11. Satoshi Discusses Transaction Fees

11

Satoshi Discusses Transaction Fees

THIS POST DISCUSSES USE of transaction fees as opposed to seigniorage as a mean of paying miners for their work of mainSeigniorage is an economic term taining the Bitcoin network. used to describe the creation of additional units of a currency. When all bitcoins have been mined and the maximum of 21 million BTC has been created, incentives for miners to work to maintain Bitcoin will come only from transaction fees collected in the course of maintaining Bitcoin. However, prior to this, the yearly rate of bitcoin inflation will be so low in the end that it will effectively be the same as after all bitcoins have been mined.

Re: Bitcoin P2P e-cash paper

Satoshi Nakamoto Mon, 10 Nov 2008 11:09:260800

James A. Donald wrote:

Furthermore, it cannot be made to work, as in the proposed system the work of tracking who owns what coins is paid for by seigniorage, which requires inflation.

If you’re having trouble with the inflation issue, it’s easy to tweak it for transaction fees instead. It’s as simple as this: let the output value from any transaction be 1 cent less than the input value. Either the client software automatically writes transactions for 1 cent more than the intended payment value, or it could come outof the payee’s side. The incentive value when a node finds a proofof-work for a block could be the total of the fees in the block.

Satoshi Nakamoto

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