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> What happens when the transfer fees are orders of magnitude more than the value being transferred?

you're missing the demand curve. As fees increase, transaction volumes go down, until there's an equilibrium. The opposite occurs as well: if transaction volume dries up, the demand for block space will decrease and eventually the fees will drop.



And you are forgetting the whole "securing bitcoin" part.

If bitcoin was to be the dominant currency, it needs a lot of mining to secure the network, otherwise attacks would be very appealing. But a lot of mining means a high transaction fee.




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