What are the transaction fees involved and how are they charged through the blockchain network?

blockchain

Man is a social animal; he gets up early to work on the projects assigned to earn a livelihood and survive in the world.  He spends money to buy daily used items in the form of products or services. The products that one uses can be defined as an entity for which the payment is made one time but the service has a recurring payment form of nature or a periodic form of payment nature. The services are in the form of subscriptions, monthly bills, and fees relating to various other daily needs and services. The blockchain technology that is used in crypto assets is a form of service. They provide the means to transfer money in an anonymous, decentralized, and secure way. The decentralized nature allows them to remain independent without anyone controlling them. Blockchains are the infrastructure that helps users to initiate the actions related to the digital transactions of cryptocurrencies.  It does not work on its own and has no role in overspending the digital asset on its own. Blockchain only provides a type of platform for the digital crypto assets like a host provides a platform and a website.

Transaction fees: These are the kind of fees that a user pays when he is using blockchain technology for a transaction. If during a transaction addition or subtraction of an asset occur the transaction fees are levied by the network. Just like we have tolls on roads to collect fees for using the service of comfort similarly the blockchain acts as a toll both to proceed in either direction. One of the advantages of these fees is that the charges are minimal as compared to the physical transactions in the market that we do daily or in a bank. Just like when in a bank the number of transactions is more the speed of results decreases similarly when overcrowding over the transaction platform i.e., blockchain occurs the same is named as network congestion. If you want to know more about bitcoin then you can read, why bitcoin is popular?

It occurs when the demand for the transaction is more than the available network. If the wave is higher and longer its effect is prone to remain for a while. If the platform is multiple or the lanes of roads are more, no one will feel congestion on the network and handling of service is smooth and efficient. Thus, the speed and ease increase with the increase of miners. moreover, if the congestion over the network increases the fees for the transaction increases. In recent times the fees on the bitcoin network are around $1 to $6. If the market is high i.e., in the bull stage the transaction fees also increase. During the bull, the transaction fees for the bitcoin were seen to jump over the $60 mark. The average being around the mere figures of $10 to $20 most of the times generally taken.

Reasons to pay: As discussed earlier the nature of blockchain is decentralized. There is no sole owner of the network, in short, no one owns it. It is a kind of pool network of peer-to-peer nature. The miners are the ones who confirm the transaction and it is fees for that work. Without the fees, it will be a kind of free work that no one in the world likes. Another reason is security from the spammers, helping the transactor to perform the transaction quickly in a secure manner. Thus, it can be seen that the transaction fees are not paid without any reason. To eliminate several digital issues the payment of transaction fees is necessary.

LEAVE A REPLY

Please enter your comment!
Please enter your name here