Transaction fees are unavoidable. Even for bitcoins.

During an interview with a rising e-commerce startup, the founder excitedly told me that he’s cracked the code to avoiding fees in online transaction. However, he could not tell me his great secret. After some thought and reading, here’s how I would design it.

Crypto Currency

There’s an open source software that allows transaction-fee-free interaction between users called openbazaar. This is good, but I can’t buy food with bitcoins (yet), so it’s out of the question for now.

Crypto Currency Conversion

The next best thing is probably a way to convert cash to crypto and back. Uphold seems to be the best option today. They allow conversions from cash of less than $1000 per month. All transactions within the system is free. Unfortunately, Uphold hasn’t quite taken a hold yet, so I wouldn’t be building an e-commerce app on top of them.

Bitcoin

After all this searching, I realized that I didn’t know enough about crypto currency and bitcoin. Time to do some reading. First, I read up on the basics of bitcoin. Next, I read the actual paper written by Satoshi where he mentions that bitcoin transactions are subsidized by coin generation. However, in a future where coin generation do not offset transactions, a transaction fee would have to be charged. It seems it seems like it’s not possible to get away from fees after all. That is unless…

Escrow Investing

A different way to avoid transaction fees would be to somehow make money with all the transaction that offset costs. I’m thinking of something that holds money and invests it like a bank. Sort of like Paypal actually… Hmm. Back to square one.