A Blockchain carries no transaction cost: Explained.
Blockchain has become a renowned platform for transactions. This platform’s popularity is because it doesn’t have any third-party interference, and the transaction fee is significantly less, or there is no transaction fee at all. Yes, you read it right, various platforms have come up with charging no transaction fee at all. Now the question arises, how does that happen. In this blog, we will explore how a platform earns when they charge no transaction fee.
Blockchain platforms that charge no transaction fee:
Transaction fees are an integral part of cryptocurrency exchange. It is used to reward the participants of the network. But the fact of the matter is that its not mandatory that this transaction fee can be the only way to read the participants; there are alternatives.
Several Blockchain platforms have emerged that offer feeless transactions. These platforms work differently, they allow the valuation of token and the way transactions are performed differs. There are various approaches that these Blockchain platforms are adopting to ensure that there is zero-transaction fees.
How does that happen?
Some of the Blockchain platforms like IOTA, EOS, NEO, and Kin are not charging any fees at all. Here is how they are making it happen:
· Charging the developer- EOS doesn’t charge any transaction fees. Every new account created on this platform need to purchase RAM from Block producer. This is used to execute transaction and smart contracts. There are certain applications which may requires higher RAM, so you need to purchase more RAM for it.
The app developers will cover the transaction cost rather than the user of the app. The Block producer who provides RAM and aids execution of transactions gets rewarded.
· Use of multiple tokens- Another Blockchain platform is NEO that makes use of various tokens. It has two different tokens: GAS and NEO. NEO is an invisible token and is not used for payment. In case of transfer of NEO tokens, there is no transfer fee.
While the GAS token is needed to execute a smart contract on the NEO Blockchain platform, every execution will cost 10 GAS, but the initial execution fee is free. Once the payment is done, GAS token gets redistributed to the holders of NEO.
In simple words, the cost of the transaction is on the developer and not the user.
Two of the example of the platform that we have discussed here have eliminated the fees, but it has also put the pressure on the Blockchain platforms and developers. The cost of RAM and other fees may not sound profitable. The cost of performing a transaction is not eliminated at all.
Certain Blockchain platforms have come up with a concept of the near-zero fee. Although zero-fee appears lucrative, the latter takes the lead when it comes to scalability and other effectiveness of near-zero fee Blockchain platforms.
Concluding thoughts- the growing use of Blockchain platforms and its application for different purposes clearly defines how effective it is and how it’s going to impact the future.
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