What is Transaction Fees in Blockchain?
The blockchain fee is a cryptocurrency transaction fee that is charged to users when performing crypto transactions. The fee is collected in order to process the transaction on the network.
You need to pay the blockchain fee to ensure your cryptocurrency transfers arrive promptly. The blockchain fee is one of the main tools used to speed up crypto transactions, which are often slow due to high congestion on the blockchain network. The lower the blockchain fee, the lower your transaction’s priority in the blockchain network.
Transaction fees for cryptocurrency depend mainly on the supply of network capacity at the time, versus the demand from the currency holder for a faster transaction. The currency holder can choose a specific transaction fee, while network entities process transactions from the highest offered fee to the lowest. Cryptocurrency exchanges can simplify the process for currency holders by offering priority alternatives and determining which fee will likely cause the transaction to be processed in the requested time.
For ether, transaction fees differ by computational complexity, bandwidth use, and storage needs, while bitcoin transaction fees differ by transaction size and whether the transaction uses SegWit. In September 2018, the median transaction fee for ether corresponded to $0.017, while for bitcoin it corresponded to $0.55.
Some cryptocurrencies have no transaction fees and rely on client-side proof-of-work as the transaction prioritization and anti-spam mechanism.
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“What Is the Blockchain Fee?” Wirexapp.com, 2021, wirexapp.com/help/article/what-is-the-blockchain-fee-0078.
Wikipedia Contributors. “Cryptocurrency.” Wikipedia, Wikimedia Foundation, 9 Nov. 2021, en.wikipedia.org/wiki/Cryptocurrency.