1 min read

Who gets the gas fee?

Fees are a universally understood concept. You don't need to understand how blockchain actually works to understand that you're paying a fee to use the network. However, the actual purpose of gas fees is less obvious.

In the real world, any time you pay a fee, you're paying another person. Whether it's a shipping cost, a convenience fee, or taxes, you understand that your money is going to another person/company/government. You might not like paying the fee, but it's worth a little extra to get the product or service you wanted.

Historically, blockchain network fees have worked this way too. Your fee went to the miner who produced the block that included your transaction, but this was almost always a small portion of the block rewards. Newly created crypto (inflation) is issued to the block producer, so the fees aren't what's keeping the network going. On Ethereum, a portion of the gas fees are even burned and don't go to anyone.

The purpose of gas fees is to mitigate spam. Email is free and spam is rampant. Physical mail has a cost, but there's still a lot of junk mail being sent because the benefits outweigh the costs (for the spammers). The same is true on blockchain. Gas fees don't prevent spam entirely, but there would be a lot more spam without fees.

This is why alternative fee systems are viable. Koinos replaces gas fees with mana so instead of paying a monetary cost, you pay an opportunity cost with your time. Miners are still rewarded with inflation and spam is still mitigated. If you can keep the fundamental promises of blockchain while offering a massively improved user experience, why wouldn't you?


P.S. With physical mail, you have the choice of paying shipping or delivering it yourself. Fee-based blockchains require you to pay. If you can spend time instead, then you could pay someone else for their time or use your own. That's an option you don't have on other chains.