Poll: What should be done with the fixed transaction fee of 0.01 PPC/kB

[quote=“masterOfDisaster, post:14, topic:1103”]What I’d really like is to understand the “Peershare” idea better and it would be the option to vote for if it were here and I already understood Peershare completely.

What I think to have understood about Peershare is (in my words) that you create a kind of branches which are backed/escrowed/lodged by Peercoin. So you can utilize Peercoin as store of value without the need of frequent transactions in the Peercoin blockchain. You aggregate transactions in the Peershare branch and execute them from time to time in Peercoin (basically like in the time when fiat was backed by gold with Peercoin being the “gold” for Peershare branches).[/quote]

Peershare allows a company to issue shares which can be exchanged in a decentralized fashion via a PoS blockchain dedicated to that purpose. The system makes it easy to disburse dividends in Peercoins. It will increase the number of transactions on the Peercoin blockchain and presumably the price of Peercoins with it.

But couldn’t you - relatively stable price for Peercoins as prerequisite - gather transactions within the Peershare system and execute “bundled” transactions in Peercoin only seldom?
You could use Peershare systems for bundling transactions, couldn’t you?

Scenario 1:
a company wants to raise funds and gathers 1000 times 1 USD for emitting 1000 Peershares each worth 1 USD.
The share holders receive for each Dollar 1 Peershare of that company.
When a share holder wants to sell a Peershare (for Peercoins or maybe fiat money), he needs a kind of exchange that handles that (or should this business only possible with the company that issued the Peershares? From my understanding: no…).
If it is done on an exchange it is completely possible to transfer fiat money or any other commodity without putting a transaction to the Peercoin network by just selling the Peershare for anything except Peercoin.
And both the exchange and the company that issued the Peershares can place bundled transactions when there is need to trade Peershares for Peercoins evading relatively huge transaction fees for small (in value) transactions.
That would be achieved by increasing the PPC volume for a single transaction (through “bundeling”) and reduction of the number of transactions in the Peercoin network.
And that would decrease the price in Peercoin for a single Peershare transaction (by decoupling the Peershare transactions from Peercoin transactions).

Scenario 2:
Peershares are used for paying dividends. This can be done by issuing a second “dividend Peershare system” different from the “company share Peershare system”. You receive tradable Peershare dividends which will only be in connection with the Peercoin blockchain once you decide to trade them for Peercoins.

But maybe I still understand the Peershare concept horribly wrong, although I’ve read it more than once…
And sorry if this sounds confusing but I’m a bit confused^^
Please be patient with me, I’m still learning

I wish I could change my vote. I voted do nothing. I’m for the first option now.

[quote=“masterOfDisaster, post:16, topic:1103”]But couldn’t you - relatively stable price for Peercoins as prerequisite - gather transactions within the Peershare system and execute “bundled” transactions in Peercoin only seldom?
You could use Peershare systems for bundling transactions, couldn’t you?[/quote]

To reduce transaction fees incurred for Peercoin transactions an issuer could choose a less frequent interval for dividend distribution, such as quarterly instead of weekly. Is this what you mean by bundling transactions?

[quote=“masterOfDisaster, post:16, topic:1103”]Scenario 1:
a company wants to raise funds and gathers 1000 times 1 USD for emitting 1000 Peershares each worth 1 USD.
The share holders receive for each Dollar 1 Peershare of that company.
When a share holder wants to sell a Peershare (for Peercoins or maybe fiat money), he needs a kind of exchange that handles that (or should this business only possible with the company that issued the Peershares? From my understanding: no…).
If it is done on an exchange it is completely possible to transfer fiat money or any other commodity without putting a transaction to the Peercoin network by just selling the Peershare for anything except Peercoin.
And both the exchange and the company that issued the Peershares can place bundled transactions when there is need to trade Peershares for Peercoins evading relatively huge transaction fees for small (in value) transactions.
That would be achieved by increasing the PPC volume for a single transaction (through “bundeling”) and reduction of the number of transactions in the Peercoin network.
And that would decrease the price in Peercoin for a single Peershare transaction (by decoupling the Peershare transactions from Peercoin transactions).[/quote]

You are right that the exchange of a specific type of Peershare for Peercoins would typically occur on an exchange and would therefore be an off blockchain transaction. Still, to get Peercoins into the exchange requires a blockchain transaction.

[quote=“masterOfDisaster, post:16, topic:1103”]Scenario 2:
Peershares are used for paying dividends. This can be done by issuing a second “dividend Peershare system” different from the “company share Peershare system”. You receive tradable Peershare dividends which will only be in connection with the Peercoin blockchain once you decide to trade them for Peercoins.[/quote]

If I understand you correctly you are proposing a new PoS currency to be used for Peershare dividend distribution to reduce the load on the Peercoin blockchain. Dividends can be paid in any cryptocurrency the issuer chooses including any PoS coin (with modest modifications to Peershare), but Peercoin has the advantage of having the most liquidity of any PoS coin.

Although this gets a little bit bulky, I prefer quoting the whole post to give an in-line answer…

[quote=“Jordan Lee, post:18, topic:1103”][quote=“masterOfDisaster, post:16, topic:1103”]But couldn’t you - relatively stable price for Peercoins as prerequisite - gather transactions within the Peershare system and execute “bundled” transactions in Peercoin only seldom?
You could use Peershare systems for bundling transactions, couldn’t you?[/quote]

To reduce transaction fees incurred for Peercoin transactions an issuer could choose a less frequent interval for dividend distribution, such as quarterly instead of weekly. Is this what you mean by bundling transactions?[/quote]

Basically: yes.
But I understand the Peershare more like tradable items, that are not necessarily part of the Peercoin blockchain…

[quote=“Jordan Lee, post:18, topic:1103”][quote=“masterOfDisaster, post:16, topic:1103”]Scenario 1:
a company wants to raise funds and gathers 1000 times 1 USD for emitting 1000 Peershares each worth 1 USD.
The share holders receive for each Dollar 1 Peershare of that company.
When a share holder wants to sell a Peershare (for Peercoins or maybe fiat money), he needs a kind of exchange that handles that (or should this business only possible with the company that issued the Peershares? From my understanding: no…).
If it is done on an exchange it is completely possible to transfer fiat money or any other commodity without putting a transaction to the Peercoin network by just selling the Peershare for anything except Peercoin.
And both the exchange and the company that issued the Peershares can place bundled transactions when there is need to trade Peershares for Peercoins evading relatively huge transaction fees for small (in value) transactions.
That would be achieved by increasing the PPC volume for a single transaction (through “bundeling”) and reduction of the number of transactions in the Peercoin network.
And that would decrease the price in Peercoin for a single Peershare transaction (by decoupling the Peershare transactions from Peercoin transactions).[/quote]

You are right that the exchange of a specific type of Peershare for Peercoins would typically occur on an exchange and would therefore be an off blockchain transaction. Still, to get Peercoins into the exchange requires a blockchain transaction.[/quote]

If you talk about Peercoins that are not yet in an exchange wallet, then yes. But if there are already PPC in an exchange wallet of some guy, you could trade the Peershares without Peercoin blockchain interaction. Only to get PPC to or from the exchange requires a transaction.
Lots of trades on exchanges are done with coins being already at the exchanges and to coins that stay at exchanges for future trades.
I don’t know about a ratio between “in-exchange-transactions” and “from/to-exchange-transactions”. I assume the coins are more often transferred between exchange accounts than from or to external wallets. But i don’t know…
Still I hope this approach would be able to decrease the number of Peercoin blockchain transations while keeeping the Peershare/PPC traing pair the preferred one (but for sure not the only possible!)

[quote=“Jordan Lee, post:18, topic:1103”][quote=“masterOfDisaster, post:16, topic:1103”]Scenario 2:
Peershares are used for paying dividends. This can be done by issuing a second “dividend Peershare system” different from the “company share Peershare system”. You receive tradable Peershare dividends which will only be in connection with the Peercoin blockchain once you decide to trade them for Peercoins.[/quote]

If I understand you correctly you are proposing a new PoS currency to be used for Peershare dividend distribution to reduce the load on the Peercoin blockchain. Dividends can be paid in any cryptocurrency the issuer chooses including any PoS coin (with modest modifications to Peershare), but Peercoin has the advantage of having the most liquidity of any PoS coin.[/quote]

That’s what I tried to make out of it - a kind of PoS only currency that can be traded for PPC.
As stated before: I think I don’t understand Peershare yet. But maybe those misunderstandings lead to new or old ideas^^
And as Peercoin can be sustained very energy efficiently, I find it the agent of choice for that Peershare concept.
…but one may be interesting in trading ot for fiat money instead.

+1

The more I think about a fixed transaction fee, the more I come to the conclusion that a variable transaction fee would be better. The only problem I see with this variable transaction fee: you can’t rely on it’s height.
Let’s try to find out how serious that problem is.

Let me try to compare it with something we know for some time - BTC.

[ul][li]
In BTC the transaction fee is optional. It is paid to the miners for solving a block that includes transactions with fees. Fees incentivize the miners to include transactions with fees.
You can avoid a transaction fee at the price of an unknown transaction duration. So if the transaction is not time critical, you can save money by paying 0.00 fee.[/li]

[li]
In PPC the transaction fee is mandatory. It is destroyed and not paid to miners. Fees don’t incentivize the miners directly. Fees incentivize the ones who want to execute transaction to do that deliberately. This prevents the network from being swamped.
If you were in a PPC world with a variable transaction fee you could save transaction fees by waiting for a period with smaller transaction fees if the current ones were to high for your taste.
One drawback might be: the variable transaction fees can stay high or even rise if lots of transactions need to be done and are postponed until they can’t be postponed any longer; eventually they might begin to swamp the network despite the high fees.
But thinking twice this is quite similar to paying high fees for BTC transactions if you are in a hurry:
the miners (I imply the majority being PoS miners) that work (energy efficiently) on the transaction do not only get a PoS reward, but by destroying the (relatively) high fees, their share of issued PPC rises. It’s quite similar to earning high fees for processing urgent BTC transactions.
[/li][/ul]

That would kind of resemble BTC’s dependency between the point of time you think about excuting a transaction and the point of time you want to have it done:

[ul][li]
BTC: individually eligible transaction fees incentivize miners to include the transaction to the next block. You pay extra if you are in a hurry.[/li]
[li]PPC: variable and determined by the network transaction fees incentivize people to execute a transaction in a time with low fees (caused by low transaction rates). Once again, you (might) pay extra if you are in a hurry.[/li][/ul]

It has taken some time, but now I find this approach of variable transaction fees more sophisticated than a fixed rate because it can adjust the fees to the demand for transactions.
A fixed rate might fail by being too high to attract people to Peercoin OR by being too low to prevent people from swamping the network with transactions. Variable fees can adjust!

I really like a variable fee, although it might be hard to create a sophisticated algorithm.
I see more advantages than disadvantages at the moment.

Please tear this post apart if you have valid arguments for doing so!
I feel the transaction fee discussion needs much more input!

One last thing - just to name a disputatious idea that crossed my mind:
it could be considered to incentivize the miners directly: if the transaction fee is higher than x (needs to be defined^^), the part above x is not destroyed but (partly?) paid as reward!
Without that incentive PPC holders not doing anything profit by the ones sustaining the network.
It would be especially nice to pay that reward for PoS blocks only.
…maybe I overshoot the mark

Oh hey just noticed this thread.

In the other thread I wrote that the fee should be a certain base amount plus optional fee for faster processing. The set number of transactions per block seems like a very clean way of setting a “base fee” and I like it. Some people mentioned that Bitcoin transaction fees are currently quite high; The first idea that came to mind was destroying half of the optional transaction fee instead of rewarding it all to miners in order to dampen a possible speculative bubble that drives up the cost of too quickly.

Thoughts?

[quote=“concavecircle, post:21, topic:1103”][…]
Some people mentioned that Bitcoin transaction fees are currently quite high; The first idea that came to mind was destroying half of the optional transaction fee instead of rewarding it all to miners
[…]
Thoughts?[/quote]

sure: http://www.peercointalk.org/index.php?topic=1539.msg12777#msg12777 - or just visit my last post in this thread…

But maybe that post was to long.
Here comes the TL;DR version:
variable txn fees!
Parts of them are paid to miners if they are above a certain limit.

[quote=“masterOfDisaster, post:22, topic:1103”]sure: http://www.peercointalk.org/index.php?topic=1539.msg12777#msg12777 - or just visit my last post in this thread…

But maybe that post was to long.
Here comes the TL;DR version:
variable txn fees!
Parts of them are paid to miners if they are above a certain limit.[/quote]

Well not really. I think I’m saying something different. The deflationary effect from destroyed fees is nowhere near as good for a miner as being straight up paid the same fee. A fee that is paid to miners offers better “product differentiation” for transaction fees, but I mentioned that the cheaper transactions might get slowed down too much, which is why I proposed destroying half the fee. For the person who wants a faster transaction, that means they’ll have to pay 100% more to get their transaction put at a higher priority, basically a speedy transaction tax placed on the consumer, reducing demand.

Nothing. It rocks!

“Target a certain number of transactions per block and raise the target gradually over time to match expected improvements in hardware. If transaction levels are below the target, fees will be very low. If they are above the target, fees will be high.”

+1, This will give PPC constant optimum growth.

A currency needs a community who actually uses the currency and not just hoard it. The value of a currency comes from the people who share the same thought that it has value. So, the more the people who use it and are willing to accept it, the more its intrinsic value is in some sense.

In the third option, “Do nothing for now and reconsider the problem when it becomes more acute.”, What assurance do we have that we will even reach the point where this will become a problem? And, how do we know that it has become a problem? For me, it is already a problem. Perhaps a rapid adoption of PPC isn’t going to happen because people are aware that this fee will become a problem in the future. The third option also had the highest vote which suggests that people know and acknowledge that the fixed fee is going to be a problem in the future. This might be the thing that is suppressing adoption of PPC. User adoption is fundamental for any currency. That is enough evidence to me that we should deal with the fees as soon as possible.

I don’t think it is very different at all. I ask for a variable tx fee (the height of the fee is associated to the tx load on the block chain). If that fee exceeds a certain value, it is partly paid as reward for the miners. There is a part of the tx fee that is consitently destroyed to limit/counter the inflation caused by PoS/PoW rewards.
In my view the variable fee and the partial payout of it is not the incentive for the PoS miners (the 1% interest per year should be enough) to do their work, but the incentive for those who want to execute transactions to do that a bit more deliberately than without fees.
Isn’t that the basic idea of the fixed fee - to prevent from “tx DOS attacks”, to make those who execute transactions pay for the “service”?
I feel like a variable fee can do the same, but by being more flexible (allowing relatively cheap tx in time with low tx rate, limiting additional tx in times with already high tx rates) it doesn’t supress adoption the way a fixed fee might do.
I’m not saying it does. But i fear that it could do. Apart from the design, the programming work, the maybe need for a hard fork, and all that other small things that need to be done to achieve a variable tx fee (just kiddin’; I know this is a hell of work!), I don’t see a drawback of a soundly designe variable tx fee yet.

Can we try to focus on advantages and disadvantages of a variable tx fee?
I think doing nothing doesn’t need to be discussed as widely as the introduction of a variable fee. If the discussion regarding doing something/nothing comes to the conclusion that doing something is the choice, you still need to look for “what to do”.
And one solution could be the introduction of a variable tx fee…

Shall I create a new topic for that as I don’t want to claim “introduce a varTxFee” the “answer to this poll” (I see clearly from the current results, waiting might be preferred, although I second lumierre’s post in assuming that people might know that a fixed tx fee could be (or become) a problem…)

[quote=“masterOfDisaster, post:26, topic:1103”]Can we try to focus on advantages and disadvantages of a variable tx fee?
I think doing nothing doesn’t need to be discussed as widely as the introduction of a variable fee. If the discussion regarding doing something/nothing comes to the conclusion that doing something is the choice, you still need to look for “what to do”.
And one solution could be the introduction of a variable tx fee…[/quote]

Is this thread not called “What should be done with the fixed transaction fee”? lol aka what’s the way a variable or different fee should be set up?

I think we both agree that directly paying miners a fee as part of the incentive to mine is beneficial, but I’m saying the reason from a textbook economics POV is that it would allow differentiated transactions, by priority/processing time, and the classic way to do this is to charge people who want the premium product more, giving the people providing the premium product incentive to do so (premium product here is a faster transaction). As a “tax” part of the fee can be destroyed, reflecting upon the possible loss of efficiency that occurs when transactions become differentiated by priority. I’m still learning about the security design of these cryptocoins so I can’t say if that’s an economically sound thing to do, but it’s a hunch based on seeing the Bitcoin arms race.

At any rate, a transaction fee that is anywhere near reflective of the network cost should be low enough that getting the economics perfectly efficient shouldn’t be necessary.

I’m bumping this one. With Jordan Lee’s proposal about voting, fees and what not I think this thread is worth revisiting!

Well done Pillow! I didn’t know about this
I vote the last one.
I will follow Sunny’s opinion about the fee thing, what ever that may be

Time to bump this due to current “heavy and strange use” (transaction spam) of the Bitcoin network.
Bitcoin introduced the “dust limit” to keep very tiny outputs out of the network : https://www.reddit.com/r/Bitcoin/comments/2unzen/what_is_bitcoins_dust_limit_precisely/
But even with the current dust limit it’s possible to spam the Bitcoin network with transactions very cheaply.
Preventing dust transations is not sufficient.

Litecoin developer Charles Lee invented something for Litecoin that makes this kind of attack very costly:

I wish I could say that Peercoin has a defense for that kind of attack (I consider it an attack).
I can’t.
As long as 0.01 PPC/kB get paid, transactions will be put into blocks. You can buy 1 MB of blockchain size for roughly 10 PPC. If you want to “add” 100 MB of blockchain size, this costs 1000 PPC.
At the current price level that would cost roughly 600 USD; 1 GB costs 6000 USD - which is nothing compared to the market cap!
I don’t consider the mandatory (fixed) fee a defense mechanism (against blockchain bloating) any longer.

Peercoin needs variable (still mandatory!) tx fees that adjust to the utilization of the network.

masterOfDisaster was gracious enough to explain this issue for me, and my vote would be for option 1 but unfortunately I already voted for None of the above at the time.

[quote=“masterOfDisaster, post:30, topic:1103”]Time to bump this due to current “heavy and strange use” (transaction spam) of the Bitcoin network.
Bitcoin introduced the “dust limit” to keep very tiny outputs out of the network : Reddit - Dive into anything
But even with the current dust limit it’s possible to spam the Bitcoin network with transactions very cheaply.
Preventing dust transations is not sufficient.

Litecoin developer Charles Lee invented something for Litecoin that makes this kind of attack very costly:
https://www.reddit.com/r/Bitcoin/comments/3ci25k/the_current_spam_attack_on_bitcoin_is_not/

I wish I could say that Peercoin has a defense for that kind of attack (I consider it an attack).
I can’t.
As long as 0.01 PPC/kB get paid, transactions will be put into blocks. You can buy 1 MB of blockchain size for roughly 10 PPC. If you want to “add” 100 MB of blockchain size, this costs 1000 PPC.
At the current price level that would cost roughly 600 USD; 1 GB costs 6000 USD - which is nothing compared to the market cap!
I don’t consider the mandatory (fixed) fee a defense mechanism (against blockchain bloating) any longer.

Peercoin needs variable (still mandatory!) tx fees that adjust to the utilization of the network.[/quote]

Charles Lee’s “dustspamfix” seems like a reasonable protection to me.

A sample attack in Peercoin would roughly look like that https://bkchain.org/ppc/tx/e1090e0120ee72c69361c417cba89d875e276df8ea3b85f84a99b4a8c1947247

One input requires approximately 148 bytes, and each output requires approximately 34 bytes.

Most efficient blockchain spamming to max out one block requires 25600 outputs. The attacker would send a transaction with 25600 outputs of 0,00000001 PPC each = 10.24025600 PPC (in combination with transaction fee).

“dustspamfix” integrated in Peecoin code (additional fee of 0.01 PPC for every output below 0.01 PPC) and the attacker would send a transaction with 25600 outputs of 0,01 PPC each = 266.24 PPC (in combination with transaction fee).

1. “dustspamfix” will make this kind of dust spamming attack 26 times more costly.

2. Higher fees don’t apply for anyone who is making transactions normally. Honest Peercoiners have nothing to lose but a small blockchain to protect.

Why not integrate it?

(besides that I favor to keep a fixed transaction fee)

Edit: also applies to XPM

"dustspamfix" integrated in Peecoin code (additional fee of 0.01 PPC for every output below 0.01 PPC) and the attacker would send a transaction with 25600 outputs of 0,01 PPC each = [b]266.24 PPC[/b] (in combination with transaction fee).

I thought an output below 0.01 PPC already couldn’t exist? Haven’t we basically already done the dustspamfix from the get-go?

Also, what prevents someone from sending outputs of 0.011 PPC a billion times to their own addresses continuously over and over again? The cost is only as MoD was stating, which is quite cheap, even if it would significantly reduce supply if sustained.

[quote=“Nagalim, post:33, topic:1103”]

“dustspamfix” integrated in Peecoin code (additional fee of 0.01 PPC for every output below 0.01 PPC) and the attacker would send a transaction with 25600 outputs of 0,01 PPC each = 266.24 PPC (in combination with transaction fee).

I thought an output below 0.01 PPC already couldn’t exist? Haven’t we basically already done the dustspamfix from the get-go?[/quote]

That would be great!

Nothing. However, it would be more expensive than

[quote=“masterOfDisaster, post:30, topic:1103”]As long as 0.01 PPC/kB get paid, transactions will be put into blocks. You can buy 1 MB of blockchain size for roughly 10 PPC. If you want to “add” 100 MB of blockchain size, this costs 1000 PPC.
At the current price level that would cost roughly 600 USD; 1 GB costs 6000 USD - which is nothing compared to the market cap![/quote]

Primary outputs would be re-used as new inputs. Inputs require more transaction size than outputs, 148/34 (bytes) = 4.35 times more transaction size.