How to give btc users no transaction fees.

[o_e_l_e_o]

Simply, because it can't be controlled by the government, which is required for a proper functionality of the economy.

There are dozens of countries which do not control their own currency, either because they use a different country's currency altogether, or because their currency is pegged to someone else's currency. There are currency unions, such as the Euro and the CFA Franc, in which many countries share a currency and none can control it directly. All these countries have functioning economies, including some of the biggest economies in the world.

Just imagine of a world where the main currency of the societies is deflationary not controlled by the government... Complete fuckin' chaos...

Because currencies spiraling in to hyperinflation forcing average people to lose their purchasing power and end up in poverty is working so well?

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[BlackHatCoiner]

There are currency unions, such as the Euro and the CFA Franc, in which many countries share a currency and none can control it directly. All these countries have functioning economies, including some of the biggest economies in the world.

And that is good, because not one government decides about the currency's policy, but a community which is conscious about their autonomy. If you read about the Euro you mentioned, you'll continuously observe their persistence to keep the price stable. It is very justified for a fiat currency to lose its value over time; the number of people in these countries increases.

So, to counter-argue,

• They don't print 21,000,000 euros and then destroy the European Central Bank, nor do they set a fixed amount of euros to be printed every 10 minutes.
• They're not unable to control their currency in case of a liquidity trap or price instability.

Because currencies spiraling in to hyperinflation forcing average people to lose their purchasing power and end up in poverty is working so well?

Hyperinflation is one extremity. Bitcoin is the other. Both of them damage the economy. Sorry for asking this, but do you really imagine a world where an uncontrolled deflationary currency prevails? Where each person will transact using LN and everyone will suddenly become happy they're not victims of inflation?

Small and stable inflation rates do good to the economy; if you know that €1 will worth less in the (far) future you will spend it. You won't rather keep it, because you'll lose your purchasing power over time. This tendency to spend your money results to an intense money circulation which is obviously economically healthier. Now imagine having Bitcoin which is generally considered a “fiat replacer”. Why would I want to spend my money if it'll surely worth more in the future?

Anyway, that's the Dev & Tech section and I wrongly chose to continue further the discussion. If you want to reply, quote me here.

[larry_vw_1955]

ok guys thanks for all the comments I could see that having no transaction fees seems very problematic to many of you. the point that got repeated was the spamming issue as a reason for not allowing free transactions. And many of you didn't like the idea to punish spammers financially, arguing how would that even be possible.

Well I don't have all the answers but punishing users of the network is not a novel idea. Ethereum does it to stakers if they go offline. They get punished financially.

Heck, the dude I saw pay $37 to transfer $200 worth of btc, that kind of seemed like a punishment.

So dont worry it's ok to punish people. It's happening as we speak. Now before we go and say something like "but they opted in to get punished". Well, when someone abuses network resources they are kind of asking for punishment. So I wouldn't shed much of a tear if it happened lol. So yeah, free transactions that would be great. Punish the spammers, that would be fine. Just give me free transactions even if it's only one or two a month.

The biggest challenge is figuring out how to go about punishing them. i think we need vitalik for that.

[pooya87]

Ethereum does it to stakers if they go offline. They get punished financially.

That has nothing to do with spam.

The biggest challenge is figuring out how to go about punishing them.

The biggest challenge is determining what transaction is spam.

[BlackHatCoiner]

And many of you didn't like the idea to punish spammers financially, arguing how would that even be possible.

Currently, if someone tries to spam the network, he will be punished financially, due to the fees he'll have to pay.

Ethereum does it to stakers if they go offline. They get punished financially.

Staking isn't the same with transacting. It's the mechanism used to secure the network; in Ethereum, they aren't punished if they spam with lots transactions unless if you include the fact that I wrote above.

The biggest challenge is figuring out how to go about punishing them. i think we need vitalik for that.

The biggest challenge was to figure out a way to decentralize consensus. We didn't need Vitalik for that, so possibly nor for this situation.

[larry_vw_1955]

The problem with "spam" is that it is a matter of perspective. These transactions aren't breaking any consensus rules, not even standard rules. We call them "spam" just because they have certain attributes that we dislike. Any kind of restriction will consequently limit the protocol which is not a good idea.

So if there was free transactions with no fees spam wuold still be a matter of perspective? If that's the case then I'm all for having free transactions! maybe not unlimited in number but at least a few every week. as a side question why wuold bitcoin developers build attributes into the prototocol that they dislike and frown upon them being used when they themself designed it to be used that way. certainly they had to realize that if they allow for example transactions with large numbers of outputs and small send sizes per output then people will do that, right? why should anyone frown upon something that the consensus rules allow unless it is unintended behavior which in that case means things need fixing.

[larry_vw_1955]

I'm not against free/fee-less transaction as long as it doesn't bring another problem. But so far no one mention how to achieve it without trade-off.

Exactly. but I think there would have to be some type of a trade off. The question is, is it acceptable to people. I wouldn't mind limiting certain types of transactions such as large # of outputs with small transaction amounts per output. Those are clearly undesirable. But other people might disagree but when you're sending dust to 500 btc addresses, you're spamming. If you want to pay for it fine but if not then that shouldn't be free.

But even that might not be enough in a free transactions utopia. You have to be more sophistocated than that. I'm gonna cook up some ideas though and see if they fly. but it might take me a while!

[o_e_l_e_o]

maybe not unlimited in number but at least a few every week.

And how do you choose who gets to use the free transactions? There is no way to set up a system where "everybody gets one" or something similar without some ridiculous KYC requirements. If you allow something like "10 per block", then you guarantee that the mempool would be permanently filled with a huge backlog of free transactions, and you can also guarantee some people would set up bots to auto-rebroadcast their own free transactions, and so the average user would be no better off. And what would be the incentive for miners to pick up a few free transactions over paying ones?

[larry_vw_1955]

And how do you choose who gets to use the free transactions?

Well, I personally would not be the one to choose who gets to use a free transaction. I suppose that would be left up to the system. It would need to be able to look at a transaction and determine whether to accept it or reject it with no transaction fee attached.

There is no way to set up a system where "everybody gets one" or something similar without some ridiculous KYC requirements. If you allow something like "10 per block", then you guarantee that the mempool would be permanently filled with a huge backlog of free transactions, and you can also guarantee some people would set up bots to auto-rebroadcast their own free transactions, and so the average user would be no better off.

Well I don't think you understand the whole idea was that free transactions would be mined in a block of their own, not mixed with other transactions that had a fee. You can read back through the thread though and you'll see where I discussed that idea.

And what would be the incentive for miners to pick up a few free transactions over paying ones?

That was already explained in detail. You can find that explanation earlier in this thread. Once you read over that explanation then I'm sure it will make more sense to you!

[BlackHatCoiner]

Well, I personally would not be the one to choose who gets to use a free transaction. I suppose that would be left up to the system. It would need to be able to look at a transaction and determine whether to accept it or reject it with no transaction fee attached.

This is an incentive based system. Just think that the security of the network is maintained due to the importance of the incentive; due to the exploitation of the human's greed. It turns out that this is the greatest and possible way to secure a network if it's ran by humans.

That was already explained in detail. You can find that explanation earlier in this thread. Once you read over that explanation then I'm sure it will make more sense to you!

And you received some answers with co-arguments. Simply put, you can't do what you've thought and retain both the same security, transaction objectivity and fee zeroing.

[o_e_l_e_o]

I suppose that would be left up to the system.

Sure, but how? What's to stop some big exchange, service, or other business, who has tens or even hundreds of thousands of UTXOs they want to consolidate or move around but with no urgency whatsoever just flooding the mempool with zero fee transactions, or at the very least taking up all the permitted "slots" with their zero fee transactions, leaving no slots available for anybody else?

It would need to be able to look at a transaction and determine whether to accept it or reject it with no transaction fee attached.

Based on what criteria? Who gets to decide which transactions are allowed to have no fee and which aren't?

free transactions would be mined in a block of their own

And as I said earlier in the thread, you can then end up with the situation where zero fee transactions are prioritized over fee paying transactions when there are not enough fee paying transactions to overcome the additional incentive you proposed for zero fee blocks. Users are then stuck with fee paying transactions in the mempool which they cannot replace and aren't being mined.

[larry_vw_1955]

I wouldn't mind limiting certain types of transactions such as large # of outputs with small transaction amounts per output. Those are clearly undesirable.

You can't prevent small Bitcoin output as long as the transaction still follow Bitcoin protocol. Besides, it's inevitable as long as Bitcoin price continue rising and more people use Bitcoin.

Small transactions aren't necessarily the problem. The problem is when a single transaction has alot of "vouts". You could change consensus rule so that if transaction had more than a certain number of vout then it has to pay a fee. That could be one of the rules. There would have to be others most likely. That would not be enough but it would be a start point.

For people that wanting to spam the network with large vout count transactions they can feel free to just continue doing the same thing because it's not a problem for the network. They will continue to pay the required fee and things will be just fine.

[pooya87]

as a side question why wuold bitcoin developers build attributes into the prototocol that they dislike and frown upon them being used when they themself designed it to be used that way. certainly they had to realize that if they allow for example transactions with large numbers of outputs and small send sizes per output then people will do that, right?

There is no unnecessary "attributes" that lets the spammers spam, they are using the same attributes that everyone else is using and creating the same normal looking transactions to attack the network. You are also focusing too much on only a single type of spam attack but there are many types. For example the simplest form is to fill the mempool with regular transactions with 1 input and 2 outputs.

[BlackHatCoiner]

You could change consensus rule so that if transaction had more than a certain number of vout then it has to pay a fee.

Like a post toll? If you have more than 10, will you pay more? These transactions already pay more than those that have less vouts. They pay similar amounts percentage-ly, but if you change that, then the transactions' objectivity is lost. The miners will, then, prefer including the transactions that pay more percentage-ly, which means those that have lots of vouts.

For people that wanting to spam the network with large vout count transactions they can feel free to just continue doing the same thing because it's not a problem for the network. They will continue to pay the required fee and things will be just fine.

As I said, miners will want from those people to continue spamming. By changing this consensus rule, you aren't defending spamming; you're incentivising miners to include spamming transactions into their blocks.

[o_e_l_e_o]

You could change consensus rule so that if transaction had more than a certain number of vout then it has to pay a fee.

And in doing so, you incentivize users and exchanges not to batch their transactions. It is preferable then, from a fee point of view, to create 100 separate transactions each with 2 outputs each (obviously each transaction would include a change output), than it is to create 1 transaction with 100 outputs. The total size difference, even considering the best case segwit use, is something around 14,000 vbytes compared to 3,000 vbytes. That's an awful lot of unnecessary blockchain bloat and an awful lot of excess unconfirmed vbytes in the mempool. This would make things worse for everybody.

[larry_vw_1955]

You could change consensus rule so that if transaction had more than a certain number of vout then it has to pay a fee.

And in doing so, you incentivize users and exchanges not to batch their transactions. It is preferable then, from a fee point of view, to create 100 separate transactions each with 2 outputs each (obviously each transaction would include a change output), than it is to create 1 transaction with 100 outputs. The total size difference, even considering the best case segwit use, is something around 14,000 vbytes compared to 3,000 vbytes. That's an awful lot of unnecessary blockchain bloat and an awful lot of excess unconfirmed vbytes in the mempool. This would make things worse for everybody.

not if the consensus rules are good enough and sophistocated enough then someone won't be able to get away with avoiding batching and paying a fee vs sending out a huge number of separate transactions. it's not meant for that. free transactions are meant for the casual bitcoin user who from time to time would like to send some bitcoin somewhere. but not everyday and maybe not ever week. maybe once a month or something like that. power users and businesses don't need free transactions to the extent that I would care how my rules affected them. thanks for your post.

[o_e_l_e_o]

free transactions are meant for the casual bitcoin user who from time to time would like to send some bitcoin somewhere. but not everyday and maybe not ever week. maybe once a month or something like that. power users and businesses don't need free transactions to the extent that I would care how my rules affected them.

If a user is only sending bitcoin once a month, then what is the issue with paying a few cents equivalent in a fee?

Further, how do you plan to differentiate a casual user from a power user without KYC, given that any user can generate as many different addresses as they want? An exchange could just keep user deposits on individual addresses and not consolidate them since they know they can then process withdrawals for free.

[larry_vw_1955]

If a user is only sending bitcoin once a month, then what is the issue with paying a few cents equivalent in a fee?

Not necessarily a "few cents" I think it might cost like $5 to send bitcoin sometimes on average. If it was always just a few cents to send then that would be different.

Further, how do you plan to differentiate a casual user from a power user without KYC, given that any user can generate as many different addresses as they want?

One thing I didn't consider is what if someone sends to 500 different addresses in one big batch just to try and game my system. Then from each individual address they try and use it to get free transactions all the time. Wow that would be a big disaster. I would have to figure out a way to stop a cheater like that dead in their tracks! That cuold be a problem.

An exchange could just keep user deposits on individual addresses and not consolidate them since they know they can then process withdrawals for free.

That would be ok as long as they didn't abuse it. The thing is though, they might find their customers not too happy with how long it took to get their money. As we know, exchanges usually inflate the fee to make sure things get confirmed fast, very fast. too fast.
 One  address per one person is fine but they would find out pretty fast that this isn't for power users.

[BlackHatCoiner]

Not necessarily a "few cents" I think it might cost like $5 to send bitcoin sometimes on average. If it was always just a few cents to send then that would be different.

The median fee is usually less than 10 sats/vbyte. Even large transactions don't pay more than $3 if they use SegWit native and 1 sat/vbyte. Most of the entities that create these large transactions are exchanges. They'll prefer to wait until they can get their transactions confirmed cheaper rather than pay too much money; the fact that they don't is another story.

One thing I didn't consider is what if someone sends to 500 different addresses in one big batch just to try and game my system. Then from each individual address they try and use it to get free transactions all the time. Wow that would be a big disaster. I would have to figure out a way to stop a cheater like that dead in their tracks! That cuold be a problem.

I still don't understand though, haven't we convinced you that a system where the user doesn't pay a 'toshi for their transactions has drawbacks?

[o_e_l_e_o]

Not necessarily a "few cents" I think it might cost like $5 to send bitcoin sometimes on average.

I have literally never paid that much to transfer bitcoin ever. If that is the average amount you are paying to transfer bitcoin, then you either need to educate yourself about fees, use a better wallet which lets you set your own fee, or both.

I would have to figure out a way to stop a cheater like that dead in their tracks!

Simple! You charge a fee.

That would be ok as long as they didn't abuse it.

And how do you stop them from abusing it, short of charging a fee? As soon as you do it on an "honor" system or something similar, then it will be abused almost immediately.