What Are Transaction Fees On Blockchain? How to Calculate Transaction Fees?

With every transaction made on the Blockchain, you need to pay the associated fees, the fees are high or low depending on the Cryptocurrency and the network you are using. In this article, let's learn more about transaction fees in Blockchain and how to charge some of the most popular Blockchain networks in the market!

What are transaction fees in Blockchain?

Considered as a fee used to pay when Party A and Party B exchange Crypto with each other on the Blockchain network, the fee will be deducted from the project's Native Token. Transaction fees are high or low depending on the activity of the network as well as external actors. Transaction fees are important to the Blockchain network, whereby:

- Fees reduce the amount of Spam transactions on the network because then Spam activities have to cost a lot to perform.

- Fees help the network better control user transactions

- Fees are also an effective communication tool to attract new users to join the network

Unlike many years ago, most of the transaction fees on major exchanges are now very cheap, but in the future, depending on the network's traffic, there will be certain changes.

Fees help the network better control user transactions | Image source: Internet

Transaction fees on some of the major blockchains today

Each Blockchain network will have a different way of calculating transaction fees, in today's article, VBI shares with you a few ways to calculate fees on some of the most popular networks today:

Transaction fees on BTC

Bitcoin miners receive transaction fees as a reward for successfully producing new blocks. Meanwhile, other wallets allow users to set other fees manually. With Bitcoin, the high or low transaction fee will be determined by the transaction size, regardless of the total amount deposited.

As users' demand to send BTC increases, transaction fees also increase, and high fees are also one of the reasons preventing BTC from becoming a popular means of daily payment.

Transaction fees on BTC | Image source: Internet

Transaction fees on Ethereum

Unlike Bitcoin, fees on Ethereum are measured by the computing power used to process a transaction, this fee is commonly known as Gas, Gas is calculated by the ETH native token of the network. The gas price directly affects network traffic, if you want to be prioritized, you have to pay a higher Gas fee than users on the same network.

The total amount of computing needed to process the transaction is equal to the total gas fees you need to pay to the network. At the same time when making a transaction, you also need to carefully consider the minimum gas level to estimate the maximum price to pay for an operation to be performed on Ethereum.

You need to have ETH in your wallet if you want to pay for transactions. Like Bitcoin, transaction fees on Ethereum are currently quite high compared to the common ground, unintentionally becoming a barrier for this network to continue to expand.

Transaction fees on Ethereum | Image source: Internet

Trading Fees on Binance Smart Chain

Is a Blockchain founded by Binance. The BSC network uses a proof of authority consensus mechanism. The network's validators need to stake BNB to become validators and after successfully validating a block, they will also receive the transaction fees of the transactions in that block.

Transaction fees on BSC are quite similar to Ethereum, which is calculated by the total amount of computing power to process the necessary operations on the network. Users can also set a high GAS price for preferred transactions to be added to the Block.

Conclusion

Normally, each Blockchain has a completely different way of charging transaction fees. Still, within the limits of this article, we only have enough time to briefly review the charging methods of the three largest networks in the market today. High or low fees will continue to change in the future as more Blockchain users force developers to expand the throughput of the network!