B.U. President Andrew Clifford and B.U. Core Developer Andrea Suisani join a panel discussion at Web3 Amsterdam.
“To fee or not to fee?” is a highly relevant industry topic: This question is becoming increasingly important to blockchain users and enthusiasts. All the panellists concluded that some form of cost for sustaining a decentralized cryptocurrency network, must be met by users of the network. In most cases this is by low transaction fees, although alternatives exist.
Moderated alongside Crimson Cloud of Hive and Dom from Heiko, the discussion explored the role of transaction fees in sustaining decentralized networks, their impact on adoption, and potential alternatives. The panelists agreed that some cost is necessary to maintain a blockchain, though opinions varied on how that cost should be structured, low fees, staking models, or perceived “feelessness”, and its implications for the future of cryptocurrency.
Opening Remarks: A Vision for Low-Fee Blockchain
The moderator opened by framing the topic as pivotal to the industry’s future. Reflecting on blockchain’s trajectory, they noted that 10 to 15 years ago, they’d predicted mass adoption within a decade, banks fading, blockchain prevailing. A key to that vision? Low or no transaction fees to enable seamless crypto and blockchain transactions. “For me, this is personal,” they said. “I want a future where people can transact fearlessly, with minimal fees.”
Meet the Panelists
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Andrew Clifford, President of Bitcoin Unlimited (B.U.), has spent a decade advancing blockchain software based on Satoshi Nakamoto’s UTXO model. He champions low fees rooted in Bitcoin’s original design, which he considers still robust despite the shift by many coins to account-based systems.
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Andrea Suisani, a core developer for Nexa, shares Andrew’s focus on UTXO-based blockchains. He emphasized scalable solutions to keep fees low while ensuring network sustainability.
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Dom, CEO and founder of Heiko, is building a blockchain blending Solana’s efficiency with Ethereum’s EVM compatibility. A former software engineer, he aims for low fees without sacrificing functionality.
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Crimson Cloud, an operations expert at Hive, straddles both sides of the debate. Hive’s ecosystem prioritizes feeless transactions for social and gaming use cases, though she acknowledges fees’ utility in other contexts.
Defining “Feeless”: What Does It Mean?
The panel dove into the concept of “feelessness.” Crimson Cloud explained that nothing is truly free, sustainability requires cost somewhere. Hive achieves perceived feelessness through a staking model: users stake Hive tokens to earn resource credits, enabling transactions without direct fees. Businesses can delegate credits to users, hiding costs behind the scenes. “It’s about accessibility,” she said. “Users don’t see fees, but the network balances load dynamically.”
Andrew Clifford contrasted this with Bitcoin’s history. Early on, Bitcoin allowed feeless transactions via a “days destroyed” mechanism, rewarding the movement of old coins. But as blocks filled due to the 1MB limit, fees rose, choking off this feature. Bitcoin Unlimited’s push for larger blocks aims to restore low fees, not eliminate them entirely. “Our philosophy is low fees, not zero fees,” he clarified.
Andrea Suisani echoed the need for sustainability. “Someone has to pay, through staking or fees,” he said. In UTXO models like Nexa’s, low fees prevent spam and prioritize transactions, but mass adoption is key to keeping them affordable. Dom from Heiko agreed, suggesting fees could shift to third parties (e.g., dApps or paymasters) via innovations like account abstraction, making transactions feel free to end users.
Fees and Network Security: A Balancing Act
A central concern emerged: how do blockchains generate revenue without fees? Crimson explained Hive’s approach, its inflationary token distributes a fixed daily reward to block producers, independent of transaction volume. Staking drives demand for Hive, stabilizing the ecosystem without direct fees eroding user assets.
Andrew and Andrea tackled Bitcoin’s challenge. With block rewards halving (now at 3.125 BTC, dropping to 1.6 in three years), miners increasingly rely on fees. Satoshi envisioned larger blocks (up to 30MB) supporting many low-fee transactions, but the 1MB cap stifled this. Bitcoin Unlimited’s scalable block model seeks to accommodate more transactions, keeping fees low while rewarding miners. Andrea added that mass adoption, billions of daily transactions, could sustain Bitcoin even with fees below one satoshi per byte.
Dom drew from Solana’s success with low fees and high throughput, adapting it for Heiko’s EVM-based chain. He stressed that small blocks create fee pressure when demand exceeds supply, a lesson from Ethereum’s high-fee eras.
Digital Gold vs. Digital Cash
The discussion pivoted to Bitcoin’s identity. Some tout it as “digital gold,” a store of value, but Andrea argued this model falters without a medium-of-exchange role. “If block rewards hit zero and transactions are minimal, who secures the network?” he asked. Andrew agreed, likening a gold-only Bitcoin to a chair with three legs. Historically, gold worked as money until long-distance commerce demanded fiat. Bitcoin, he argued, must support frequent transactions to thrive.
Dom was less decisive, noting that a high market cap might sustain the digital gold narrative, but “the math doesn’t play out” without transaction volume. Crimson tied this to adoption: fee structures must align with a chain’s purpose, financial tools might tolerate fees, while social platforms like Hive demand frictionless use.
Spam Prevention and Scalability
High fees deter spam, but how do low-fee or feeless models cope? Andrea called fees a necessary “spam prevention mechanism” in UTXO systems, though scalability can keep them minimal. Dom cited Ethereum’s past vulnerabilities, cheap data blobs clogged the network, spiking fees for legitimate users. Solana’s compute-based fees, while not perfect, mitigate this, inspiring Heiko’s design. Hive’s resource credits, Crimson noted, throttle spam by tying transaction capacity to stake, not direct payment.
Andrea revisited Bitcoin Unlimited’s block size solution. At 7 transactions per second, Bitcoin serves few users. Scaling to Visa’s 20,000 transactions per second requires larger blocks, balancing supply and demand to keep fees predictable and low.
Adoption Through Low Fees
The panel linked fees to adoption. Andrew recalled Bitcoin’s retail heyday (2013–2014), when 2-cent fees enabled coffee purchases, until rising costs killed that use case, birthing the “store of value” mantra. Andrea agreed: low fees demonstrate blockchain’s speed and utility, drawing users in. Crimson highlighted Hive’s HBD stablecoin and Bitcoin Lightning integration, enabling instant, feeless transfers that settle off-chain, fostering small-scale economies worldwide.
Dom shared his Ethereum experience, paying $100 for a DeFi swap in 2020, prompting Heiko’s focus on scalability. “Big blocks reduce friction,” he said, echoing Andrew’s logic.
Audience Insights and Closing Thoughts
Andrea emphasized the need for a global peer-to-peer cash system, regardless of which project delivers it. Panel moderator recommended Hijacking Bitcoin by Roger Ver for context on the block size wars.
In closing, Andrew likened fees to centralized platforms like Facebook: users pay indirectly via data, but blockchains demand collective responsibility for sustainability. Andrea stressed adoption through scalable, low-fee networks. Dom advocated reducing user friction, even if fees persist behind the scenes. Crimson framed fees as a toolkit, some chains will use them, others abstract them, empowering users with choice.
The panel concluded that while “feeless” may be a misnomer, someone always pays, the future lies in balancing cost, usability, and adoption to fulfill blockchain’s promise.