In today’s post, I describe the importance of feeless transactions and how we plan to bring them to Stealth.
What is a feeless transaction?
A feeless transaction is one that does not require an extra payment when sending coins. Fees are a critical component for practically every payment system. In Bitcoin, for example, fees not only provide an incentive for block producers, but also limit blockchain spam, which increases storage requirements and reduces the usability of Bitcoin. If each spam transaction has a cost, spam attacks can be largely prevented by requiring additional payment from senders. Even though the transaction cost for any single spam transaction is low, they add up, making any attack costly. They also make any attack significant enough to cause a disturbance prohibitive.
While transaction fees for cryptocurrencies are typically marginal, they often fluctuate and can become expensive. BTC transactions, for example, have been as high as $5. Ethereum fees often fluctuate so fast that transactions will be dropped by the network even when fees exceed the recommendation. In these cases the user loses the fee in addition to the inconvenience of having a transaction denied.
Fees also detract from the usability of a platform because a user must account for fees. This means users need a surplus balance for even the smallest transactions, which makes microtransactions impractical. Additionally, fees make accounting more complicated. For example, an 0.01 coin fee means a user may send 1 coin, but needs to subtract 1.01 coin from their balance. Although these inconveniences don’t make a platform unusable, they do make it less pleasing to use, potentially even having an impact on adoption.
Stealth will soon allow for feeless transactions.
Instead of fees, the sender will have the option of submitting a proof-of-work, where the sender’s computer must do a calculation with a known difficulty and include the results of that calculation in the spending transaction. This type of feeless system has precedence in other cryptocurrencies, demonstrating that proof-of-work is a viable anti-spam measure and enhances the user experience.
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Hondo