The problem

Bitcoin Core‘s default fee changed several times over the years as the bitcoin exchange rate increased, from 0.01 BTC to 0.0005 BTC to 0.0001 BTC.

Each of these changes required a change in the Bitcoin source code and therefor a new release. Would the default fee have stayed at 0.01 BTC, every Bitcoin transaction would cost now 88$ in transaction fees.

And Bitcoin is not the only cryptocurrency many others such as LISK have also been plagued with this problem.

CryptoUBIs could offer another approach

CryptoUBIs are cryptocurrencies where most, if not all, of the newly minted coins are handed directly to the users that have successfully proven they are unique individuals.

Instead of using Proof of Work or Proof of Stake, cryptoUBIs rely on something called Proof of Person.

This enables a new solution to the static transaction fee problem because a new unit that could be called “coins per hour” emerges.

This unit represents the amount of coins a cryptoUBI participant receives each hour.

UBIC for example uses this approach so that one transaction will cost you about 6 hours worth of cryptoUBI distribution in other words 1 transaction will cost you approximatively 6 “coins per hour”.

As a consequence if the number of UBIC participants is low then the transaction fees will be high because each participant receives a bigger chunk of the cryptoUBI distribution and it is assumable that the cryptocurrency is not worth that much in FIAT currency.

If the number of participants increases the the transaction fees will decrease.

Under those circumstances the transaction fees are the inverse function of the amount of users in the network, just like this diagram shows

Can this solution be transposed to other cryptocurrencies such as Bitcoin?

Although it is not possible to determine the number of users that are currently using the Bitcoin blockchain it could be approximated using the number of addresses created or the amount of transactions that were fulfilled within the last 24 hours for example.

In such a scenario the transaction fees would go down if the amount of transaction and address creation is high and the transaction fees would go up if the amount of transaction and address creation is low.

The current block reward should also be taken into account. The lower it is the lower transaction fees should be.

Edit:

It would also be possible using the Proof of Person to allow a users to make a certain amount transaction without paying fees. For example every user could have a quota of free transactions he could do every month.