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"but this formula has other benefits as it enforces minimum transaction fee amounts" Why is this good/important?

Jtsummers 12y ago
It would reduce friction in the bitcoin economy. Consider, in a more conventional economy, a significant tax levied by the government. This tax either reduces the profits for the seller or increases the cost for the buyer or both. 1. The seller can optionally soak the cost of the transaction fee. But this means less profit for them while the buyer sees no changes (until later when the seller finds this is unsustainable as fees increase). 2. The seller can raise prices by the fee amount (how sales tax works in the US, effectively). The buyer is then paying more and more over time as fee amounts increase. 3. Some combination, seller determines the amount they can afford to lose while keeping prices low enough to not lose too many customers. In the end, all 3 options will create a drag on the economy. Either by reduced buying power or reduced profits resulting in reduced future growth. We also see this with credit/debit card transaction processing. Sellers, per their agreements with CC companies, aren't supposed to have different prices between CC and cash transactions. This means they lose part of their profits on CC transactions, with some companies (AMEX) costing them more than others.
- boxcardavin 12y ago
  Maybe I misunderstood, does "minimum" in this case mean that fees must be "at least ฿X"? So wouldn't a fee minimum enforce a higher drag on the BC economy? I will also google this question down later.
- cma 12y ago
  Those kind of credit card agreements were outlawed under an Obama consumer-protection law. You can now offer a discount for people who pay in cash, though I believe the agreements can still require it be advertised as a discount for cash, not as a fee for credit card usage, even if they are effectively the same.

It would reduce friction in the bitcoin economy. Consider, in a more conventional economy, a significant tax levied by the government. This tax either reduces the profits for the seller or increases the cost for the buyer or both. 1. The seller can optionally soak the cost of the transaction fee. But this means less profit for them while the buyer sees no changes (until later when the seller finds this is unsustainable as fees increase). 2. The seller can raise prices by the fee amount (how sales tax works in the US, effectively). The buyer is then paying more and more over time as fee amounts increase. 3. Some combination, seller determines the amount they can afford to lose while keeping prices low enough to not lose too many customers. In the end, all 3 options will create a drag on the economy. Either by reduced buying power or reduced profits resulting in reduced future growth. We also see this with credit/debit card transaction processing. Sellers, per their agreements with CC companies, aren't supposed to have different prices between CC and cash transactions. This means they lose part of their profits on CC transactions, with some companies (AMEX) costing them more than others.

boxcardavin 12y ago
Maybe I misunderstood, does "minimum" in this case mean that fees must be "at least ฿X"? So wouldn't a fee minimum enforce a higher drag on the BC economy? I will also google this question down later.
cma 12y ago
Those kind of credit card agreements were outlawed under an Obama consumer-protection law. You can now offer a discount for people who pay in cash, though I believe the agreements can still require it be advertised as a discount for cash, not as a fee for credit card usage, even if they are effectively the same.