Help keep transfer fees to save the referral system and help Bitshares grow!

[jakub]

Well I'll take it that you concede to a degree traders may be sensitive to transfer fees, given Yunbi's actions and current exchange standards.

I don't know about Yunbi in particular but to cover their costs centralized exchanges need to charge their customers at some stage, they usually do it when you try to withdraw your funds.
So their business model is not directly comparable to ours as we don't have the withdrawal stage.

Traders definitely do much more trading operations than transfers so in that sense they don't' really care about transfer fees too much as it is not a significant part of their business.

My point is that we need to charge fees on something or have inflation.
Having high transfer fees does the least damage, as the only people who are unhappy about it are those who are the least important to us at this stage. So we can afford to hurt them and get away with it.

We've already had the discussion where lowering transfer fees doesn't mean necessarily mean less income.

If only 10% of Chinese users will pay $0.2 but 80% will pay $0.04 then $0.4 will earn the blockchain a lot more money. Also when the fee is in the 'acceptable range' people might make a lot more transfers, more frequently and so end up spending a similar amount as a higher fee would have generated anyway.

Well, this might be a valid argument. There must be a point where the optimal fee value is but to figure it out we need to know the price sensitivity curve. As BM rightly said a few days ago, in order to find out the price sensitivity of our users we need to experience high fees for some time and then lower them and observe how the transaction volume changes. I am not aware of a different way to do it.

[Empirical1.2]

I'm using Poloniex at the moment and they don't charge anything extra, I don't know what the market accepted rate is. But if they're not charging it's because customers are sensitive to it and they make their money elsewhere.

We have to somehow pay for witnesses and worker proposals.
We can finance them by:
(a) Transfer fees
(b) Trading fees
(c) Other fees (e.g. new accounts, new assets, voting etc)
(d) Inflation
What do you choose?

This how I suggest to finance our costs:
For the initial stage (i.e. now, when liquidity is an issue)
(a) 60%
(b) 20%
(c) 20%
(d) only if we have no other choice

For the production stage (i.e. when liquidity is high)
(a) 10%
(b) 80%
(c) 10%
(d) never

Well I'll take it that you concede to a degree traders may be sensitive to transfer fees, given Yunbi's actions and current exchange standards.

Regards paying for witnesses and worker proposals.

I think many worker proposals like the prediction market should be crowd-funded & also possibly need to be run separately (Similar to Augur on Ethereum.) 

We've already had the discussion where lowering transfer fees doesn't mean necessarily mean less income.

If only 10% of Chinese users will pay $0.2 but 80% will pay $0.04 then $0.4 will earn the blockchain a lot more money. Also when the fee is in the 'acceptable range' people might make a lot more transfers, more frequently and so end up spending a similar amount as a higher fee would have generated anyway.

Also you can see Yunbi lowered the withdrawal fee, so obviously they feel they make more $ per customer & attract more customers by keeping the transfer fee as low as possible. So crypto-exchange comparable trading fees plus lower transfer fees could equal higher income.

So to finance costs, I suggest following the exchange model who presumably make the vast majority of their revenue from filled order fees.

I would also be in favour of adding anything that's simple, low cost and generates high transactions. eg. Blockchain dice. (Which I know is an issue.)

Edit: At the early stages while liquidity is an issue like you mentioned, I still think lower transfer fees could potentially generate comparable income as higher transfer fees for reasons stated above.

[jakub]

I'm using Poloniex at the moment and they don't charge anything extra, I don't know what the market accepted rate is. But if they're not charging it's because customers are sensitive to it and they make their money elsewhere.

We have to somehow pay for witnesses and worker proposals.
We can finance them by:
(a) Transfer fees
(b) Trading fees
(c) Other fees (e.g. new accounts, new assets, voting etc)
(d) Inflation
What do you choose?

This how I suggest to finance our costs:
For the initial stage (i.e. now, when liquidity is an issue)
(a) 60%
(b) 20%
(c) 20%
(d) only if we have no other choice

For the production stage (i.e. when liquidity is high)
(a) 10%
(b) 80%
(c) 10%
(d) never

[Empirical1.2]

These are our users listed by priority:
(1) Traders - not sensitive to transfer fees, might be sensitive to trading fees
(2) Merchants - not sensitive to transfer fees, very sensitive to the referral program working (and the referral program to work requires a perceivable difference between pay-as-you-go fees and LTM fees)
(3) Consumers (i.e. normal users) - sensitive to transfer fees and the referral program working

Right now we are in phase (1) and maybe a bit of (2).

Transfer fees are not worth discussing until we are in phase (3), now it is just an unnecessary distraction and referral program killer.
And in phase (3) we will be in a position to actually lower the transfer fees as the revenue will start coming from trading.

'(1) Traders - not sensitive to transfer fees, might be sensitive to trading fees'

How much does the average crypto exchange charge you to deposit, withdraw and move funds within their exchange?

I'm using Poloniex at the moment and they don't charge anything extra, I don't know what the market accepted rate is. But if the standard is not to charge it's because customers are sensitive to it and they make their money elsewhere.

In fact it seems businesses know traders are so sensitive about transfer fees that Yunbi made an effort to lower theirs...

• Lowered the withdrawal fee to 10 BTS!

[jakub]

Let's get our priorities right.

This is our user-base listed by priority:
(1) Traders - not sensitive to transfer fees, might be sensitive to trading fees
(2) Merchants - not sensitive to transfer fees, very sensitive to the referral program working (and for the referral program to work a perceivable difference between pay-as-you-go fees and LTM fees is required)
(3) Consumers (i.e. normal users) - sensitive to transfer fees (especially in countries like China) but also sensitive to the referral program working

Right now we are in phase (1) and maybe a bit of (2).

Transfer fees are not worth discussing until we are in phase (3), now it is just an unnecessary distraction and referral program killer.
And in phase (3) we will actually be in a position to lower transfer fees as the revenue will start coming from trading fees.

[Xeldal]

...
If BitShares doesn't yet have any useful products and services then the potential is limited. The solution for the referral programme is to fast track a product (if you can't artificially stimulate BitAsset liquidity)  But charging high transfer fees won't aid adoption or the referral programme imo.


REFERRER: Hey dude do you wanna join BitShares?

DUDE: Is BitShares a crypto-currency like Bitcoin that the whole world may end up using like a digital gold?

REFERRER: No. BitShares is a crypto-company! 

DUDE. OK? What's the point?

REFERRER: Well we're able to use profits and shareholder directed dilution to fund development of awesome decentralised products and services!

DUDE: Cool you mean like Gambling and Silk Road, all on a blockchain!? 

REFERRER: Well unfortunately, BitShares decentralization is just a thin veil so we can't actually offer those..

If you are suggesting that the big idea is to skirt regulations by hiding behind the thin veil of decentralization, that will come to a quick end.

I would recommend NXT or Augur on Etherum for that. What we do offer though is a decentralised exchange and BitAssets, so you can hold currencies like BitUSD on the blockchain!

DUDE: Cool, I'll take a 1000 BitUSD!

REFERRER: Whoa, steady on there buddy, our markets aren't actually liquid or very active yet.

DUDE: Ok so what can I do on this BitShares?
...

Thats a pretty good summary.  There isn't yet a functional product and the low hanging home run options for whatever reason are off limits.  Its pretty sad, given the core ideal of bitshares is supposedly immutable unstopable freedom and voluntary choice, free market solutions etc.   yet we're not allowed to do all sorts of peaceful, voluntary, valuable exchanges because we're scared someones ignorance will paint us in a poor light.   Better that someone shines a light at all on bitshares lest it gets even darker around here. 

That discussions probably best for another thread though.

[Tuck Fheman]

At this stage we need traders and trading bots, not small users who will just send a token back and forth a few times and get bored after a week.
Those small users will not bring liquidity to SmartCoins.

Nor will a bunch of whales sitting on their stacks waiting to cash out one day.

[Empirical1.2]

Yeah. I know that's why in the intro I said we need to fast track a product/service that makes BitShares more useful given that the markets are still not very active.

I think a cheaper fee is better at the moment. You will get more people into the system, experimenting with what little is on offer at the moment. It also means you can give out free samples to try it out, whereas atm 100 BTS just covers two transactions.

This whole transaction fee debate is doing two things:
(1) distracting us from the real problem (i.e. how to make SmartCoins useful)
(2) undermining the referral program

At this stage we need traders and trading bots, not small users who will just send a token back and forth a few times and get bored after a week.
Those small users will not bring liquidity to SmartCoins. Traders will.

I agree to an extent for the Western market that whether the fee is $0.05 or $0.2 the real problem is how to make Smartcoins useful and until we have an immediately useful product and service neither will be particularly successful.

However I think we've gotten a lot of feed back that a $0.2 fee will be a barrier to adoption in China. (Previously our biggest market and the market currently driving the Bitcoin rally.)

So I lean toward trying lower fees, which may be sufficient to make the referral programme lucrative in China and when we have products and services we can charge higher for those which will make it more lucrative globally.

[jakub]

Yeah. I know that's why in the intro I said we need to fast track a product/service that makes BitShares more useful given that the markets are still not very active.

I think a cheaper fee is better at the moment. You will get more people into the system, experimenting with what little is on offer at the moment. It also means you can give out free samples to try it out, whereas atm 100 BTS just covers two transactions.

This whole transaction fee debate is doing two things:
(1) distracting us from the real problem (i.e. how to make SmartCoins useful)
(2) undermining the referral program

At this stage we need traders and trading bots, not small users who will just send a token back and forth a few times and get bored after a week.
Those small users will not bring liquidity to SmartCoins. Traders will.

[Empirical1.2]

REFERRER: Well if you join today and go through the whole process of buying BitShares we'll let you send these currently useless tokens back and forth for $0.2

DUDE: Wow! Golly, golly gosh! Only $0.2 to send useless tokens back and forth! I can't wait to tell my friends about BitShares!

@Empirical1.2, if the tokens are useless will your DUDE be more happy to send them back and forth for $0.01?

We need figure out how to make the token useful, and not how make transferring them back and forth cheaper.

Yeah. I know that's why in the intro I said we need to fast track a product/service that makes BitShares more useful given that the markets are still not very active.

I think a cheaper fee is better at the moment. You will get more people into the system, experimenting with what little is on offer. It also means you can give out free samples to try it out, whereas atm 100 BTS just covers two transactions.

Where a crypto-company will make it's money is on the products, services & purchases. (Even PayPal doesn't charge for basic transfers)

they do.

I don't use Paypal myself but I was saw this on their UK website.

Send or receive money between friends and family and we won’t charge you anything, unless the payment is funded by a credit card, involves a currency conversion or is a cross-border payment.

https://www.paypal.com/uk/webapps/mpp/paypal-fees

[jakub]

REFERRER: Well if you join today and go through the whole process of buying BitShares we'll let you send these currently useless tokens back and forth for $0.2

DUDE: Wow! Golly, golly gosh! Only $0.2 to send useless tokens back and forth! I can't wait to tell my friends about BitShares!

@Empirical1.2, if the tokens are useless will your DUDE be more happy to send them back and forth for $0.01?

We need figure out how to make the tokens useful, and not how to make transferring them back and forth cheaper.

[fav]

Where a crypto-company will make it's money is on the products, services & purchases. (Even PayPal doesn't charge for basic transfers)

they do.

[Empirical1.2]

With crypto-currency the token is the product, so they can justify a transfer fee, yet they still keep it as cheap as possible because they want to get as many people into the system as possible.

Where a crypto-company will make it's money is on the products, services & purchases. (Even PayPal doesn't charge for basic transfers)

If BitShares doesn't yet have any useful products and services then the potential is limited. The solution for the referral programme is to fast track a product (if you can't artificially stimulate BitAsset liquidity)  But charging high transfer fees won't aid adoption or the referral programme imo.


REFERRER: Hey dude do you wanna join BitShares?

DUDE: Is BitShares a crypto-currency like Bitcoin that the whole world may end up using like a digital gold?

REFERRER: No. BitShares is a crypto-company! 

DUDE. OK? What's the point?

REFERRER: Well we're able to use profits and shareholder directed dilution to fund development of awesome decentralised products and services!

DUDE: Cool you mean like Gambling and Silk Road, all on a blockchain!? 

REFERRER: Well unfortunately, BitShares decentralization is just a thin veil so we can't actually offer those..

If you are suggesting that the big idea is to skirt regulations by hiding behind the thin veil of decentralization, that will come to a quick end.

I would recommend NXT or Augur on Etherum for that. What we do offer though is a decentralised exchange and BitAssets, so you can hold currencies like BitUSD on the blockchain!

DUDE: Cool, I'll take a 1000 BitUSD!

REFERRER: Whoa, steady on there buddy, our markets aren't actually liquid or very active yet.

DUDE: Ok so what can I do on this BitShares?

REFERRER: Well if you join today and go through the whole process of buying BitShares we'll let you send these currently useless tokens back and forth for $0.2

DUDE: Wow! Golly, golly gosh! Only $0.2 to send useless tokens back and forth! I can't wait to tell my friends about BitShares!

[jakub]

The problem with this logic is that this assume they have not come yet, because of the "high" fees. Which is totally not the reason why, im[not so]ho.
There are a  ton of other far more important factors - being way too yearly, hard to transfer accounts [why did  you not spend the time to have o.9.x export keys that take 30 sec to import, instead of days to move to 2.0???]; Not only poorly documented API but one missing essential functions for the simplest bot, and that when we needed one so powerful that everybody can as easily as possible make his version of a  wallet or integrate/move his exchange on the BTS blockchain ; I will not talk about the badly reinvented margin call rules, here... although they do no faviours to liquidity to such extend that having those rules mean never having liquidity; Having  an 'official' gui that is missing so much important functions - why for example one cannot yet claim his vested balances? It is a button and calling one api function, isn't it?

I agree with that. First we need to fix all the other show-stoppers and only then we should revisit the fee problem.

Why not do it like this:
(1) Eliminate all the existing bottlenecks for trading in terms of functionality (e.g. migration issues, API for trading bots, margin call rules, troll-box etc).
(2) Make the trading fees very low (only for LTM, to keep the incentive to buy LTM).
(3) Keep the trading fees low (for LTM) as long as liquidity is low (this is to make sure the fees are not blocking liquidity).
(4) Only when liquidity starts appearing gradually increase the trading fees and observe how it affects liquidity.

[Tuck Fheman]

The general idea must be - we lower the fees to practically zero so they come in bunches, some of them start to trade and we earn trading fees from the volume traders. Do not get me wrong, the trading fees can and should be vastly improved as a design.

The problem with this logic is that this assume they have not come yet, because of the "high" fees. Which is totally not the reason why, im[not so]ho.
There are a  ton of other far more important factors - being way too yearly, hard to transfer accounts [why did  you not spend the time to have o.9.x export keys that take 30 sec to import, instead of days to move to 2.0???]; Not only poorly documented API but one missing essential functions for the simplest bot, and that when we needed one so powerful that everybody can as easily as possible make his version of a  wallet or integrate/move his exchange on the BTS blockchain ; I will not talk about the badly reinvented margin call rules, here... although they do no faviours to liquidity to such extend that having those rules mean never having liquidity; Having  an 'official' gui that is missing so much important functions - why for example one cannot yet claim his vested balances? It is a button and calling one api function, isn't it?

And after all this  and more essential stuff is missing, we will have a worker proposal, so we can jump and pivot and spend  6 mo. fighting the imaginary main cause of all ills?  Because after 3 days we discovered that the high fees are the main reason for no instant adoption?

You're making too much sense dude, stawp it!  Let us breathe the Hopium for a few days first.

BTW I've been working on a new marketing campaign : BitShares - Change all the things, all the time!