On Januray 4th of 2021, Ethereum reached its peak price at a massive $1162.97
Although it was just shy of its current ATH (~$1440), it was a significant pump and one of, if not the, strongest in the current bull-run.
Any and all ETH holders and traders were overjoyed. Cryptotwitter had #ethereum on trending. Hey, I treated myself with a cigar, too.
After a col crypto winter, this was the warmest of the warm ups.
However, it brought to light a well discussed problem with major coins like Ethereum. One that most of cryptoverse is very well aware of.
Right after the celebratory tweets and the usual ragging of the other ill-doing coins, came a rush of similar looking tweets.
"Why is the gas fees so high!"
"Omg, I cannot believe how much I have to pay to transfer my eth!!"
"Jeez, can I just take my profits and leave, please!"
Although not forgotten, we have slowly started to live with it - albeit it is visibly annoying.
This is not the first time high transaction fees have been discussed.
Back in 2017, CNBC had published an article discussing the gigantic transaction fees of BITCOIN.
Huge transactions were a real thing on the blockchains, but the price tag it came with was just as huge. Newer forks and protocols like ETH solved one huge issue that bitcoin carries along - transaction time.
It is almost a miracle if you ever see a BTC transaction complete in 10 minutes. I think adetorrent is a believer, it happened to him.
But the issue of huge transaction fees still lurks within our streets.
Why are transaction fees so high?
Eth follows a "first price auction system". That means the higher bidder gets their transaction processed first. It is called "gas fees".
When the Eth network gets busy, i.e., more transactions are taking place. That means more blocks have to be processed. The transactions that pay more for gas, get the first priority. With transactions biting to go through first, the gas fees increases.
In relation to the latest pump, it is obvious why the gas fees would increase. But this has left many people distained. For beginner traders or holders it is almost impossible to complete transactions without their assets losing 50% or more value in gas fees only.
Josh_Rager on twitterIt also effects business models built on Eth network. The massive gas fees completely stuns business and removes the ability to perform micro-transactions.
A possible solution Vitalik had tweeted consists of making and accepting payments with a second currency involved, but that just complicates things.
In the long run, this is always paints a bad picture.
How does Hive solve this?
Hive is deigned to work in ways that solves this issue. Aren't their blocks that get mined? Yes there are. Don't block producers take anything in return? Yes, they do.
But unlike Eth, block producers (witness) get compensated in HP, which is the staked version of Hive. The amount they receive is based on their position on the "block producer" rank list.
The ranks are achieved through votes from the community itself and is influenced by their actions within and outside the blockchain. The higher ranked they are, the more blocks they get to process, the more HP they get.
blind-spot on twitterIrrespective of the size, transactions of hive are free and instant. Yes, instant. Blocks have a 3second time frame, which is as close to instant as possible. You bank teller takes more time than that to say "Good morning".
What this means is that users, curators or content creators, investors or traders, get to experience something haven't - fast and free transactions.
Business models can be built on the chain and reap the same sweet fruits. Micro-transactions are a no problemo on hive.
It is also healthy. Your risk of cardiac failure from anxiety is drastically reduced. No more of the never ending wait for your transaction to complete and no more worrying if the transaction has completed and you did something wrong.
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