In simple terms, a transaction fee is paid when any individual or group of people buy or sell digital currencies or when they make transactions of a certain amount of cryptocurrency from one exchange or wallet to another
Most crypto traders have some common complaints regarding high transaction fees. If you plan to invest in digital currencies, you should have knowledge about the two major types of fees involved in crypto dealing: crypto exchange fees and network fees
Crypto exchange fee
Most of the cryptocurrency exchanges in the market make money by charging a fee for every trade that takes place on their platform. Many exchanges also charge for deposits and almost always for withdrawals. This is the main source through which exchanges make money.
You also need to understand the concept of maker and taker. Maker is a crypto trader who creates a new trade on an exchange and taker is a crypto trader that turns out to match a maker’s trade. Crypto fees involved for each of them vary in most cases
Network fees, in other words, gas, are the second most common type of fee when trading crypto on decentralized exchange platforms. They are actually the market rates for verifying the transaction on the blockchain. They are fixed by and paid to the miner of the network
So let’s assume you have a motorbike or a car (your transaction), and the car needs fuel to function (gas). The engine (miner) consumes that fuel (miner fees) to help you move forward. In a Proof-of-Work mechanism, miners are mainly rewarded for the processing power and electricity cost. Meanwhile, in a Proof-of-Stake mechanism, they are rewarded for locking up some of their cryptos as stake
If you want to make crypto transactions, you will have to pay small fees for using the blockchain. It’s also called a transaction fee. Without that, it's not possible to process transactions. And the amount of the fee depends on how popular and busy the network is. Secondly, wallet fees are also essential to pay wallet providers for using their software. Although some individuals can broadcast their transactions directly, without any wallets, most of the users need a human-friendly interface
While network fees are common for all blockchain users, wallet fees are set and determined by the companies who developed the wallet. So you have to secure your digital coins somewhere safe, and for that, you need to pay the wallet fees
Now another most obvious charges that are hard to ignore are the exchange fees crypto exchange platforms charge for their services. Moreover, exchange fees fall into 3 types, trading, deposit, and withdrawal fees. So if you have BTC and need ETH. You will have to sell BTC and then purchase ETH. For that you can easily streamline the process by simply converting BTC into ETH. In order to avail this convenience, conversion fee can be 2% or even more
Regardless of whether your crypto portfolio is up or down, one thing is certain: someone else is becoming rich. When Coinbase became a public limited company, they were actually valued higher than the three largest stock exchanges in the world combined.
These exchanges are insanely richly valued because they usually charge more than 50x as much in fees as traditional financial exchanges. That’s a big amount of money going out of your pocket. You surely want to know about the hidden fees involved in a crypto business that eats up a large chunk from your pocket. However, before you’re too afraid, Swapzone takes no hidden fees when you exchange.
Spreads are considered a bit complex and harder to evaluate. Almost every exchange has a price that they pay to buy a coin from you when you bid, and a price they will sell you a coin at when you ask. So the spread is something called the difference between the two quoted prices and is usually smaller for frequently traded assets
You might not know this but most exchanges charge fees when you transfer money. A few of the main fees charged are deposit and withdrawal fees. You will face steeper fees while withdrawing. Some exchanges charge substantially more to withdraw crypto and fiat currencies and have no free options
Secondly, wallet or crypto transfer fees were charged in the past by almost all the exchanges. Now, most major exchanges provide wallets and transfers for free. Plus, you might not have heard of staking fees before, as they are the newest type of fees at exchanges which are quite expensive.
You normally incur fees when you transfer funds between wallets and that transaction is validated and recorded in the blockchain ledger or on-chain transaction. On-chain transactions are very expensive and slow as well.
In blockchain-related fees, the ledger fee is quite obvious. Ledger fees vary according to the specific type of coin you are transferring and the network demand at that given moment. Such fees are highly volatile and shift in both the short and long term.
Moreover, many exchanges provide free internal transfers by keeping all the internal transactions off the chain. Only processing on-chain transactions when digital coins need to move externally off their platform may require a fee
A transaction fee is paid when individuals or organizations buy or sell digital currencies or when they transfer a certain amount of crypto from one wallet or exchange to another
Many crypto traders have to face a common issue regarding high gas and transaction fees. If you plan to invest some money in the crypto business, it is important to be aware of the transaction fees involved in the process, not to be hit by surprise
Many people look for an alternative to the world's most well-known cryptocurrency trading platforms such as Binance, Coinbase, and eToro. Now there are zero-fee crypto exchanges that allow crypto users to buy, trade, and sell Bitcoin and other cryptocurrencies assets without paying any fees. However, when there’s a transaction fee, it can either be already taken into account when you see the exchange rate or it can be added up later. On Swapzone, “transaction fees are not included” means that the rate displayed doesn’t count in the transaction fee
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