> So ability to charge transaction fees is an incentive to keep the block size limit at 1MB?
Yes. And the reason that may be important is for the long term viability of bitcoin.
In order for bitcoin to work, you need a lot of miners spending a lot of electricity to run these hash calculations. That's what will actually ensure the transaction makes it into the blockchain. The incentive for the miner to do so, currently, is that they will "discover" their own bitcoins while doing so, essentially paying themselves for the work.
However, the rewards are decreasing over time and will eventually phase out completely. The long term vision of bitcoin had been for users to specify a transaction fee when they try to buy/sell something (taken from the amount they're sending), which the miners will earn if they figure out the hash.
For now, since there's still new blocks being discovered, the network has kinda been working with minimal transaction fees. But if people will never be willing to pay transaction fees, there's no long term viability here.
Yes. And the reason that may be important is for the long term viability of bitcoin.
In order for bitcoin to work, you need a lot of miners spending a lot of electricity to run these hash calculations. That's what will actually ensure the transaction makes it into the blockchain. The incentive for the miner to do so, currently, is that they will "discover" their own bitcoins while doing so, essentially paying themselves for the work.
However, the rewards are decreasing over time and will eventually phase out completely. The long term vision of bitcoin had been for users to specify a transaction fee when they try to buy/sell something (taken from the amount they're sending), which the miners will earn if they figure out the hash.
For now, since there's still new blocks being discovered, the network has kinda been working with minimal transaction fees. But if people will never be willing to pay transaction fees, there's no long term viability here.