Cryptocurrency mining is the name given to the process of confirming cryptocurrency transfer transactions by solving complex mathematical problems by devices with special software and hardware, and as a result, rewarding with newly produced cryptocurrency.
There are two significant reasons why the vast majority of cryptocurrencies charge transaction fees. First, transaction fees reduce the amount of spam on the network. It also makes it costly and difficult to conduct large-scale spam attacks. Second, transaction fees are an inducement for users who help verify and confirm transactions. Transaction fees are a reward for helping the network. Users continue to receive their fees for confirming transactions even if the reward amount decreases.
Satoshi Nakamoto, the creator of Bitcoin, which effectively uses the blockchain network, has set a fee standard for transactions to be made on the network. The purpose here is to run the validation mechanism for transfer transactions and to protect it from spam attacks by keeping the cost high.
Miners get a fee for the transaction they confirm. Transaction fees vary depending on network congestion. The amount of the transfer has no effect on the fee to be paid. Processes pending approval are collected in a place called the memory pool. The miner approves the transaction for which he accepts the transaction fee and receives the fee.
Those who want to slow down the network by manipulating, will want to increase the network density. For this reason, they will target to rise the number of transactions that are constantly waiting for approval. However, these transactions will not be received and will be ignored by the miners as they will keep the transaction fee low. Since the transaction fees, which will be at a reasonable level, will increase the cost, it is an important measure to deter the people who will make the attack.
How to Calculate Bitcoin Transaction Fee
You may not pay any transaction fees to send Bitcoin. However, your transaction will wait as it will be ignored by the people who will approve this transaction. No one wants to do a job without being paid for it. Because the system he set up for the approval process will cost energy and waste time.
The Bitcoin transaction fee, on the other hand, is calculated based on the transaction size, not the amount you trade. Let’s say your transaction size is 100 bits and the average transaction fee is currently 80 satoshis per bit. In this case, you would have to pay around 8,000 satoshis (or 0.0008 BTC) for your transaction to have a good chance of being added to the next block.
In case of heavy network traffic, you need to increase the transaction fee to confirm your transaction as soon as possible. This process varies depending on the instantaneous speed and intensity of the market. Therefore, in general, sending Bitcoin when the network is dense does not make sense as it may cost more than it is worth.
The speed at which blocks are added is also one of the important factors that change the Bitcoin transaction fee. Even if miners continue to add blocks rapidly, this speed has a limit.
How to Calculate Ethereum Transaction Fee
Ethereum transaction fees are calculated differently than Bitcoin. The transaction fee calculates the amount of computing power, called Gas, and required to execute a transaction. Gas price is measured in Ethereum (ETH), the network’s own token, and can vary. You can visit Etherscan to track the gas price.
Gas prices may vary. If the amount of gas remains the same, your transaction fee may change based on ETH. The most important factor determining the gas price is the density of the network.
The gas transaction fee is determined by taking into account all costs. The value of the total Gas amount in Gwei is calculated. E.g; For 10000 Gas, a Gas value is 50 Gwei and a 500000 transaction fee, which is 0.0005 ETH. The transaction fee will change as the Gwei value changes.
With the Ethereum London Hard Fork update, the transition to the Proof of Stake protocol brought significant changes in transaction fees. Fees are expected to decrease in transactions. It is aimed to ensure stability with the attainment of a certain standard. It is aimed to reduce the amount of energy consumed by 99%. This will significantly reduce the cost.
Follow us on Twitter
Join our Telegram channel