Blockchain Basics

All you need to know about transaction fees

While you won’t really recognize the small transaction fee it is the very reason blockchains will live forever. Here is the reason why.

Why fees are important

Taking a look at Bitcoin, miners generate on average a new block every 10 minutes for solving a cryptographic puzzle, the so-called Proof Of Work. A block contains a lot of transactions, but usually never all of them.

How the transaction fee is calculated

The fees fluctuate due to bitcoin network demand and the limited block space. The more people try to use the network to process transactions the higher the demand for space on the block. Consequently, only payments with the highest fees are processed and the required fee for a fast process rises.

How the transaction fees are sent

To make sure your wallet includes the correct miner fee, many wallets have an option to calculate the fee dynamically. This will help you make sure your payment is confirmed, even when the bitcoin network is very busy. However be aware, that there might be higher costs.

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