Cost of Bitcoin Transactions Six Years Ago

Looking at this chart from blockchain.info, I understand that there have been 1,918 transactions confirmed on March 6th, 2011.

Those were the good old times where you didn’t need to worry about fees. People who are long enough involved to have experienced in March 2011 the magic of sending your money instantly, world-wide, anytime, with no fees may be not entirely pleased with the fact that those days are gone and you need to pay fees now to use the Bitcoin network.

But then, that day was before the first reward halving, so on that particular day there were 7,200 new bitcoins distributed to miners as a reward for contributing to what passed for the Bitcoin network hashpower at the time. There were also a couple of bitcoins worth of fees, even at the time. Ignoring those, we can divide the number of new bitcoins by the number of transactions to find the cost of one transaction in bitcoins on that particular day.

That’s 3.75 bitcoins per transaction.

Bitcoin prices are rather volatile right now, because everybody is nervous about the decision on the Winkelvoss ETF. As I’m writing this, I see a price of $ 1181.68 at Coindesk.

So those 3.75 bitcoins transaction cost would be $4431.3 at present prices. In other words, if you calculate cost per transaction in bitcoins instead of dollars, they have gone down massively in the last six years.

For the record, the last number for confirmed transactions available at the chart cited above is 297,108, for March 8th, 2017. And after two halvings the mining rewards are down to 1,800 bitcoin a day. Add another 234 bitcoins in fees for a total cost of 2,034 bitcoins on that day.

Divide by 297,108 transactions and we find that one transaction on that day of this week cost 0.006846 bitcoins. That’s less than the 2011 value by a factor of about 500.

Of course it would be nice to have no cost for the massive mining infrastructure supporting the Bitcoin network. Of course, all things equal, no fees are better than low fees, and low fees are better than high fees.

But transaction costs are moving in the right direction, especially if you look at all costs (including block rewards) and if you calculate them in bitcoin.