Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/230576
Authors: 
Brown, Collin
Chiu, Jonathan
Koeppl, Thorsten V.
Year of Publication: 
2019
Series/Report no.: 
Queen’s Economics Department Working Paper No. 1423
Abstract: 
We use block level data from the Bitcoin blockchain to estimate the impact of congestion and the USD price on average fee rates. The introduction and adoption of the Segwit protocol allows us to identify an aggregate demand curve for bitcoin transactions. We find that Segwit has reduced fee revenue by about 80%. Fee revenue could be maximized at a blocksize of about 0.6 MB when Segwit adoption remains at 40%. At this blocksize, maximum fee revenue would be roughly 1/8 of the current block reward - or the equivalent of 1.6375 BTC as a reward in the long run given current prices and demand for Bitcoin.
Subjects: 
Bitcoin
Payment Systems
Fees
Congestion
Segwit Protocol
JEL: 
E42
G2
Document Type: 
Working Paper

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