"High" Transaction Fees

[Method-X]

if technical possible we should introduce "relativ" orders.

what does i mean?

i could place an order with the properties "buy bitUSD 0.2% above the feed price"
the market maker just needs to place his order 1 time and not multiple times.

  I'm pretty sure this was talked about previously but there is a technical issue holding its implementation back.

[Shentist]

if technical possible we should introduce "relativ" orders.

what does i mean?

i could place an order with the properties "buy bitUSD 0.2% above the feed price"
the market maker just needs to place his order 1 time and not multiple times.

[starspirit]

I'm still wondering how this affects market transactions. Efficient markets must accommodate micro transactions. What would this look like for buy and sell orders? What would be the impact on market-makers?

And how do we deal with this...

How do you buy anything with a credit or debit card? They do the same. When a merchant sets up their systems to accept Bitshares they will know that there is a fee taken off what they receive, just the same as if they were accepting cards or paypal or pretty much anything else.

Except that the fee will be different depending on the 'class' of user.

Yeah I also forgot to mention microloans, microinvesting, microtrading in developing nations.

Depending on the avg trade size 20 cents can be better or worse for traders.  Typically Bitcoin exchanges charge 0.2% on each side and give a big discount for the maker.  That means your avg trade size has to be $100 to equal the trading costs of an avg. Bitcoin exchange.  At least the BitShares platform won't have counterparty risk.

Yeah but its even worse for market-makers. On external exchanges, there is zero cost for setting, cancelling and moving orders, only for fills. In comparison, based on my current understanding, moving a single pair of bid/offer spread orders 100 times per day (to adjust to movements in the fair price of the asset) would cost $16 per day (net of cash backs if you're a lifetime member). I'm concerned about the economics of this, especially for privatised bitAsset issuers that wish to support their tokens.

I also need to clarify what happens if a market-maker's wall is chewed at by lots of small orders (usually the case with market-making). Does that mean the market-maker experiences a fixed cost for each small fill? If so, this would give the market-maker a lot less control over cost than on external exchanges, and make it even less economic.

Since it's price takers that have the control over their trade size, and market-makers are providing the efficiency in the market, would it be better to always put the combined fee on the price-taker?

Also, allowing market-makers to place relative orders (that do not need constant changing on the network) would help a lot, though I know there have been past issues raised around the technical implementation of this.

As another consideration, could the following be considered:
- setting a percentage fee on market transactions, consistent with other exchanges
- setting a lower fee on market transactions compared to other token transfers

Apologies if I am misunderstanding the intended application of these higher fees in market exchanges, but the efficient operation of the markets is critical to the entire success of bitShares.

[Xeldal's comments also reflect the same concerns]

[Xeldal]

I'm still wondering how this affects market transactions. Efficient markets must accommodate micro transactions. What would this look like for buy and sell orders? What would be the impact on market-makers?

Im interested in this also.  As far as I can tell, it would be outrageously expensive.  Its already expensive even at 0.1 BTS.  You'd spend $40 easy on each market you tried to make, using the same strategies. You'd have to adopt a different, much more conservative approach.  Spreads would widen, liquidity would be hampered.  Without either relative orders or auto-routing its not looking very attractive.

Could orders be a different transactions class with filled orders taking the fee?

What happens when there are smart contracts, is every instruction going to have a flat $0.20 fee?

I gather that there is a separate fee, for example; to send encrypted messages; defined by the number of bytes, yes?  And instructions to create a UIA have seperate fees as well.  So separate classes of transactions/instructions are common.

And how do we deal with this...

How do you buy anything with a credit or debit card? They do the same. When a merchant sets up their systems to accept Bitshares they will know that there is a fee taken off what they receive, just the same as if they were accepting cards or paypal or pretty much anything else.

Except that the fee will be different depending on the 'class' of user.

I think the fee will be the same, always $0.20 paid by the sender, regardless of member class.  Paid members simply get a portion of that back.

Yeah I also forgot to mention microloans, microinvesting, microtrading in developing nations.

Depending on the avg trade size 20 cents can be better or worse for traders.  Typically Bitcoin exchanges charge 0.2% on each side and give a big discount for the maker.  That means your avg trade size has to be $100 to equal the trading costs of an avg. Bitcoin exchange.  At least the BitShares platform won't have counterparty risk. 

The fee on centralized exchanges is only for completed trades.  BitShares charges a fee just to place the order, and then again to cancel it..  In a typical market you might change your order 500 to 1000 times in a day.

[merivercap]

I'm still wondering how this affects market transactions. Efficient markets must accommodate micro transactions. What would this look like for buy and sell orders? What would be the impact on market-makers?

And how do we deal with this...

How do you buy anything with a credit or debit card? They do the same. When a merchant sets up their systems to accept Bitshares they will know that there is a fee taken off what they receive, just the same as if they were accepting cards or paypal or pretty much anything else.

Except that the fee will be different depending on the 'class' of user.

Yeah I also forgot to mention microloans, microinvesting, microtrading in developing nations.

Depending on the avg trade size 20 cents can be better or worse for traders.  Typically Bitcoin exchanges charge 0.2% on each side and give a big discount for the maker.  That means your avg trade size has to be $100 to equal the trading costs of an avg. Bitcoin exchange.  At least the BitShares platform won't have counterparty risk. 

[starspirit]

I'm still wondering how this affects market transactions. Efficient markets must accommodate micro transactions. What would this look like for buy and sell orders? What would be the impact on market-makers?

And how do we deal with this...

How do you buy anything with a credit or debit card? They do the same. When a merchant sets up their systems to accept Bitshares they will know that there is a fee taken off what they receive, just the same as if they were accepting cards or paypal or pretty much anything else.

Except that the fee will be different depending on the 'class' of user.

My understanding is that the fee itself is not different.  The difference is where the fee goes.  Lifetime members receive 80% of the fees they pay back as loyalty rewards, similar to how many credit card reward programs operate.  Subscription members get 50% of their fees, and basic users don't get anything back.  Subscription and basic have some of their fees diverted to their recruiters, and everything else goes to back to the network pool out of circulation.

Got it, thanks Trog.
Now still the question on efficient operation of markets.....

[Troglodactyl]

I'm still wondering how this affects market transactions. Efficient markets must accommodate micro transactions. What would this look like for buy and sell orders? What would be the impact on market-makers?

And how do we deal with this...

How do you buy anything with a credit or debit card? They do the same. When a merchant sets up their systems to accept Bitshares they will know that there is a fee taken off what they receive, just the same as if they were accepting cards or paypal or pretty much anything else.

Except that the fee will be different depending on the 'class' of user.

My understanding is that the fee itself is not different.  The difference is where the fee goes.  Lifetime members receive 80% of the fees they pay back as loyalty rewards, similar to how many credit card reward programs operate.  Subscription members get 50% of their fees, and basic users don't get anything back.  Subscription and basic have some of their fees diverted to their recruiters, and everything else goes to back to the network pool out of circulation.

[merivercap]

Has NOBODY here ever used Paypal??!! You guys who just use crypto are spoiled!

https://www.paypal.com/al/cgi-bin/webscr?cmd=_display-receiving-fees-outside

The transaction fees are $0.30 + % depending on if you are using your paypal balance or your credit card etc.

Paypal will allow you to eat the transaction charge if it's going to a friend or family member.. but if its going to a merchant for a product or service.. the only choice is to pass it on to the merchant.

I could have bought a house with the fees I have paid to paypal over the years.. merchants expect the same.. BitShares even in its highest fee is still +33% LESS!

I think if this whole thing really becomes an issue.. I think a similar approach to having 'Merchant' user account class could help direct the fees with more control for the end user.

Just a thought.

Paypal makes money from service fees similar to the traditional banking/credit card system.  For person to person transactions there are no fees.  Most non-merchant users did not notice any fees transferring money back and forth between each other.  As you mentioned there was some change later in its history when Paypal started asking users if the transaction was to 'friends/family' or for 'products/services'.  They would charge for the latter, but not the former.   It's not that the sender 'eats' the transaction charge.  Paypal just does not charge anything.

[starspirit]

I'm still wondering how this affects market transactions. Efficient markets must accommodate micro transactions. What would this look like for buy and sell orders? What would be the impact on market-makers?

And how do we deal with this...

How do you buy anything with a credit or debit card? They do the same. When a merchant sets up their systems to accept Bitshares they will know that there is a fee taken off what they receive, just the same as if they were accepting cards or paypal or pretty much anything else.

Except that the fee will be different depending on the 'class' of user.

[BunkerChainLabs-DataSecurityNode]

Has NOBODY here ever used Paypal??!! You guys who just use crypto are spoiled!

https://www.paypal.com/al/cgi-bin/webscr?cmd=_display-receiving-fees-outside

The transaction fees are $0.30 + % depending on if you are using your paypal balance or your credit card etc.

Paypal will allow you to eat the transaction charge if it's going to a friend or family member.. but if its going to a merchant for a product or service.. the only choice is to pass it on to the merchant.

I could have bought a house with the fees I have paid to paypal over the years.. merchants expect the same.. BitShares even in its highest fee is still +33% LESS!

I think if this whole thing really becomes an issue.. I think a similar approach to having 'Merchant' user account class could help direct the fees with more control for the end user.

Just a thought.

[merivercap]

Ok... lets see some estimates:  how many total "micropayments" need to be made before the cost of implementing support for them is covered?

What does the cost of implementing support mean?

I'm fine with not being focused too much on low transaction fees in general as a business.   However for micropayments I wouldn't look too much on the cost side, but the value side of a network effect. 

1) Global developing population is: ~6 Billion out of 7 Billion Total World Population (Over 75% have mobile phone access)
http://www.prb.org/Publications/Datasheets/2012/world-population-data-sheet/fact-sheet-world-population.aspx
http://www.pcmag.com/article2/0,2817,2407335,00.asp

2) # of Online Content Generators: As of April, Tumblr has 227 million blog accounts
http://www.statista.com/statistics/256235/total-cumulative-number-of-tumblr-blogs/

3) Total iTunes downloads since inception to 2013: 25 billion
http://www.digitalmusicnews.com/permalink/2013/02/06/cannibalization
"According to IFPI stats, paid downloads traditionally represent about 1/20th of broader downloads (the rest being illegally obtained). Which means there at least half-a-trillion downloads waiting for or entering a cloud-enabled reincarnation"

Also there is a case to be made that a 'free' strategy and minimizing friction as low as possible can work very well.  Facebook, LinkedIn, Twitter, Pinterest, Paypal etc were essentially free in their growth phases. 

Anyways I think the 20 cent general fee is fine, but it would be great to lower transaction fees (maybe 1 cent?)  for anything less than $1 (or other small amount) would accommodate a lot of attractive sectors.

[Pheonike]

Its just like here in the US.  When you use a debit card you pay the fee. When you use a credit card the merchant pays the fee.

[monsterer]

How do you buy anything with a credit or debit card? They do the same. When a merchant sets up their systems to accept Bitshares they will know that there is a fee taken off what they receive, just the same as if they were accepting cards or paypal or pretty much anything else.

Except that the fee will be different depending on the 'class' of user.

[tonyk]

 I am starting to think that this system might actually work...

The merchant just knows that when he post "gadget A" for $2.23 bitUSD he will actually be receiving $2.03. So it is easy for him to adjust the price the other way around - I want 2.05bitUSD for this item so I must post 2.25 bitUSD as a price.[what I need net plus the max fee]

 It is trivial for the client of the buyer to convert the 'Send $2.23 at the highest possible fee' to the amount needed to be send with the actual fee for this send-from account. In other words, in the client the default sent amount will be "Inputted Amount - max fee + actual fee"

[edit]
A step further for ease of transition will be the 'sender's' client to even display - "Send $2.23;  Cash-back/Refund $0.16".

[profitofthegods]

In the user interface, when the user says they want to send $100, the transaction that it will create will be a send $99 and pay $1 fee.  The receiver will see "receive $100 and pay $1".   

How do you pay for anything at a store if you always send less than the amount you specify?

However, if you provide an option to do both, you will confuse users. IMO better to stick to the original method.

How do you buy anything with a credit or debit card? They do the same. When a merchant sets up their systems to accept Bitshares they will know that there is a fee taken off what they receive, just the same as if they were accepting cards or paypal or pretty much anything else.