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Offline bytemaster

"High" Transaction Fees
« on: June 09, 2015, 12:34:45 PM »

I have seen quite a few posts concerned about the "high" transaction fees.  I want to provide some perspective to show how these "fees" are actually quite "low".

1.  When dealing with a non-stable crypto-currency the "fee" of $0.04 is the least interesting part of the cost.  And only applies when the two parties are both willing to remain "long" on BTC.  Everyone who is simply using BTC as a payment vehicle rather than a speculative investment sees a fee equal to  2 * spread + volatility risk + 2*market fee + transfer fee.   In other words, the "cost" to transfer 1000 stable dollars via BTC or any other crypto-token is easily 1-3% or about $10 to $30. 

2.  Imagine Lemonade cost just $0.01 in materials.   Imagine there was one lemonade stand that charged $0.02 and could barely cover the cost of the table (aka server).   The creators of this lemonade hope that low prices will help them dominate the beverage market.    Now imagine an Ice Tea vendor opens up down the street with materials that cost $0.01.   This Ice Tea vendor decides to charge $0.20 for a drink and offers its customers an opportunity to earn money by referring friends and coming up with creative advertising.    Customers see an offer for $.20 and compare it to the Coke they are use to paying $0.40 for and conclude "what a deal", "tastes great, less fattening, half price!".   The value of a refreshing drink is easily worth $0.40 and now they can get it for $0.20.   So they switch to Ice Tea and happily pay $0.20.   Ice Tea goes viral and gains the network effect while Lemonade waits and hopes people will discover their service.

The thing to remember is that lower prices isn't always better.  We provide a huge value to our users every time they make a transfer and while they are holding their money on the blockchain.  The customers also benefit from the referral program because it means a large and growing network.    So the customers must ask which they would rather have low transaction fees with poor network effect or high fees with larger network.   Time and again the market has shown that customers are willing to pay more to be part of a larger network.   

 
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Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline profitofthegods

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Re: "High" Transaction Fees
« Reply #1 on: June 09, 2015, 12:55:19 PM »
You are comparing to Bitcoin, but things like BitUSD will never appeal to users of Bitcoin and shouldn't be trying to appeal to Bitcoin users. BitUSD should be an alternative to things like Paypal where the consumer doesn't pay any fee at all.

Why would somebody choose to use BitUSD and pay small but not insignificant fees, when they can use Paypal and pay zero fees?

Is it not possible to re-balance some of the fees towards merchants instead of consumers, eg by finding some way to force merchant checkouts accepting BitAssets to issue a pending transaction which is free to approve or deny and placing all the fees on issuing the transaction and none on approving or denying it, (as I suggested here: https://bitsharestalk.org/index.php/topic,16794.msg214909.html#msg214909)?

Offline bytemaster

Re: "High" Transaction Fees
« Reply #2 on: June 09, 2015, 12:56:33 PM »
You are comparing to Bitcoin, but things like BitUSD will never appeal to users of Bitcoin and shouldn't be trying to appeal to Bitcoin users. BitUSD should be an alternative to things like Paypal where the consumer doesn't pay any fee at all.

Why would somebody choose to use BitUSD and pay small but not insignificant fees, when they can use Paypal and pay zero fees?

Is it not possible to re-balance some of the fees towards merchants instead of consumers, eg by finding some way to force merchant checkouts accepting BitAssets to issue a pending transaction which is free to approve or deny and placing all the fees on issuing the transaction and none on approving or denying it, (as I suggested here: https://bitsharestalk.org/index.php/topic,16794.msg214909.html#msg214909)?

Not mentioned, but we plan on showing the receiver of the funds paying the fee rather than the sender.   So it will work just like paypal.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.


Offline Method-X

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Re: "High" Transaction Fees
« Reply #4 on: June 09, 2015, 01:00:39 PM »
 +5% I can confirm bytemaster understands exactly why referral programs work. People use what others recommend. They don't actively seek out the cheapest system.

Offline cass

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Re: "High" Transaction Fees
« Reply #5 on: June 09, 2015, 01:01:39 PM »
Why would somebody choose to use BitUSD and pay small but not insignificant fees, when they can use Paypal and pay zero fees?

everytime when i've used paypal i had to pay fees.. not on paypal site .. but on merchant site for using PP service - at least 1-3 € per transaction! Themeforst as an example .. but endless more are doing it in this way..
Correct me if i'm wrong here..
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Offline cass

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Re: "High" Transaction Fees
« Reply #6 on: June 09, 2015, 01:02:58 PM »
. People use what others recommend.

Exactly and in parallel it builds trust and increase credibility and reputation ..
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Offline profitofthegods

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Re: "High" Transaction Fees
« Reply #7 on: June 09, 2015, 01:06:24 PM »
Not mentioned, but we plan on showing the receiver of the funds paying the fee rather than the sender.   So it will work just like paypal.

If that means I can buy something online without paying a transaction fee then

 +5% +5% +5% +5% +5%

That's a game-changer to me


Why would somebody choose to use BitUSD and pay small but not insignificant fees, when they can use Paypal and pay zero fees?

paypal 0 fees? that's news to me

Merchants pay fees. Transferring balances between currencies incurs a fee. But spending money when shopping online from a regular account does not incur any fees. Same with debit cards - yes there are high fees, but the consumer never sees anything about them. To the card holder, making a purchase is free.

I have no problem with fees being paid, I just think it should be the merchant and not the consumer who pays them.

Offline EstefanTT

Re: "High" Transaction Fees
« Reply #8 on: June 09, 2015, 01:27:38 PM »
If I understand well, the receiver of the funds will be charged.
What happen if the sender have a free account (0.20$ fee) and the receiver have a life account (O.O4$) ? Who will be paying the fee and which amount.

My concern is that high fees paied by the owner of a  free account might seem unappealing for someone who principally use crypto currency for small purchases online (less than 1$).
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Offline tonyk

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Re: "High" Transaction Fees
« Reply #9 on: June 09, 2015, 03:29:42 PM »
Thinking out loud here.


How about having 1 mo. subscription (maybe in place of the 1y membership if this makes the system to heavy).

Pay $5 monthly subscription, get up to 300 transaction in the next 30 days with NO transaction fee.[Not eligible for referral pay of any kind]

If all 300 transactions are used the fee ends up being $0.016 good deal for them, but most people will end up with probably 10-50 transaction in an average month.

?
Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline betax

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Re: "High" Transaction Fees
« Reply #10 on: June 09, 2015, 06:34:02 PM »
What about micro transactions? could that be a percentage? and bulk transactions, for example I want to send UIA tokens to many users in one transaction?
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Offline Pheonike

Re: "High" Transaction Fees
« Reply #11 on: June 09, 2015, 06:42:43 PM »

How about the Amazon Prime model. Pay a membership fee once per year and never pay a fee anything else that year.

Offline bytemaster

Re: "High" Transaction Fees
« Reply #12 on: June 09, 2015, 06:55:06 PM »

How about the Amazon Prime model. Pay a membership fee once per year and never pay a fee anything else that year.

That would allow you to spam the network for a one time fee.   
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline bytemaster

Re: "High" Transaction Fees
« Reply #13 on: June 09, 2015, 06:55:46 PM »
What about micro transactions? could that be a percentage? and bulk transactions, for example I want to send UIA tokens to many users in one transaction?

Cost is linear with the number of accounts touched; therefore, price is also linear.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline Pheonike

Re: "High" Transaction Fees
« Reply #14 on: June 09, 2015, 07:19:25 PM »

Then how about a decreasing fee based on usage.

001-100 fee 0.20$
201-500 fee 0.15$
501-5000 ...

 

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