Transaction Fees

Since there is a finite cap of 21 million bitcoins, the block subsidy will eventually cease to exist. The block subsidy was designed solely to bootstrap the network, and over time, the incentive for miners to continue producing blocks is expected to come entirely from transaction fees.

When a transaction is made on the BSV blockchain, a small fee is included with the transaction, which is paid to the node that writes the transaction to the ledger. The fee structure is determined by individual nodes, and they can set their own thresholds for the fees required to process transactions. These fees may vary depending on the size and complexity of the transaction.

For simple digital cash payments, fees are expected to remain low, as high fees would undermine Bitcoin’s utility as a digital cash system capable of enabling micropayments. To replace the block subsidy effectively, two scenarios are possible:

1. High fees coupled with low transaction volume.

2. Low fees accompanied by high transaction volume.

The first scenario would make Bitcoin impractical as a digital cash solution, but the second scenario—achieved through scaling—ensures that the network can handle large volumes of transactions efficiently with low fees.

The BSV blockchain, through unbounded scalability, enables this low-fee, high-volume model. Just as Coca-Cola generates profit by selling vast quantities of products with a small profit margin per unit, miners on the BSV blockchain are incentivized to process massive numbers of transactions, each with a tiny fee. This approach ensures profitability even as the block subsidy fades.

Miners that invest in efficient hardware, innovative software, and robust infrastructure are expected to thrive in this scalable ecosystem, reaping rewards from the high throughput and economic efficiency of the BSV blockchain.