Bitcoin transaction fees have recently increased 2.5 times. And shortly, commissions will only grow. Why are the fees so high? Why is there a rising trend in fees? Is there any way to reduce them? These and many other questions will be answered by our professional Alex, studying cryptocurrency and Bitcoin in particular for six years.
What Does Bitcoin Transfer Fee Depend On?
There are no complimentary transfers in the cryptocurrency network. There are commissions; they float; it all depends on the degree of network congestion. If the network is overloaded, the Bitcoin transfer fee increases, on low traffic decreases. The commissions go to pay the miners who mine the coins and form the blocks. For this reason, the amount of commission will increase.
The amount of commission depends on several factors:
- The number of transactions going through the network: if there are many transactions, the transaction code increases. Each new Bitcoin transaction adds some bytes to the transaction. Once the code grows by a thousand bytes, the fee increases by 0.0001 Bitcoin.
- Network congestion: the more transactions occur per unit of time, the higher the commission will be. Higher commission reduces buyer appetite and regulates network load.
- Transaction size: if there are many transactions with small amounts per unit of time, the amount of remuneration to miners and, therefore, the commission grows. But rare but relatively large transactions of cryptocurrencies lead to a drop in commission.
How to Reduce Bitcoin Commissions
In modern cryptocurrency wallets, Bitcoin transfer fees are charged automatically and appear in a window. But unlike bank transfers, where the commission cannot be reduced or increased, the cryptocurrency user has options. Users can reduce the amount of commission for Bitcoin transfers from wallet to wallet, but one must understand the risks.
If the amount is reduced, the transaction time will increase. Right now, the minimum fee for a BTC transfer is 0.0001 Bitcoin. But do not hurry to expose such a fee; the transaction will unlikely be confirmed on the same day; at best, the transaction will be carried out on the next day or even later.
If you increase the commission for Bitcoin transfer, the payment will be included in the next block. Transaction times can also increase as Bitcoin prices rise. The activity of transfers grows, and with them, so does the queue.
Changing the Commission Manually
Calculating BTC transfer fees manually is a tedious and thankless task. Moreover, while you are entering the next value, activity in the network can change drastically, and you will have to count all over again. So, it is better to rely on online calculators.
- Estimatefee.com: this marketplace offers a range of commission values.
- Bitcoinfees.info: transactions are divided by their speed into fast, medium, slow. Reasonable commissions are selected according to these values, and the user has to choose the value he likes.
- Bitcoinfees.earn.com: the amount of commission is not determined in fractions of the whole Bitcoin but immediately in satoshi.
Considering the Speed of the Transaction
If the transaction speed is essential to you, it makes sense to calculate the optimal amount of commission on Bitaps processing service. To do this, go to the site, find the block Bitcoin Network in the menu on the home page, and in it a line – the recommended commission. In this line, there are three values colored in different colors:
- Blue: the high priority of the transaction.
- Green: the value of the medium priority commission.
- Black: low transaction readiness value.
Choose a number, divide it by 10000, and you get the amount of commission in Bitcoins.
Deliberate Understatement of the Commission
In this case, be prepared for a long wait. There is a real danger that your transaction may hang for a very long time. The number of unconfirmed transactions is constantly growing and already exceeds a hundred thousand transactions. It is not for nothing that experts advise against low commissions.
As an option, conduct transactions at low traffic when the number of cryptocurrency transactions drops sharply. This usually happens late at night and in the early morning hours. There are special traffic counters that track traffic fluctuations.
Every year a vast number of people become interested in Bitcoin and other cryptocurrencies. This trend has both positive and negative sides. On the one hand, the popularization of cryptocurrencies will lead to their gradual inclusion in all spheres of life and take them out of the gray zone of the economy. On the other hand, at the moment, the increase in the number of users only leads to a rise in the price of Bitcoin.
If you are interested in the cryptocurrency and Bitcoin market, you will probably also be interested in our other articles related to blockchain. Every week we publish informative articles that answer our readers’ questions about ways to make money from cryptocurrencies and mining in particular. We also make comparative analyses of cryptocurrency exchanges, for example, Bitpanda cryptocurrency exchange or KuCoin cryptocurrency exchange, and explain the main processes taking place in the world of cryptocurrencies.
I have been studying cryptocurrency for over 5 years. I have accounts in every exchange and I test everything on myself.
I want this market to be more understandable for everyone.