IOTA: Why free transactions matter most
A short fable about IOTAns and blockchainians
There are two main benefits of IOTA over previous generations of cryptos: unlimited scalability and free transactions. The importance of scalability is obvious: if you want to achieve global adoption, you will need to address this issue. While the conventional blockchain can be bloated with layers of added complexity in order to push (at least to some extent) its limits of scalability, it is far more difficult, if not impossible, to replicate free transactions.
The free transactions might seem trivial. After all, why should you care paying $1,37 for a $5000 transfer. It is still cheaper than the banks, right? And there are no intermediaries, right? Why should you care about IOTAs free transactions that allow nano-payments in IoT. It only seem to benefit the machines’ economy, that is still not here and might never come. Who knows!
As far as the average person is concerned, she will be happy to pay a minimal fee on her transactions as long as it is cheaper than the current alternatives. So why bother with free transactions? It seems like a tiny benefit. Why bother?
There is another implication of free transactions, apart of not spending your money. One that you might not be aware of and that is of utmost importance. Let me tell you a little story:
Once upon a time there was a planet called IOTA. It’s inhabitants, hard working people, had a global agreement — just two rules of coexistence:
- Before asking a favour, you have to do two favours in return.
- Your own needs have to be fulfilled by someone else.
You could not cheat as a smart ledger system was keeping track of your own tasks and the favours you have done. So it was practically impossible to be picky about your choices. If you want a package to be carried from point A to B, you had to do two similar tasks for someone else.
This way the inhabitants were altruists by design. Everyone was committed to help the society, as it was the only way to be part of the system that takes care of your own selfish needs. Since you could not do anything by yourself, everything you did was for the others — for the society. This was the only way to fulfil your personal needs. And they were taken care of, as long as you took care of the others.
This is how this marvelous society worked. And it had an interesting ramification:
Nobody was above anyone else. If you wanted more for yourself, you had to do double as much for the society. Hence, in order to improve your own well-being and standing, you automatically improved the well-being and standing of the whole system. Everyone benefits. No one can exploit. Egoistic drives turned for the benefit of the whole.
As the population was still small, it is said that there was a wise, powerful man living among them called Coordinator (or “Coo” - the way he was lovingly called by the IOTAns). He took care of the favour-ledger and made sure that the rules were followed. This was important as to make sure the system worked even when sporadic alien visitors came, who didn’t know or didn’t want to follow the rules. As the population grew, these intermittent disturbances became relatively small to destabilise the society, so that the old “Coo” retired. But that’s another story.
On the other side of the universe
There was a planet called Bitcoin with its inhabitants called blockchainians. It had a similar rule as the IOTAns: Nobody could take care of their own needs. But, instead of helping the others in order to help yourself, you had to ask the “Miners” for help.
These Miners were a separate caste, or, at least, they thought they were. They thought, they were better than the “normal” inhabitants, as they were the only ones who could do anything. And, as they were the only ones who did something, they insisted that they should get paid. Otherwise, where is the motivation to work for the “normal” blockchainians? Hence,
the blockchain society would collapse without fees
The fees were the ulterior motivator and guarantor that the system worked. The Miners were not interested in the system per se. Their interest was that the monetary system that made them rich was kept in place. They did not care about the needs of the lower-caste blockchainians. All “favours” were bought with money. If you had enough money, you could fulfil all your needs and beyond.
The spread of inequality
At some point the Miners realised that they can get even richer, if they hired even more manpower so that they could do even more “favours” and make even more money. This seemed like a good investment. Over time small Miners grew into huge companies. Almost all fees were being re-invested so that they grew into gigantic concerns. It is said that one cartel of such companies called “China Pools” was processing over 81% of all favours.
The Miner’s dictatorship
These Miners have become a middleman that had all the money and power. When it came to political decisions, the cartel always followed its own interest in the first place. And their sole interest was to keep the power. And to make more money. So the concerns of blockchainians (decreasing the time it takes to complete the favours, for example) were half-heartedly solved without jeopardising the monetary system and the status quo.
This society was unequal and unfair. When the first settlers moved to blockchain, they thought, they have cut out the middleman and achieved true freedom and equality. A new, brave world! Only to realise that by incetivizing favours with money, they were incentivizing the worst in each other. The work for the sake of money created inequality, which led to the pursue of egocentric agendas. They arrived at exactly the same capitalistic system they have fled from.
Many attempts have been made to address the issues of the blockchainians (like the speed of the favours). Many thought, they could do it better and moved to other planets like Ethereum, Litecoin, etc. However, it didn’t change much the situation at hand. Only few realised, that the money was the real problem.
And only a few lucky ones got this figured and moved to IOTA. But as more and more blockchainians moved to IOTA, the intergalactic Miners association felt the heat and decided to wage war on IOTA. They spread rumours about the failures of IOTA’s social system, it’s creators, the wise man “Coo”, and many other aspects. This did not stop the migration, though, as blockchainians realised the benefits of IOTA as its society progressed further. But that’s yet another story that is still being written…