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Take PayPal or Wise. User A sends $100 USD to User B, and the payment network takes a $1 fee. User A now has -$100 USD and User B has $99 USD. If you add -100 +
by zeroclip 4y ago
Take PayPal or Wise. User A sends $100 USD to User B, and the payment network takes a $1 fee. User A now has -$100 USD and User B has $99 USD. If you add -100 + 99 it might seem like money disappears, but that remaining $1 of value has gone to the network as a fee for services rendered, and it was something that both parties were willing to pay.
Even here, both users are short USD, but it is not a "negative sum" system as the users gain some positive value by having the payment processor transfer and secure their funds. If the only metric is how much USD a buyer has left, every visit to the bakery would be a negative sum game.
In the above example, PayPal and Wise are User C. In a permissionless blockchain, User A and B can both also opt to be validators and receive these protocol rewards, so there may not even be a User C that extracts rent on each transaction.
- chx 4y agoNah, PayPal or Wise has the money. It didn't disappear from circulation.
- zeroclip 4y agoI assume you are not talking about the minority fee that goes to the validators for their services, but the majority fee that is burned in ETH after EIP1559. When a limited supply token is burned, the total supply is reduced, and assuming that does not decrease the demand, then the value will diffuse to all token holders. If 75% of all PayPal or Wise fees were burned such that all users of PayPal had their account slightly appreciate in value whenever there is significant transactional volume in the network, a lot of users would be pretty into that. Besides, this is just one way. Bitcoin does not burn fees, so it’s much more like the PayPal and Wise approach, no money leaving circulation.