Strategical vision of fees for Faircoin 2

  • 19/03/2017 a las 15:52 #13000
    Imagen de perfil de Enric DuranEnric Duran
    Jefe de claves

     

    Strategical vision of fees for Faircoin 2

    A proposal to make faircoin the fairer currency also at fees level

    The fees model on faircoin, have different weakness that should be improved.

    Fees that promotes economic inequality

    The general fees distribution in the cryptocurrency world, is aligned with a specific politics of economy. As the fees are related to the weight of each transaction and not to their economic value, this creates different unexpected economic results.

    This model of fees is clearly inequal from the economic perspective, because there is what is called an indirect tax, which tax everyone independently of the value of their transactions and holdings.

    Therefore is a tax model that hurts the 99% more poorer and benefit the 1% more richer.

    For example an action of paying a small quantity to many members of same community, will pay more fees than an unique milionary transfer between two addresses.

    With Faircoin 2, the costs of running the network is part of a solidarity action, as the CVN joins for being aligned with the goal of the faircoop ecosystem and not for a greedy reason; and their action should be supported. But this not means that the fees just should grow meanwhile stays in the same bad economic model that has been until now.

    Thats why we should take an approach of supporting the costs of the CVN but not but making growth the fees in a model that is opposite to the faircoop values.

    Fees that desincentive the exchange and the microtransactions

    In general the social currencies avoid to add fees on the transactions, because this is opposite to their goal to make the currency to circulate between the participants. When they add fees they do based in holdings or based in a periodic contribution…

    On a global economy project we have also the issue of the inequality on the daily costs. So a fee that can feel right in the european occidental world can be perceived as expensive and create a real problem in daily exchanges in the poorest areas. As we can not control where is used the currency, there is no way to adapt the fees of transactions to the areas.

    In this sense, we should avoid to make growth the fees for an economic reason, and just keep them for the antispam needs.

    Fees that creates an usability issue

    The presence of fees on wallets, exchange and payments services creates an usability problem

    for the users and the services itself. On the case of OCP for instance, we want to have any user a real faircoin address and any movement become a real onchain transaction for appearing on the blockchain and using it as a transparency and proof of payment, but at same time, the fees creates more complicated numbers on the transactions like 999.99 that finally corrupts the accounting.

    We can do still offchains transactions like currently inside fairpay without fee, but then we lost the public transparency and decentralizacion of the blockchain. In this sense not makes sense to move fairpay to onchain transactions until this can happen without fees.

    When somones move faircoins preparing a payment to somewhere else, should think on move the cost of the fees too, and sometimes it not works, making more complicated the management.

    On the android wallet, when you send all the value that was in your wallet, the fee is discounted from the transaction, and this makes that the money send and the money received dont match.

    On the electrum transactions inside the same wallet (case of OCP for instance), the fee is discounted from the transaction too… so the receiver have a 0.001 less.

    In general when you use a payment processor and need to pay an specific amount could have issues because you need to discount the fee for reach the exact amount on the payment. This already happened when using the full amount of android wallet to pay on fairpay.

    Long term goal should be to avoid to have fees for the transactions, at least for reputated users.

    Fees that not help at communication level

    Now for the faircoin 2 launch would be a real communicative fail, to say, we improved the blockchain technology for the blockchain… and now all the transactions will pay more!

    Technological improvement should be connected to pay less, not more on the fee system.

    At the moment that we are able to provide onchain transactions without fees, to at least part of the users, this will be an important achievement at level of communication.

    A plan to keep shorterm the fees low and prepare a future without fees

    – Short term

    Right now the most important is to launch faircoin 2, so not any short term development can be done for avoinding fees. Then we should just keep the same fees that we have today which has been shown as useful for the only goal that they really have: avoid spam.

    For covering the costs of the CVN, I propose to create a voluntary fund which would be backed by faircoop to cover it if voluntary is not enough.

    The methodology that makes more sense from the faircoop ecosystem point of view, is to make the CVNs to publish their monthly costs in OCP. ( 100% of electricity cost of the device involved, a % of the internet cost a % of the amortization of device)

    Raise the funds there and then distribute in a transparent way based in the needs of each CVN, we should put a max for CVN that I suggest to keep in 200 faircoins monthly.

    The affectation to faircoop budget would not be more than 4000 faircoins by month. Which is not any issue to manage. Much, much better than making more expensive the fees for sure.

    – Long Term

    I propose to look on different options for avoiding spam risks.

    – explore on no fee by default with an automatized system to create fees any moment that an address is detected as spamming (because many small transactions in few time, and so…). So this method would be great because trust by default like faircoop values does.

    – develop a reputation based system, for which based in different automatized checkings, an addreess can be excempt of the fee. This method needs to create the trust for avoiding fees, still could create a great adventage for the real use of faircoin.

  • 22/03/2017 a las 13:51 #13011
    Imagen de perfil de Thomas KönigThomas König
    Participante

    A proposal to keep the already decided fee structure in FairCoin2

    Blockchain space is very valuable

    All transactions take space on many hard drives because the whole blockchain is stored on every node in the network and also needs to be transferred there. That is why bigger (in size) transactions should pay more fees than smaller. In contrast to Bitcoin we decided to use a equal mandatory transaction fee for everybody instead of creating a so called fee market, in which the rich pay more fees so that their transactions are processed quicker than others. In FairCoin2 we decided that everybody contributes to the blockchain with the same amount of fees per transaction size. I cannot think of any fairer system. Also keep in mind that blockchains are used for way more than just to transfer value. There are many more use cases that rely on such a distributed, immutable database. These kind of profitable applications also use space and they must not do that for free. Everybody can access the FairCoin2 blockchain without any restriction therefore we must have a simple way to enforce a responsible use of the limited blockchain resources. Fees are not taxes! It’s a tiny payment for using this common good.

    Micro-transactions

    If the value of a transaction is very small, let’s say as low as the transaction fee or only several times higher we call that a micro-transaction or a micro-payment. The new FairCoin blockchain was designed to be the base for further development. This also includes a micro-payment framework which I plan to include in the FairChains project. So we must leave out the micro-transactions aspect out of the discussion because FairCoin2 core was not designed to handle those well.

    Keep it simple

    We leave the fees to the CVN operators (who complete a very responsible and demanding task). This keeps the system simple, maintainable and thus less error prone and the system is easy to understand and track for everybody. Because the decided solution is human and consensus based rather then a complex technological system it emphasizes the values and vision of collaboration and democratic approach in FairCoin.

    The fee schema of FairCoin1 was inherited from the person that initially started it in March 2014. He did not have a clue about most of the things he was doing. Setting the fee to 0.001 FAIR (0,00005 €) was not the result of a well though out plan but rather blindly setting the value the closest to zero as he could make it. Running a blockchain with zero transaction fee is best described as irresponsibility. The reason this worked so far is the fact that FairCoin still lives in the shadow and is not exposed to the different forces. If we plan to prepare for broad adoption the fee structure must follow.

    The goal is zero fees for transaction of small value

    In the future we should create a framework where we don’t collect any fees at all. As mentioned earlier I’ve already worked to create a draft. Such a free system needs a strong and healthy ground which FairCoin2 aims to be – including its fee structure.

    Conclusion

    It is important to understand that we agreed on the fee for a standard transaction of about 0,00113 €. See, that’s is nothing! Furthermore be aware that the mandatory fee must be – and luckily – can be adjusted as the market value of FairCoin changes. So if the value rises we decrease the fee and vice versa. This makes spamming the blockchain expensive and the normal usage inexpensive.

  • 23/03/2017 a las 20:44 #13016
    Imagen de perfil de Enric DuranEnric Duran
    Jefe de claves

    It is fine that the fees are proportional to the size of the transaction. Thats not my issue.

    The main concern I has expressed is that there is not a clear justification for raising the fees x23 times (2300% ) just for prevent a problem that still not exists.

    Has been not any relation between low fees and loading the blockchain with unuseful sizes, until now. Ok, theorically could happen but is not the reality we are facing, as still more than half of the blocks are empty today.

    We have dinamically the capacity to adjust the fees in few hours with the admin group. So if there is any attach, we can do it in few hours. Why to push the fees as default x23, if we have the dinamically capacity to adapt.

    As we are going to do improvements to the fees structure in following developments after faircoin 2, could happen that we are faster on this, that the blockchain to be more crowded, or not.. just we dont know it, and there is not the need to make big changes that the reality has not demanded.

    Otherwise, there is not any documentation that justify why to push the fees to 0.0013 euros and not 0.00015 or 0.00065 for instance. It seems a quite random decision, and as such, not proporcional to the needs we have.

    If until we have better methodologies to defend us from spam, and unuseful transactions, we want to raise something the fees is fine, but could we rethink the agreement to a number not so big?

    I could agree on a middle point between the two proposals, like 0.005 fair a single transaction. So 5 times more than today 0.00025 eur at current price.

  • 23/03/2017 a las 20:53 #13017
    Imagen de perfil de Thomas KönigThomas König
    Participante

    How can you say we are raising the fees 23x??? This is not true. What we are going to do is set the value from a complete nonsense value of zero to a reasonable value! Please, stop advertising that we are raising the fees! That is not fair!

  • 23/03/2017 a las 20:59 #13018
    Imagen de perfil de Enric DuranEnric Duran
    Jefe de claves

    It is just what the numbers says. nothing to advertise, just did the calculations in a table…

    which is the reason that determines what is reasonable, then?

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