Transaction fees and money velocity.

[Adrian-X]

Hi community 

I have been immersed in Bitcoin for over 3 years and have gained related technical and economic insight.
while up until now I have only invested in Bitcoin I am considering diversifying. 

So before I do I would like to update my understand of NXT, and I would value the community's input on a fiew questions I'll ask over the coming weeks.

I understand transaction fees are distributed as a percentage of total coins held against total coins issued.   
First how are transaction fees determined and chained?

[hughmanwho]

Basically the way forging works is that you have a percentage chance that you and only you will be forging the current 1 minute block.  Any transaction fees generated during that minute are 100% yours.

Once we get bigger the plan though is to have 2 or 3 computers forging simultaneously, which would increase security, someone with 100 Nxt couldn't occasionally bring down the network, and in fact someone with 3 million Nxt could still only bring it down for about 1 minute per day if three computers were used, if 5 were used, it'd be one minute every year.  Point being though eventually each block will be forged by multiple computers who will equally split transaction fees.

[Adrian-X]

Thanks got it.

But I don't understand how the transaction fee determined or who sets how much a transaction fee is?

And who pays the fee, the sender or receiver?

And is it possible to send a transaction with no fee, and if so how is that decided?

[^[GS]^]

Theory
1440 confirmations = 24hs

Reality
1440 confirmations = ~48hs

I think that explains everything!

[Sebastien256]

Right now, fee are 1 nxt for each transaction. There is currently a debate in the community to lower the fee. Apparently, this might happen soon.
If you want to be inform globally about the current status of nxt, I suggest you consult this excellent BLOG from Damelon: http://www.nxtcoins.nl/50-2/

EDIT: Actually, the sender pay the fee. no free transaction.

[lyaffe]

The item "Update to 0.5.12 NOW!" in the Damelon's blog leads to this URL http://www.nxtcoins.nl/update-0-5-12-now/ and clicking the "download" link takes you to http://you.justgot.scammed/be-careful-0.5.12.zip
I didn't notice any specific problem caused by this link but its really a bad joke and should be fixed.

[^[GS]^]

late with the news, now the urgency is to install the 0.6.0!

http://info.nxtcrypto.org/client-update-0-6-0/

[Sebastien256]

Yes always from the official source.
http://info.nxtcrypto.org/

[Adrian-X]

Right now, fee are 1 nxt for each transaction. There is currently a debate in the community to lower the fee. Apparently, this might happen soon.
If you want to be inform globally about the current status of nxt, I suggest you consult this excellent BLOG from Damelon: http://www.nxtcoins.nl/50-2/

EDIT: Actually, the sender pay the fee. no free transaction.

Thanks.

I would be more open to the idea of fee being optional, and possibly determined by algorithm factoring in the number of forging coins and the days destroyed (velocity)

[EmpireCloud]

Right now, fee are 1 nxt for each transaction. There is currently a debate in the community to lower the fee. Apparently, this might happen soon.
If you want to be inform globally about the current status of nxt, I suggest you consult this excellent BLOG from Damelon: http://www.nxtcoins.nl/50-2/

EDIT: Actually, the sender pay the fee. no free transaction.

Thanks.

I would be more open to the idea of fee being optional, and possibly determined by algorithm factoring in the number of forging coins and the days destroyed (velocity)

I think if the fee was optional you could spam the network?
I like the idea of a lower fee, or maybe a no fee period for a while, subsidised by the development fund.

Ultimately there needs to be a small fee to incentivize people to forge and thereby process the transactions in a decentralised way.
 
(But then again maybe if it reaches a critical mass in the future and people have their clients on 20 minutes a day just using NXT could that be enough to decentralise the network? Imagine no inflation and no fee, Bitcoin would be toast.)

[Adrian-X]

Sure you need to eliminate spam, so yes fees are necessary.

But hording in NXT is encouraged and reworded, so it would be fare to discourage hording by reducing the fee to encourage money velocity. I like the idea of fees being set by an algorithm that is a combination of money velocity and active accounts.

[hughmanwho]

Blockchain explorer doesn't seem to include the average transaction size but that would be interesting to know.

Definitely need to have something and you need to make it worth it for the forgers to forge.

I think you could probably charge a 0.5% fee and it'd seem smaller than one Nxt and would be smaller for the average transaction.. 5 cents for a transaction seems big in the world of cryptos but if it's a fixed percentage of the amount being transacted, it be less likely to discourage small transactions.  Plus I really want micro-transactions to be doable where you can afford to send someone 0.1 Nxt and not have to pay 1 Nxt to do it.

[cryptomaniac]

Blockchain explorer doesn't seem to include the average transaction size but that would be interesting to know.

Check that interesting data mining article on that theme:
http://brosephus.github.io/nxt-explore/