It seems like the 0.01 PPC fixed transaction fee is becoming more of an issue as the PPC value rises. It was negligible in the early days of PPC but we’re at a point where the usability of this coin is dictated by the transaction fee. I understand that Sunny King explains over and over that this coin is to be a “backbone” currency. However, is that just an excuse to have security in the network? As far as I know, the fixed fee was intended to reduce the blockchain size and to prevent spamming but all of these are already solved in bitcoins. We don’t need to synchronize to the whole blockchain to start transacting as done with Bitcoin’s MultiBit wallet (takes a minute or so). In BTC, fees are imposed when there is high volume of transactions to be confirmed. In my opinion, we don’t have to be a backbone currency. PPC could become more usable if we just allow zero or low transaction fees when there is less transactions to confirm - a dynamic fee structure. If we keep the high 0.01 tx fee, we risk to end up in the following:
The rich get richer. Some of you may argue that the 1% “interest” in Proof-of-Stake is available to all, rich or poor. However, the rich is always at an advantage. For example, if a poor guy had only 1 PPC and mints 1% of his coins in 1 year, he would get 0.01 PPC. That 0.01 PPC is almost useless because it will be destroyed as soon as he transacts. In a percentage perspective, if a rich guy (100 PPC) and poor guy (1 PPC) mints with 100% of their holdings in a year, the rich guy get to keep most of the 1% interest and the poor guy receives almost nothing. In essence, the rich get richer.
A PPC bubble. Here is why bitcoin is not in a tulip mania while PPC run the risk of becoming one. Bitcoin definitely has many uses but it’s mainly used to transact. Its valuability comes from the convenience it brings as a medium of exchange. Nothing backs bitcoins but it is its property to last makes it a good store of value. This ability to last is also true for PPC but it will lack the convenience of exchange in the future. It will just be a means to store value but not usable. Why would people use it if there are other alternatives that cost less to transact? This sounds like gold right? Most PPC folks including Sunny explain that PPC imitates gold better than bitcoin. However, this is a bad thing. Bitcoin is currently a threat to gold because it costs less to transact but is still durable and divisible. PPC is like taking a step back. If Bitcoin is gold 2.0, PPC is gold 1.5. People would only buy PPC to speculate on it but not really use it to buy goods because it is impractical. Frankly, among the hundreds of cryptocurrencies, it is useless because you can’t buy anything with it. As the value of PPC rises, lesser merchants would want to accept it due to the fees rendering it more and more useless. Therefore, it is a bubble waiting to pop unless we do something about it.
I am a big fan of Proof-of-Stake but not the fixed transaction fee. My only request is to have a dynamic tx fee to give the market control over liquidity. We shouldn’t pay fees if we don’t have to. We give the poor a chance to spend their minted coins whenever there is less load on the network (zero or small tx fee). We also make the coin spendable just like bitcoin. The spendability of bitcoin is what makes it better than gold. With a dynamic tx fee, we suppress the volume of transactions when the confirmation time is long while encouraging transactions when there is less volume. This would allow for optimum growth and a healthy self-regulating economy. I would not be surprised if another spendable PoS cryptocurrency comes up. It would lead to PPC’s demise.
Please post your thoughts and try to change my mind about the tx fees. This thread is not meant to bash PPC but to debate on it for its improvement. I’m sure most people feel and predict the same as I do.