The blockchain fee is a transaction fee charged to the crypto users when they realize a cryptocurrency transfer. This fee is charged to process the transaction in the network.
This fee is necessary to make sure that cryptocurrency transactions are completed on time. The blockchain fee is one of the tools used to speed up encrypted transactions, which are usually slow due to the high congestion in the blockchain network. The lower the blockchain fee, the lower it is the priority of the transaction on the blockchain network.
The fees to process the transactions can change depending on the following aspects:
1. Network conditions
There is a limited number of transactions that can be included in a block because every block in the bitcoin blockchain can only store up to 1 MB of information. This can cause congestion when several users complete transfers. As a result of this, there can be more unconfirmed transactions than free space in a block.
When a user decides to send assets and the transaction is submitted, it is initially placed on the mempool before it is included in a block. It is from this mempool that miners decide which transactions to include while prioritizing those with the higher fees. The fee market can become a competition if the mempool is full of requests: users will begin to include higher fees to get their transactions on the next block. Eventually, the market will reach a maximum stability fee that users are willing to pay, and miners will start to work the mempool in order. Once the movement has decreased, the stability fee will be lower.
2. Transaction size
Once again, because a block in the bitcoin blockchain can’t store more than 1 MB of information, the size of the transactions is something that miners have to give significant consideration. This means that small transactions are easier to validate. On the other hand, larger transactions require more work and space in the block. This is the reason miners favor smaller transactions since a larger one would require a higher fee in the next block.
There is no simple way to measure the size of a transaction and that is why blockchain fees can change depending on these aspects. Because of this, bitfoliex has established fees so that their clients know what to expect and don’t have to suffer these changes every time they want to realize a transaction. We take care of everything so that you can make transactions without worrying.
