Network Fee

A Network Fee, as the name implies, is a fee you pay to a blockchain network for transferring a digital asset on that network.

The fees go to the miners or validators of that blockchain network who win the right or are chosen by the validation mechanism to ultimately confirm your transactions and add to the blockchain.

Fees are paid by users of the blockchain, which includes individuals, businesses, and even crypto exchanges.

Under normal trading conditions, paying higher network fees will generally get your transaction verified quicker, as miners give you priority over transactions with lower fees.

Network congestion, however, can also make network fees drastically increase if the fees aren’t a fixed amount.

As network usage increases, some users are willing to pay higher fees to expedite getting their transactions verified quickly.

Miners are willing to take the larger reward, leaving users who aren’t willing to pay more fees waiting.

As you can imagine, this cycle continues over and over, with users paying higher and higher fees as congestion grows.

Ethereum (ETH) experienced increasingly expensive average network fees at the end of 2021, with fees averaging between $40 USD and $65 USD per transaction.

In June 2022, Ethereum (ETH) network fees are averaging $5.24 USD, their lowest in almost 12 months.

See transaction fees and miner fees for more info.

Related Terms

Ethereum (ETH)

Ethereum is a decentralized blockchain platform that makes digital money, global payments, and applications possible using open-source software and smart contract functionality. The big difference between the two is that Ethereum is programmable, meaning you can build and use decentralized apps on the network. That means the Ethereum blockchain can be programmed to do virtually anything.

Transaction Fee

Fees charged by a blockchain network to execute and validate transactions on that blockchain network. Fees are used to incentivize miners to complete complex and expensive cryptographic problems to validate transaction blocks to the leger of a blockchain.

Miner Fee

Another name for transaction fees that a blockchain network charges to execute and validate transactions on the blockchain network of choice. Miners are incentivized to do the work of verifying transactions, confirming transactions, and then adding those transactions to a new block, which is finally added to the blockchain. This is accomplished by miners by using their vast amounts of computing power to be the quickest at solving complex and expensive cryptographic problems faster than the next miner.

The Merge

The Merge signifies a time in the future when the Ethereum blockchain transitions from the proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) blockchain.

Bitcoin (BTC)

Bitcoin (BTC) is most well known as a digital decentralized cryptocurrency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer Bitcoin network without the need for intermediaries, such as payment gateways or banks or routing services. Think of bitcoin as Internet money, that you can send and receive directly, to and from anyone, and you can use it to pay for stuff.