Crypto without commissions: how blockchains can come to free transactions
Platforms such as EOS, NEO, IOTA and Kin no longer charge transaction fees. It would seem to be a boon for users, but does it get better from this in General?
One of the infamous aspects of bitcoin is high transactions. Although they are now much lower than during peak periods, one bitcoin transaction still costs about $3. This led to the fact that many of the bitcoin competitors began to promise low fee. And some cryptocurrencies have gone further – they are trying to completely abandon the commissions.
This is not an easy task: transaction fees are an important part of setting up most cryptocurrencies, as they reward various network members - for example, miners or nodes - for facilitating transactions. However, transaction fees are not a strict necessity and there are alternative ways to reward blockchain network members and confirm transactions.
Some blockchains have started to implement transactions without commissions. This often leads to radical changes in the way transactions are executed and token pricing is evaluated. Listed below are the various ways to eliminate transactional commissions and providing the users a free experience with the use of the block chain.
By rewarding developers
EOS is one of the blockchains that does not charge a transaction fee. Instead, each new account requires purchase of RAM (RAM) manufacturers blocks. This RAM is required to perform transactions and smart contracts on the network, and some applications may require account creators to pay for more RAM.
This model means that the cost of transactions is covered by application developers, not application users, but it also indirectly ensures that block manufacturers will be rewarded for executing transactions and providing their RAM.
This is very beneficial because EOS applications are widespread. As noted by EOS Creator Dan Larimer,"a decentralized search engine would try to entice users from Google if it charged a small fee for each useful search result." While some blockchain applications deal exclusively with transactions, others simply have no reason to charge a fee.
By using multiple tokens
Blockchain NEO is also partially finished with commissions, dividing their tokens in two varieties: NEO and GAS. The NEO token is indivisible and is not intended for payments - it is more like a "share" of the NEO platform than a cryptocurrency. There is no fee for the transfer of NEO tokens.
Meanwhile, the token GAS necessary for the execution of smart contracts on the blockchain NEO. Each execution of a smart contract costs 10 GAS tokens, although initially they are free. When developers pay a Commission to GAS, it is redistributed among NEO owners.
In other words, NEO places the cost of most transactions on developers, freeing up core users and encouraging stakeholders. This is similar to the EOS approach in which developers are rewarded, although NEO tokenizes network resources more directly.
By assigning work to users
Most of the block chain does not require user intervention to confirm the transaction and instead distribute the work among the members of the network. Bitcoin relies on miners, EOS relies on block manufacturers, and NEO relies on various nodes.
IOTA takes a different approach: instead of paying a miner or node to confirm a transaction, your device should simply confirm two previous IOTA transactions before your own transaction is verified.
This ensures a free proof of your transaction. However, the IOTA network doesn't take user charges for the transaction: it just takes time and work for your device without charging a fee for your transaction.
By subsidizing the platform
Although blockchains are often developed by the community, some are created by companies that can afford to cover transaction costs. The kik chat app eliminates transaction fees this way.
Although the company EIC was originally planning to run the token on the blockchain of Ethereum, it is decided that the Commission Ethereum is too high. Instead, she made a fork of Stellar and started her own blockchain Kin.
At the moment, Kik is responsible for voting for blocks and confirming transactions on the kin blockchain. As a result, it can easily cover the cost of Kin transactions without charging fees. However, in the future, Kik can gradually transfer control over the blockchain to partners, which will be reliable nodes.
Remuneration to such kin nodes will be paid from the company's reserve depending on the economic activity that accounts for their share. In other words, the work of kin nodes will not be rewarded depending on the cost of blockchain operation, but will be paid by the company.
Other idea
All of the blockchains described above have zero transaction fees - in other words, each of them manages to bear the burden of user costs. However, the cost of executing transactions cannot actually be excluded from the network, although it can be substituted. Otherwise, developers, companies, partners must bear the costs.
This means that the developers of the block chain must continue to work towards reducing costs. If the costs to network members are too high, complications arise and incentives decrease. For example, EOS suffers from high RAM costs, which forces the network to constantly strive to reduce the cost of creating accounts.
In other words, inefficiently replaced costs can have a negative impact on potential partners, which is also tantamount to discouraging users by high commissions.
Many popular blockchains have reached near-zero commissions, which looks like a more realistic model than a complete lack of commissions. Larimer may be right that users expect something free. However, whether free blackany more popular compared to those that support a very low fee due to scalability? A low Commission in tandem with high scalability can be a very effective selling point, especially if the blockchain is already popular for other reasons.