Since the 2017 bull run, higher Bitcoin prices correlate with increasing transaction costs. That cost is only a symptom. The real problem seems to be transaction volume on a network that has well-known limitations on throughput. So, is this what we should expect every time Bitcoin price surges?
Take your Bitcoin Price Cake and Absorb the Cost!
You don’t have to pay more for your transactions, necessarily.
But before we go down that road and start analyzing how you can have your Bitcoin price cake without eating transaction costs, it is important to establish that:
- Transaction prices increase as a result of Bitcoin price increases
- Therefore, you have more money in terms of fiat for each coin you hodl when transactions go up
- If you make more money hodling, why do you care if a transaction went up from the equivalent of $1.5 USD to $6.5 USD?
- Part of the increased cost is baked into Bitcoin price increases
- Then you should compare: Can you make a $1,000 USD transaction from your bank account for $6.5 USD?
If you don’t want to Eat Transaction Costs, Plan Ahead!
We all want to pay less for our transactions. But the alternative is not only more expensive but also not as great as Bitcoin in general. If you didn’t plan ahead, then just take that relativist point of view and understand that you are still better off.
But if you planned ahead, the impact of higher transaction fees will not be as bad. Here are a few things you can do to optimize your transactions and pay less.
Use Every Tool to Have your Bitcoin Price Cake Without Eating Transaction Cost!
There are mainly 3 tools you can use to optimize your transaction costs when Bitcoin prices rise:
- Get ahead of the curve with your transactions – if you can
- Prioritize your transactions and attach lower fees to low priority transactions – even if it takes more time to get confirmation on those
- Use physical hand-offs with paper wallets or even Opendime devices where trust and proximity allow you to – off-chain transacting
- Take advantage of the Lightning Network!
If Priority Changes, Bite the Bullet and Accelerate your Transaction!
The environment in which we do business is far from perfect. Even if you plan ahead to reduce your transaction costs, you might need to raise the priority of one of your transactions, suddenly.
If that is the case, you will end up paying more than you planned to, but you could still save some money if you use Bitcoin transaction acceleration services.
These allow you to optimize the fees you attach to each transaction, so you pay a fee that is as close to the equilibrium point in the market as possible.
Can we Have Our Bitcoin Price Cake Already?
Markets offer you a series of trade-offs at every level, no matter which system you use. Your job is to pick the best system for you – that in which the trade-off balance is in your favor. Within that system, it is your duty to optimize your usage as much as possible – if you value your capital.
Therefore, you should take what Bitcoin is giving you in stride. Have your Bitcoin price cake and keep in mind that the transaction cost you must eat is:
- Lower than it was on December 6th, 2017, relative to Bitcoin prices
- A result of your own choices and planning to a certain extent
There is no doubt the network is working better, despite a congested mempool and higher transaction fees.