Average costs of transactions increased by a factor of 39 for Bitcoin and 76 for Ethereum in the course of only 20 months.3
For simplification we assume to store as few as 100 bytes of information as a text comment with each transaction, so the cost of storing 100 bytes of information represents the transaction price.
Assessing how expensive these transactions are compared to other “data storage solutions” is not easy. It’s not helpful to just compare these costs with the costs of storing 100 bytes of information on a hard disk (currently roughly 0.000000003 USD) because a single HDD is at no time highly secure, highly available and immutable like a blockchain.
The closest alternative to the distributed nature of a blockchain would be a global-scale, distributed database network. There are several possibilities and existing products for such a database. In this article we specifically chose Google Cloud Spanner as an example.4
of writing 100 bytes in Google Cloud Spanner: 0.0002 USD.
Cost of reading 100 bytes 1000 times in Google Cloud Spanner: 0.000015 USD.
The cost of storing only a few bytes of information on the Ethereum or Bitcoin network is currently roughly 2000 to 8000 times higher than using a global-scale, internet-grade database. Additionally, an actual database is faster than a blockchain by multiple orders of magnitude.
It could be argued that comparing a public blockchain to a distributed database is necessarily like comparing apples and oranges. This objection is certainly correct: a blockchain and a distributed database are completely different things built for different purposes, but they are comparable as to the storage of arbitrary information in a structured way.
Additionally, it could be argued that a private / permissioned blockchain would drastically reduce the cost of storing information on a blockchain. This is true (in many cases), but a private blockchain is not suitable for creating an open ecosystem for content.
Furthermore, there are “storage blockchains” like Storj, Sia, Filecoin, MaidSafe, Ethereum Swarm, which are “offering” lower costs, but they come with other constraints and design limitations that make them less favorable for a project like ours
One could argue that the actual transaction costs on the commonly used blockchains are in fact much lower and that the prices that users have to pay are so high because of all the speculative investors that are boosting prices. With this in mind, let’s take a look at the “real” costs of a Bitcoin transaction.
The current Bitcoin network hashrate is about 5 Exa-Hashes/s (17.07.2017); the efficiency of the best publicly available mining hardware ranges between .05 and .098 W power consumption per GH/s. The average daily number of Bitcoin transactions is roughly between 260,000 and 330,000.6
Result: the power consumption of a single Bitcoin transaction is approximately 35 kW/h (ranging from 26 kW/h to 43 kW/h in July 2017 on the Bitcoin network).
Globally, the price per kW/h ranges from 0.01 USD (production cost at a very cheap location) to 0.35 USD (retail price including all infrastructure costs, taxes, fees etc.). So even if we assume a price of 0.01 USD (without any follow-up costs), the minimum cost for a Bitcoin transaction is currently 0.35 USD. But this cost assumption completely ignores other important factors like environmental sustainability, geographic region, infrastructure costs, investments in mining hardware etc. Accordingly, the realistic “intrinsic” costs of a Bitcoin transaction are probably 5-20 times higher (1.80 USD – 7.00 USD).
What do we conclude from this? That Bitcoin and Ethereum are unsuitable for storing information and that they are expensive and slow?
No, the point was to demonstrate the extra charge that (currently) has to be paid for the independence of any third party and the security of a blockchain like Bitcoin or Ethereum.
General conclusions and particular insights for the Content Blockchain Project
- Currently, storing even low amounts information on a blockchain like Bitcoin or Ethereum is indeed expensive in comparison to traditional solutions – probably much too expensive to store hundreds of millions of ISCCs and much too expensive to handle the content microtransactions of the Content Blockchain Project.
- Blockchains are poor databases [regarding storage of large amounts of data]. Using a blockchain for a project should be a well-conceived decision.
The reason we still believe a public blockchain is the right environment for our project is very straight forward:
If you want to built a truly open, secure, reliable and censorship-free content ecosystem, a public blockchain is currently the best way to do it.
Our current goal is to find a (better) blockchain solution that is suitable for content microtransactions and ISCC registration in an economic sense. We are investigating towards creating a new blockchain specially for ISCC and content transactions in order to make transactions affordable in the long run.