Bitcoin

What are the transaction fees involved in bitcoin trading?

Bitcoin

If you have already tried trading Bitcoin for standard fiat currency using an exchange platform, or ever used Bitcoin to make a general purchase, or searching for how to buy bitcoin without fee, you would have probably noticed that a small bitcoin network fee was applied to the transaction.

Unless you trade in high volume or engage in significant money movement, the regular bitcoin minimum fee applied to your Bitcoin trades and transactions is almost always the same: 0.04 USD.

This amount is equal to 0.0001 Bitcoin (BTC), which depicts the generally accepted minimum fee recommended for most Bitcoin purchases.

In order to fully understand current bitcoin transaction fee, you need to know how to recognize the fees attached to cryptocurrency transactions, to begin with.

With the help of a block explorer, you can spot the fee paid for a trade by checking transaction details. Likewise, you can identify it by calculating the difference between the inputs and the outputs. For instance, your input is 0.12605724, and your output is 0.12583356. The fee for this transaction which is the difference between these two numbers will be 0.00022368.

So the question is, how do you know how much of a fee to pay for your transaction to be confirmed as quickly as possible? Well, the primary determinant will be the size of your transaction.

Every bitcoin transaction is just a piece of code that has a specific size, much more like a file on your PC. The transaction size is directly proportional to how much money you’re sending. And the bigger the size of the transaction, the more it takes up space inside the transaction block. If it consumes extra space, then other transactions will be left out because the block size isn’t infinite. Hence, you will have to pay big fees for big transactions so as to repay for the space you’re taking up inside the block.

Once you know your transaction size, you can determine how many satoshis (0.00000001 bitcoins) you want to spend on each byte of your transaction.

For instance, if your transaction is 600 bytes and you pay a fee of 10,000 Satoshis, it will be lodged in the 16.66 Satoshi per byte segment (10,000/600=16.66).

At this present moment where cryptocurrency is garnering more users by the hour, this will probably lodge your transaction somewhere within the next 15 transactions blocks or approximately 150 minutes, since a new block is detected every 10 minutes on average.

So, now you know important transaction fee is to the bitcoin network (the priority of every transaction is based on some factors, including the amount of fee and the transaction size in bytes). But if you’re using a Blockchain Wallet or other types bitcoin wallets, then you don’t have to give another thought, because most of these wallets calculate an appropriate fee based on the transaction size and the level of traffic on the network using a dynamic fee.

 

Garry Ralph

Garry Ralph

Garry is cryptocurrency specialist and has been writing on relevant topic since cryptocurrencies started to grow in popularity in 2011. Garry is well-versed in all aspects of cryptocurrency investing and has successfully guided many newcomers to ultimate success in the field.

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