How Does a Cryptocurrency’s Block Size Limit Affect the Competition for Transaction Fees?
A strict block size limit restricts the total number of transactions that can be included in a single block. When demand for block space exceeds this supply, it creates intense competition among users.
This scarcity drives up transaction fees, as users must bid higher to ensure their transaction is included by a miner. A larger block size limit would generally reduce this competition and lower fees.
Glossar
Competition
Market ⎊ Competition in the cryptocurrency and derivatives markets refers to the rivalry among exchanges, protocols, and market makers for liquidity, trading volume, and user base.
Small Block Size
Constraint ⎊ Small Block Size represents a deliberate protocol constraint that limits the maximum amount of transaction data permitted within a single block, directly restricting the network's raw transaction throughput.
Block Size
Capacity ⎊ The block size parameter fundamentally dictates the maximum data volume a single block can hold on a blockchain network.
Block Size Limit
Constraint ⎊ Block size limit, within cryptocurrency networks, fundamentally dictates the maximum data volume permitted within a single block added to the blockchain.