟨halshs-00951358⟩

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