Transaction Fee - what is it?

A transaction fee is a payment for payment authentication services in a blockchain system. This procedure is carried out by miners, who also serve as validators. Technically, the confirmation process differs from that of a fiat financial system, where there is a clear cost or a fixed fee. In a cryptocurrency system, transaction fees depend on several factors.

Commission calculation

The transaction cost directly depends on the following:

  • network congestion;
  • volume (size) of the transaction message.

The first factor is directly proportional to the increase in network load commission. The more unconfirmed transactions in the list, the higher the load on miners. They prioritize those payments for which users are willing to raise the payment amount for validation to get more profit. The larger the commission, the faster the payment will be confirmed, and the transaction entry will be entered into the register.

The size of the message may depend on the payment amount. For example, microtransactions will have less weight. For relatively large amounts - more. That is, if a user needs to send 20 bitcoins, then this amount can consist of coins of different denominations (5+1+2+1+2+1+1+1+1). Accordingly, the transaction has a larger number of inputs.