Topic: How would the ecosystem change if the fees came back to the user after 1 year? (Read 234 times)

As I explained before, you could also allow users to send coins to some place that will be given back miners as fee, but this would require replacing proof of work with that (or using it together with proof of work).

Thats not how blockchain works because there would be no miners on the first place since they do know that they couldnt make out money because we do know on how fee works.

We cant just expect that those fees that we've been used would go back to the user after 1 year?  Turns out that you arent
willing on paying up fee on something you had transacted?

Keep in mind that you are paying for a service and those arent just for free.

If those coins are going to give you back, it could be some dusty input, which could cost you more than it's worth...And a few more. While using bitcoin, for privacy, you should not reuse addresses. however it is realistic to think that people only mine to secure the network knowing the amount of electricity and Bitcoin mining hardware required. but I really like such fees going into some kind of decentralized liquidity fund to control the money supply with a predefined rule that maintains the scarcity or anti-inflation feature of the currency. And it becomes more valuable than we think because whatever is scarce it becomes worthless.

The whole idea of burning their own supply as we see in some coins it is nothing but a gimmick to me, bitcoin did not needed anything like that to become the best currency around the world, the hard limit imposed by satoshi is more than enough, after all before the creation of bitcoin no other currency had that characteristic, not even gold as we do not really know how much gold the earth really has, so how much gold we could have in the future is also a mystery while fiat can be printed at will, so burning the supply seems to me as an attempt at manipulating people to think a cryptocurrency is more valuable than it actually is.

It sounds like an appealing idea, but I feel that miners will be not rewarded enough this way, so they'll have a smaller incentive of confirming transactions. Also, would people really care about this kind of cashback? There were only a few times when I spend too much money on the fees, and most of the time I'm okay with the fees, so I would not care if my fees were returned to me now. I mean, it would be a nice little bonus, but not a game changer. So it's just not worth it to figure out how to implement it and not get miners angry over something that doesn't matter that much.

The fees are an incentive to the miners to propagate and secure the network in a decentralized manner.  If you remove the profit incentive from miners by returning fees to the transactors, there essentially is no reason for anyone to spend resources on propagating the network.  The result is a less robust and less secure network, and if the network can't be trusted to be secure, the price of the crypto suffers because no one is going to spend a significant amount of money on an asset that might prove open to manipulation.

Burned fees seem to be the solution. Maybe at some point we will see it more often. The only coin that I know does that to reduce fees is AVAX. A documentation can be taken a look here.

https://docs.avax.network/learn/platform-overview/transaction-fees

But if we talk about bitcoin, the lightning network has its very economical fees that is the best solution that I can observe for now for bitcoin users.

I would say that "burning" is the educated guess for that. I would assume if ever single fee that was paid went to some burned address so that it would be gone forever, that would really hurt bitcoin in the long run but also make it very very valuable at the same time.

How would we survive if all that many bitcoins got burned every single day, there would be a lot less left in the market. One would say this would make it more valuable because there are less available in the market, but others may say that it would also make it a lot less desirable because it is getting less and less available for many people. I do not know which one would happen but I do not wish to test it and see, the outcome could be horrible as well and the risk doesn't really worth it.

Miners will not keep on making this much money in the long run anyway. Let's remember that it will go down more and more with each halving, next halving it will be even less, and the halving after that will be quarter of this, it just keeps going down more and more and that is why we can't always consider miners when we are making discussions like this because they won't be around forever. However even assuming that, we are talking about fees and we are not talking about the rewards.

So, assuming that fee's do come back, even in that case the bitcoins that are mined would still be going to miners, the miners would lose money because they would not be gaining those fees anymore but they would still be making an income from the rewards they mine.

The question is where will you get the coin to return it to the user?. You know that fees are going use to pay miners including the block reward. If ever the user will get the fees back then what about the miner who got the fees?. This will need more coins for that to happen. Nothing will happen much anyway of this happens in my opinion.

This will not work in bitcoin, with the halving that happens every 4 years it means the rewards the miners are getting in terms of bitcoin are lower, Satoshi envisioned that in the future the miners will benefit primarily and then absolutely from the fees, and if something like that was done then all incentive for the miners to keep investing heavily in their equipment will disappear and the network will become insecure due to this lack of investment, so I do not think this is a good model to follow.

A cryptocurrency cannot exist without miners and transaction fees.
However,I assume that you want us to imagine and theorize over a hypothetical payment system,that has no transaction fees(and probably no miners).
Well,if the fees came back to the users after one year,then the users will be incentivized to create as much transactions as possible,since they will get back the fees after one year.Such payment network will get stuck due to the multiple spam transactions,the confirmation time will become ridiculously slow and the network will simply block.
If you ever want to create such altcoin and such blockchain,good luck.

Imagine yourself as a miner then would you support this idea?

How can you expect someone to invest their money and time with no real rewards for themselves and crypto market becomes already a profitable investment so don't expect enthusiasts to invest with no expectations.

Yeah, that's probably the strongest argument against OP's idea.  But let's say he wasn't talking about bitcoin, but some new altcoin.  If fees were frozen for a year, and assuming this was a coin with a large transaction volume there would have to be a lot of coins in existence, since all those fees would be locked up for what amounts to a very long period of time (unless the standard fee was very low).  That was my first thought, but I might be modeling it wrong in my head.

In any case, what OP suggested would never be implemented for bitcoin, because nobody would go for it.  I'm also pretty sure the idea has been thought of before and that there's a reason why altcoins haven't adopted a system like that.

Actually as a miner first and foremost my first thought was not very nice.
But I did see hugeblack gave it a merit so I  read all answers>

I realize t could work in conjunction with the idea I floated about here and there the "lost" coin or stale abandoned account idea.

Down the road as rewards shrink if transactions are frozen  the system would collapse as miners would say fuck this shit no $$ in it for me.

I posted the 50 year stale address idea which is an address that has not had a withdrawal is stale or abandoned.  The contents float back to th rewards and miners get a much needed boost.

If you say it prevents a holder from holder his coins it does not.
Ie a 50 coin address idle from 2009 to 2059 simply needs to pull .00000001 out and into a new address.

so it says 49.99999999 or maybe 49.99990000 the main amount stays still the address is not lost or abandoned  .  the long time holder keeps his privacy.

obviously some coins are abandoned and lost they fold back into the rewards moneys. The transaction dependency that will be an issue in 2059 becomes far less of an issue.  The frozen fee idea can be twisted around a bit  but I see a hint of value to it. Down the road my idea and the op's idea will be improved and implemented in one form or another.

Why because solving scaling is needed and blending these proposals could make it work for miners long time holders and daily users.

I am referring to any coin in existence here and not just bitcoin. Majority of cryptos have finite supply. So your proposition can work for a finite period of time only. But once all coins are mined, who will keep the network running without a reward? It wouldn't make sense to any of the miners to keep running their nodes with zero rewards. So even if small, but still some percentage of transaction fees needs to go to the miners to keep network running for longer time. No one really like to provide free service!

Yes, as I said before, I forgot about that part while typing the text, and then post an example at one post of 8 ideas that deal with giving rewards to be mined without creating new coins.

You mean, not paying the miner in fees, only by bitcoin generation. Well, in the short term it might even work, but long term you need to pay for the transaction to be registered, so fees are kind of the motivation to keep the miners active. As of now, since a successfully mined block would anyway have a compensation in bitcoin, it could be OK, as surprising as it may seem.

The business model of the crypto mining industry would shift to adapt.

Miners would seek ways to consistently and reliably profit from holding transaction fees for 12 months. There would be an additional abstraction layer added where miners would try to earn 100% interest on transaction fees in 1 year. To enable them to profit from fee holdings, so that they could essentially keep it.

In a way, what you're describing is a financial perpetual motion machine. Which continues to operate reliably and efficiency on a near -something for nothing- model of energy/capital.

Its commonly said that people get what they pay for and reducing transaction fees in this way, could result in reduced hash rate, performance and reliability.

Then again, maybe you have a good idea here. Maybe it is possible to reduce or eliminate transfer fees to a good degree. That could be a neglected area software designers haven't applied much focus or emphasis on.

I agree with your opinion. Miners work to secure the network and they need a lot of money to do so as mining machines become more expensive as well as electricity costs. Even though they will receive a block reward, but I don't think it will be enough because the reward will be smaller every 4 years "halving" period.

I expect that implementation from the developer so that we don't have to incur too many transaction fees to secure the network. The more transactions that are accommodated into one block, the miners will get more money. I hope this can be a solution in the future and at that point adoption will be better. 1 sat/ byte so far so good and stable in the last few months. In fact it is much cheaper than the cost of withdrawing fiat from some centralized exchange to a bank account.

Bitcoin mining is an economic activity and there must be a good return to continue, thus ensuring the decentralization of the network.
When the miners do not receive any money, they will not continue to do mining and therefore the network will be weak.
It is possible to think of solutions that make the fees zero, but they are either centralized or require trust, and therefore we cannot say that they are decentralized.

The best thing we can do is to reduce the fees to the least possible, with the possibility of adding more transactions within the block, and thus the miners get more money.

Let's look at something objectively:
A good mining machine would cost around 5500$

Now one has to understand that the cost of electricity differs in every single county, therefore, it does not matter where you live, it might be really high or really low, no one knows.

But you might spend like 500$ per month on mining, depending where you live.

A miner is more like a business man who have invested his money here and how would be get the money back? The transaction fee is something that pays him for his service and if we do look at it, it's not really much, it perfectly fits their life and hopefully they are able to balance it all out.

But at the end of the day, balancing it all out might not work and therefore many individual mining farms gets shut down, therefore it's not like they are swimming in gold. Taking the fee away would be disastrous.

Hope you understand that.

Interesting. Don't you think this would be exploited by spammers who could spam as much as they want probably with borrowed  fees knowing that they will eventually recover their money back when their frozen/locked fees are released.
One or more crypto networks probably burn their fees, I wonder what you think about that. I actually prefer such fees to go into some sort of decentralized liquidity pool for controlling currency supply with predetermined rule that helps maintain the scarcity or anti-inflationary feature of the currency.

I still don't see the problem that you're trying to solve. If there is no problem at all, then it's basically a useless feature. On what basis the user is allowed to earn the fees if they don't provide any support to the network? The network would be very weak and prone to attack if you design it that way. On top of that, no one would support the chain. User should not expect to earn mining fees or something similar if they aren't doing anything.

It's one thing for it to be frozen and a different thing to have the fee returned, it would simply clog the whole chain for a year if the returning fees would have their own space in a block.


Actually no, it will not prevent them from doing so and it will only make sure he can repeat this thing every year at zero costs.


This makes zero sense.
PoB is an alternative to PoS, and furthermore an algorithm that has never been successfully tested with any coin, and it's far easier to attack than PoS, let's compare the number of people who will stake coins for a reward and to protect the network and the ones willing to burn their money for it.
Oh, and in the end, nothing is being solved.

Yes, I forgot about that obvious part. It would require changing the system.

Some examples of those changes would be:
A=
1-Has frozen transaction fee going back to you after 1 year.
2-You can also send coin to some place.
3-Money sent to this place back as reward after X months.
4-Amount of money sent to this place is your stake used to decide the mining.

B=
1-Has frozen transaction fee going back to you after 1 year.
2-You can also send coin to some place.
3-Money sent to this place back as reward after X months.
4-Amount of money at this place is your stake used to decide the mining.

C=
1-Has frozen transaction fee going back to you after 1 year.
2-You can also send coin to some place.
3-Money sent to this place back as reward after X months.
4-Amount of money sent send as reward from this place is your stake used to decide the mining.

D=
1-Like A but instead of X months, the money go back as miner reward at next block.

E, F, G, H =
1-Like previous 4, but instead of sending coins to some place that will go back as reward after X months (or next block at the case of D), while making a transaction you can choose between making a normal transaction fee that will go back to you after 1 year, or sending it to some place where the fee will stay there and will go back to as reward to miners and also be used to do the staking related things.

There is some one change that wouldn't have the freezing method.
I=
1-All transactions fees go to the reward pot, there is no freezing.
2-What is used to decide the miner is the amount of coins send as transactions fees.
At idea I you will lose your transaction fees like happens right now, but they will have an extra use.

Fees are used to pay miners to include our transaction into the blockchain. If the system only freezes the fees, there must be some other reward to the miner, if not, why would they process your transactions? Then the discussion will go toward incentive. Yes, the devs could create other incentive mechanism, but the question is, is it better than fee system? At a glance, the ecosystem will radically change, but I don't think it's in the better direction.

Then how will miners be incentivized to secure the network? Let’s not forget that most if not all miners conduct mining operations simply because they can earn a living off it. It’s quite unrealistic to think that people would mine solely to secure the network knowing how much electricity and hardware Bitcoin mining demands.

While not exactly what you described though, Proof of Stake is the closest. Which in itself has a lot of issues when talking about an asset for money/SoV.

The transaction fees are the part that should ensure Bitcoin run forever. The block rewards are decreasing, rather sharply. When those will become really small, the miner have to be paid somehow for their work. That's what the transaction are fees for, not only to avoid network spam.
This being said, if your idea would be implemented, in some (many?) years from now, there's a (good) chance the miners will leave.

So while your idea is interesting for your own pocket (and all users'), it's not that good for the ecosystem...


And something more. If those coins will return to you, it may be some dust input, which may cost more to be spent than how much it worth...
And something more. While using bitcoin, for privacy, it's recommended to not reuse addresses. Still, in years, all the old addresses will be filled with dust. All in all, it looks more a waste than not spending some cents.

I think there was a coin that did this already but I'm not sure.

I don't think there's much change though. I could see it being a thing but paying a few cents for a transaction isn't really a problem and fees might be preferable for miners to want to accept as it means they pay less for transactions (than the freezing system) and they get paid from the mining which provides a functional system for the chain to sustain itself after the last block halving.

We have transactions fees, to avoid creating tons of transactions and increase the blockchain size to a extreme amount.

Those transactions fees are sent to the next user who is the miner.

How would the economy of a coin would change if instead of sending the transaction fee to be mined, the transaction fee was frozen and 1 year after it it would be sent back to the wallet. The user wont lose that money, but still can't keep making tons and tons of transactions to spam the blockchain.