Bitcoin Just Hit $1 Billion in All-Time Transaction Fees

On Oct. 30, 2019, the bitcoin blockchain reached $1 billion in cumulative transaction fees.

According to data from blockchain analytics startup BlockChair, the amount of bitcoin transaction fees collected annually has actually decreased in recent years.

While the cumulative amount of bitcoin transaction fees converted to USD amounts to roughly $1 billion, the amount is actually much larger if you consider the market value of bitcoin today.

The cumulative size of transaction fees on the bitcoin network is only set to grow larger in the coming years - especially as alternative mechanisms for rewarding miners such as block subsidies gradually decline.

"Over the long run, the transaction fees will eventually have to replace the block [subsidy]," said Jameson Lopp, CTO of bitcoin management startup Casa.

Stepping back, transaction fees play three key roles on the bitcoin blockchain - all of which serve to secure the integrity and censorship-resistance of the network.

First, attaching fees to bitcoin transactions discourages denial of service attacks, also called "Spam" attacks, from slowing down the network.

"It's very simple: you pay more, you get your transaction accepted more quickly. So that mechanism is a fair way to participate in a pending transaction pool."

Finally, and perhaps most importantly, transaction fees also ensure transaction finality.

Coupled with the bitcoin block subsidy - which yields 12.5 BTC per block and decreases by 50 percent every four years - transaction fees incentivize bitcoin miners from purposefully stalling or editing the blockchain.