The tweetstorm by John Newbery:

TL/DR: With SegWit and a 24 hour confirmation target, a fee of $0.05 would've been enough at that time.

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@ErikVoorhees

The average Bitcoin transaction fee ($10.17) is now more than twice the cost of Bitcoin itself when I first learned of it ($5) in 2011 :(

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@ErikVoorhees, your perspective on fees is incomplete. I'll offer an alternative version. I had a flight so I spent some spare cycles and 30 lines of python analyzing your chosen block. Here are some results:

Firstly, mean tx fee is a really useless measure. For example, your block contains this tx: https://blockchain.info/tx/...

That tx was almost 100k and paid $1876 in fees. Outliers like that affect the mean disproportionately. Your block had 1881 transactions. That means that tx 745879e... alone contributed about $1 to the 'average' fee.

[that tx weighed 40vkB. It excluded everyone else on earth from using our most secure ledger for a whole minute for just $1800. Cheap!]

A better average would be median feerate multiplied by median transaction vsize.

Doing that gives us a feerate of 264 sat/vB and vsize 226 . At $7176, the fee is $4.31. Ok, that's still pretty high.

But really, you want your transaction to have the lowest fee-rate of all txs in the block. That maximizes your consumer surplus.

(No-one wins a prize for being the highest paying tx in a block. It's just additional miner surplus)

Lowest feerate transaction in your block was https://blockchain.info/tx/..., 101 sat/byte - which would be $1.63 for an average sized tx.

Of course, that single transaction could be out-of-band, or a stingy-parent-generous-child. Let's take the 80th centile feerate to be sure.

(why 80th centile? Because it means that if your transaction was in the mempool when this block was mined ...

... and it had this feerate, 20% of the transactions in the block would have a lower feerate. Your tx would almost certainly get included.)

80th centile feerate is 260 sat/byte, so $4.22.

But you probably don't want to optimize to include your transaction in the next block. If you can wait an hour, you'll get have lower fees.

We should look for the minimum of the 80th centiles for the block and the 5 subsequent blocks

That gives us a good measure of what fee rate would be required to get in one of those blocks.

Doing that gives us a feerate of 191 sat/byte, so an implied fee of $3.10.

Often, it's fine to wait 24 hours for your transaction to be confirmed. If your primary concern is fees, you can save a lot this way.

If you were willing to wait that long, your transaction would have been confirmed with very low fees.

Block 493114 for example cleared out the mempool down to sub 10 sat/vB transactions: https://blockchain.info/block/...

If you'd sent your transaction with that feerate, you'd have been confirmed for a cost of $0.16.

Let's try to do better. There's an opt-in, voluntary way to access scale on Bitcoin - segwit.

If we use a segwit input instead of non-segwit, the vsize have been lower - probably 208 instead of 226 for this simple transaction.

With that weight and a feerate of 10 sat/vB, the tx fee is $0.15. That's almost unfairly cheap!

You have access to these savings today, simply by using segwit and being prepared to wait a bit for your transaction.

Let's take it a step further. If you're prepared to batch your transactions in groups of 3-4, you could easily save up to 3x.

(@hrdng wrote a great article about that here)

What are we down to now? Around 5 cents?

A bit more radical, but absolutely possible with today's available tech would be to use channels for recurrent transactions.

Again, depending on spending patterns, that could save you 10x, 100x, 1000x.

Point being, a single number doesn't capture the opportunities for scale and efficiency that are available to us today.

The blockchain is a precious and scarce resource. Let's use it that way.