What is Transaction Fee in Cryptocurrency Transfers?
In cryptocurrency transfers, the transaction fee is a fee paid to miners that ensure reliable and accurate transactions in cryptocurrency networks. To secure cryptocurrency networks, miners create a blockchain by linking transaction records together in blocks. For this process, they need to solve complex mathematical problems using their computers. Miners who solve these problems confirm transactions by adding new blocks to the network, and in return they earn both newly minted coins and transaction fees.
The amount of transaction fees varies according to cryptocurrency networks. Some networks have a fixed fee, while others may vary depending on the size and speed of the transaction or the demand of the miners. For example, in the Bitcoin network, transaction fees are dynamic and increase or decrease according to transaction density. When the transaction density is high, miners approve transactions with higher fees first. Therefore, if you want your transaction to happen faster, you need to pay a higher transaction fee. When the transaction density is low, you can also perform your transaction by paying a lower transaction fee.
Transaction fees make up the cost of cryptocurrency transfers. This cost is much lower than traditional banking systems. Especially in international transfers, banks incur high costs due to the difference between high commissions and exchange rates, while these costs are absent or very low in cryptocurrency transfers. In cryptocurrency transfers, transaction fees are paid only to miners, and these fees are necessary for the security and sustainability of the cryptocurrency network.