An interesting side effect of the recent Bitcoin price crash as reported by exchanges has been the drop in hashrate which has created a glimpse into the future of Bitcoin. A future where transaction fees serve their intended purpose as both an antispam measure and valuable component of the miner reward.

Beginning yesterday there has persistently been a pool of unconfirmed transactions which has at times been in excess of the maximum blocksize and sometimes spiking to several times the maximum blocksize of one megabyte. Bitcoin is all about scarcity. Most commonly people consider the scarcity of the Bitcoin tokens themselves, but the scarcity of space for transactions to be confirmed in blocks is an important emerging scarcity.

At the moment, the minimum transaction fee for a transaction to be relayed across the network and to be confirmed into a block is two cents per kilobyte of data to transmit any arbitrary amount of value using the Bitcoin value reported by popular exchanges at the moment. Some wallet implementations and users successfully manage to send transaction using a fee which is a tenth of that. For this bargain of a price you can send any arbitrary amount of value to anywhere in the world without any regard for national borders. No other method of transmitting value in history has been as cheap or indifferent to distance, and it is frankly unsustainable in the long run.

Mining, the computationally and electrically expensive task of committing transactions to the blockchain has so far been subsidized almost entirely by the issuance of new Bitcoins in coinbase transactions, but time goes on the block reward will continue to halve every four years as miners are weaned off of new coin issuance. Successfully weaning mining operations off of coin issuance and on to transaction fees as a way to sustain their mining operations is critical to the sustained success of Bitcoin. Scarcity in terms of space in blocks for transactions to be confirmed is necessary to cultivate a healthy transaction fee market.

Without the chance of a transaction languishing unconfirmed there's little incentive to pay much of a transaction fee to miners. With that chance a marketplace can flourish and miners can get paid. While this seems to preclude a future where you might go into the local coffee shop and send them a coffee's worth of Bitcoin every morning it offers a more interesting sort of future: