Why does a transaction fee’s vary depending on the coin, or the time of transaction? Let’s find out.

For more information on the question “What are transaction fees and why do I need to pay them?”, Bitcoin technology and cryptocurrency check out the text-version of Bitpanda Academy Lesson 13: [ Ссылка ]

Video Chapters:
00:00 - Intro
00:38 - What is a transaction fee?
02:06 - How does a transaction get processed and confirmed?

#TransactionFees #Crypto #Bitpanda #Bitcoin

One of the biggest selling points for cryptocurrency is the low fee transaction fee’s. Across some payment corridors in Africa remittances for fiat currency transactions can cost as much as 20%. This is where cryptocurrencies come in, cross border payments without the middleman. Although, you do need to know about the cost of transaction fees and how they are calculated in cryptocurrency transactions.

▬ What is a transaction fee? ▬▬▬▬▬▬▬▬▬▬▬▬
Let’s start by identifying what is a transaction fee, and why do we need to pay them?
Transaction fees are necessary in order to get a transaction included in the next block
It’s really important to note that the actual fee you have to pay varies and depends on the network
Did you know that Bitcoin transaction fees are fixed at a couple of cents, regardless of the amount you send!

Now you’re starting to get the feeling of this, let’s start with some of the basics.
We know that the Bitcoin network is able to verify transactions without a single authority because of miners who allocate their computing power to the network. Actually, one of the key reasons that miners continuously participate in a blockchain-based network is because of the block reward they receive for validating a block. Cryptocurrency mining can be an extremely profitable business for cryptocurrency miners.

In the case of Bitcoin transactions, the reward for miners consists of two things: all transaction fees in the block that the miner validated - and the additional incentive of a specific block reward of newly minted coins in the process. For every 210,000 blocks that are mined, the reward for mining a block falls by half. It takes roughly four years for 210,000 blocks to be mined. Consequently, bitcoin halving usually occurs in four-year intervals. The next halving is predicted to take place in 2024.

▬ How does a transaction get processed and confirmed? ▬▬▬▬▬▬▬▬▬▬▬▬
Well, as you already know, you don’t physically own a cryptocurrency like Bitcoin. Instead, the blockchain records ownership and distributes these ownerships to the whole network.
The actual amount of fees you pay depends on the cryptocurrency and the network. Second layer solutions like Segregated Witness (SegWit) or the Lightning Network, transactions can now be sent for as little as a couple of US Dollar cents, regardless of the amount you are sending.
This is an important detail if you use Bitcoin as an alternative to traditional and established remittance services, some of which charge fees of up to 10 percent per transaction.


▬ About Bitpanda ▬▬▬▬▬▬▬▬▬▬▬▬
Bitpanda is a fintech based in Vienna, Austria and was founded in 2014 by Eric Demuth, Paul Klanschek and Christian Trummer. Bitpanda has 2 million users and more than 400 team members. With a PSD2 payment service provider licence, state-of-the-art security and streamlined user experience, Bitpanda has grown into a popular trading platform for newbies and experts alike. The goal is to tear down the barriers to investing and personal finance through digital assets and blockchain technology like cryptocurrencies, precious metals, fractional stocks and ETFs and to bring traditional financial products into the 21st century

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