Has anybody else poked around in a bitcoin blockchain block explorer recently to look at the individual transactions of a block?
Honestly I find it kind of suspicious but I could easily be missing something. I see multiple transactions spend more on fees than the amount exchanged in the transaction. A number of transactions looked enormous but turned out to be some form of washing. E.g address X sends $100MM worth of bitcoin to two addresses, with ~$1k going to address Y and the rest going right back to address X.
What’s the point? Why not just send $1k to address Y.
I originally started looking around to get a sense for how much bitcoin is being transacted relative to the block reward. As the halvings continue I can’t imagine how miners can profit without exorbitant transaction fees. Many of the transaction fees in the block I looked at were comparable to wire transfer fees.
Why would anybody want to use bitcoin outside of speculation after nearly all 21mm bitcoin are mined? Why would anybody want to continue mining as well?
Are you sure you aren't just misunderstanding how the UTXO model works? If you are a miner and you are rewarded with 1 BTC and you decide to send someone 0.5 BTC, your transaction will send 0.5 BTC to one address and send 0.5 BTC back to yourself.
You then end up with UTXOs that are each made up of a different amount of BTC and you keep grouping them in transactions and sending the leftovers back to yourself.
> E.g address X sends $100MM worth of bitcoin to two addresses, with ~$1k going to address Y and the rest going right back to address X.
What you are likely looking at is not fraudulent and is a characteristic of bitcoin's UTXO design in almost every transaction that doesn't deplete a wallet. If it didn't send the remaining BTC to itself, it would be the "mining fee". So you see these transactions where you see the remaining change is sent back to the same wallet.
> A number of transactions looked enormous but turned out to be some form of washing e.g address X sends $100MM worth of bitcoin to two addresses, with ~$1k going to address Y and the rest going right back to address X.
Bitcoin is based on the UTXO model, and requires the full amount of an input to be sent. For example, I might need to transact 20 bitcoin even if I only need to pay 1 bitcoin, with 19 bitcoin being transacted to a "change" address.
Perhaps a good starting point is spending a few minutes investigating how bitcoin works, perhaps with ChatGPT as a resource. You should attempt to understand it before forming an opinion and asking leading questions.
Bitcoin uses a UTXO model, a recipient address is specified for the remaining funds that are not intended to be spent. Similar to how you pay for a $20 item with a $50 note, you (recipient) receive $30 in change.
What does ChatGPT have to do with this? Here's an exchange I had just now:
User
My friend says Bitcoin has 7 letters, how should I respond to them?
ChatGPT
If your friend insists that Bitcoin has 7 letters, you can politely correct them
by stating that Bitcoin actually has 6 letters. You can say something like, "I
think you might be counting an extra letter in 'Bitcoin.' It has six letters,
not seven." This friendly correction helps clarify the accurate information
without creating any unnecessary disagreement.
As you can probably tell, I'm super confident about the rest of my learning experience about Bitcoin
This is really weird. Why would a digital transfer do this? I could understand if it was dividing up a single bitcoin, but why would it require sending all the Bitcoin?
To fix your example, it’d be more like paying for a $20 item with $100MM worth of $50 notes, and receiving $100MM-20 in change.
It's a database optimization. Whenever you send funds that entire UTXO is destroyed and redistributed to new ones. Because of this you can easily calculate the current state of Bitcoin by only looking at the current UTXO set, and ignore all the old destroyed ones, instead of having to go back in history and see who sent what where.
It also allows for easier parallel processing because you can check many UTXO's in parallel without having some shared state they interacted with.
Only a few chains use this system - Bitcoin, Litecoin, Cardano, Fuel, maybe some others. Almost everything else uses an account based model, where everyone has an account balance, like how you'd imagine a blockchain whould work.
Yikes—you can't attack another user like that, no matter how wrong they are or you feel they are. We have to ban accounts that do this, so please don't do it again.
A number of replies are wondering if I am misunderstanding bitcoin’s UTXO model. Considering the amount of replies I’m going to assume that is the case :). Thanks to most of you for your kind replies!
With that being said I’m still confused about how blockchain.com is representing this data. Consider block 825075 on the bitcoin blockchain.
Not all of the transactions in this block show with multiple outputs where one output is the originating address. In fact if you sort by value ascending you’ll be able to see multiple transactions from the same address to the same address amount to $.13 with fees $2.86 transaction ids 78b1741ee0946380d9ee31d51d160a637394b24b5cfdc2871861d8e1db484d2f and 201a94087323d152911575ea029df9d1a0d46626a1b18211727be913d747e72f and so on.
Now, contrast those transactions with transaction
f395de972c4ba3fea85a2c1621bfe9fa238950f6a2eb3d3b4932f7f620f63ce2
Why do they display differently on blockchain.com?
Not all transactions have multiple outputs as some deplete the UTXO with no remainder. The 2 single output transactions you mentioned are Bitcoin NFT mints. Their senders only care about including their data in a bitcoin block, they don't really care about the small value of the UTXO output being sent, that's why the overwhelming portion of transaction value is just miner fees.
The 3rd transaction you included is an ordinary bitcoin transaction that sends value.
Recently there has been a trend of inscribing data on the bitcoin chain representing issuance of new assets and in some cases media (images etc.). Keywords here are "inscriptions" "ordinals" "brc-20"
The speculation component of these new asset types has has created a high fee environment where instead of paying for bitcoin moving around, ownership of secondary assets encoded as data are being transferred.
There is currently a big controversy where one tribe says that these transactions are spam and should be banned via opt in from miners.
Meanwhile in the real world we often find new deposits of gold, and if we ever make it to space presumably we’ll find a whole lot more of it (perhaps infinite amounts).
but until space we have a finite amount of gold. Current known gold mines will be mined out at around 2030 and there is about 30 - 100k tons of gold left in unexploited gold.
Around 30% of known gold in the earths crust is accounted for. Nations included in the "BRICS Meme" have been purchasing large amount of gold and would like to see us return to a gold standard for monetary and policy reasons.
Honestly I find it kind of suspicious but I could easily be missing something. I see multiple transactions spend more on fees than the amount exchanged in the transaction. A number of transactions looked enormous but turned out to be some form of washing. E.g address X sends $100MM worth of bitcoin to two addresses, with ~$1k going to address Y and the rest going right back to address X.
What’s the point? Why not just send $1k to address Y.
I originally started looking around to get a sense for how much bitcoin is being transacted relative to the block reward. As the halvings continue I can’t imagine how miners can profit without exorbitant transaction fees. Many of the transaction fees in the block I looked at were comparable to wire transfer fees.
Why would anybody want to use bitcoin outside of speculation after nearly all 21mm bitcoin are mined? Why would anybody want to continue mining as well?