Ethereum Founder: Users Should Pay 'Rent' on System

Vitalik Buterin, the outspoken founder of the ethereum network, has never shied away from views others in the cryptocurrency community might hold to be controversial. Buterin has commented on the potential for fraud and scamming in the ICO space, for instance, and he is known for speaking frankly about his own network as well as other blockchains. Now Buterin has a new, but contentious, idea designed to help save ethereum over the long term. The ethereum developer has proposed so-called "rent fees" that would be levied on users in exchange for the amount of time their data will remain accessible on the blockchain.

Buterin's proposal asks that ethereum users be responsible for footing some of the bill for maintaining data across network nodes. As ethereum and other major cryptocurrencies and blockchain networks have ballooned in popularity in recent months, the addition of exponentially greater levels of data has put a strain on many of the underlying networks. By asking users to pay a fee, ethereum could gain a double victory over this problem: On the one hand, the network would generate additional funds to deal with the growing amount of data. At the same time, though, users who opted to not pay the fee would see some elements of their data removed from accessibility.

An 'Unsustainable' System

According to a report by Coindesk, ethereum developer Raul Johnson has described the current system as "unsustainable" over the long term. "No one likes talking about rent, but we need to have this conversation," he suggested.

Buterin's fee idea is gaining traction among a key component of the ethereum community. The idea is that the network will calculate fees based on a long-term limit on the "state," a portion of ethereum data that node operators must be able to store and that tracks the ownership of current information for various apps. Buterin suggests that this state data would be limited to 500 gigabytes for each node computer. To facilitate this limitation, users would pay fees according to how long their data would be stored.

While Buterin's concept is straightforward, and while it may prove beneficial to the strength of the ethereum blockchain over the long term, the addition of new fees is never popular.

Investing in cryptocurrencies and Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns bitcoin and ripple.