Transaction Fee

Transaction Fees are 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.

As crypto adoption increases across decentralized finance and payments, networks get more congested with users and transactions, leading to longer wait times for getting transactions confirmed.

This leads some traders to pay higher fees per transaction in an effort to get miners to validate their transaction first, over transactions offering lower fees.

The higher the fee the faster a block is validated and added to the blockchain.

Transaction fees tend to collapse after large market sell-offs, as active addresses and the number of transactions on a network drop.

To this fact, many cryptocurrency analysts keep a close eye on changes in transaction fees over time as an indication of increased or decrease retail market participant interest.

3rd party analytics firms, such as Messari, maintain historical records and charts of the changes in average transaction fees for a given network, since the inception of that network.

For example, the average bitcoin (BTC) transaction fee for the last 30 days is USD $1.32

You can view more statistics and data about Bitcoin fees provided by Messari here.

Related Terms

Network Fee

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.

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.

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.

Bitcoin ATM (BTM)

A Bitcoin ATM (BTM) is an ATM machine that lets you buy and sell Bitcoin (BTC), transfer Bitcoin (BTC) to someone else, and some even let you sell Bitcoin (BTC) and withdraw cash. Surprise! A Bitcoin ATM is very similar to a traditional bank ATM, in that you can deposit and withdraw fiat money. To […]

Halving

The halving reduces the rate at which new bitcoin is created, specifically reducing block rewards, and in effect, reducing the incentive for miners to continue their work of securing the network.