Network Fees represent essential elements in the operation of any blockchain-based network, serving as the cost associated with transacting, including sending or trading cryptocurrencies.
Covered in this guide:
1. Understanding Network Fees
2. The Need for Network Fees
3. How Network Fees are Calculated
4. Additional Resources for Calculating Network Fees
Understanding Network Fees
Every transaction that involves sending cryptocurrencies from one address to another entails a Network Transaction Fee, also known as a Network Fee. This fee also applies when making trades on exchanges. The fee amount depends on the network you utilize. For instance, transactions involving Bitcoin differ from those on the Bitcoin Cash, Ethereum, or Litecoin networks. Some tokens even require a secondary, or "gas," token to suffice network fees.
The Need for Network Fees
Cryptocurrency transactions are consolidated, verified, and recorded into a digital ledger termed a blockchain through a process known as mining. In blockchains employing proof-of-work systems such as Bitcoin and Ethereum, miners receive block rewards, comprising of cryptocurrency, upon validating a new block. A block refers to a stack of verified transactions chained together to form a blockchain.
Conversely, proof-of-stake systems reward validators through transaction fees. When choosing to forge the next block, validators ensure transaction validity, sign the block, and add it to the blockchain. As a reward, transaction fees associated with the transactions in the block are awarded to the validators. These fees serve as a crucial ingredient in ensuring the network runs smoothly.
Trust Wallet recognizes the significance of these operations but does not partake in collecting any of these fees or rewards.
How Network Fees Are Calculated
Fees are subject to fluctuation based on market demand and network capacity. The fee per transaction is contingent upon the amount a user is willing to pay. A heftier amount guarantees faster processing, while lesser amounts may lead to transaction deferment.
Bitcoin network fee calculation can be challenging due to the dependence of the fee on factors such as the transaction's size in kilobytes. SegWit sends, because of their reduced data transmission, are generally cheaper.
Ensure you have the latest features by getting the most updated version of Trust Wallet: trustwallet.com/download
Additional Resources for Calculating Network Fees
Several accessible platforms can aid in calculating network fees:
- [Bitcoin Fee Calculator](https://estimatefee.com)
- [Gas fees tracker on Ethereum Network](https://ethgasstation.info)
- [Live transaction visualizer featuring BTC, ETH, and BCH](https://txstreet.com/v/btc-eth).
To simplify matters, Trust Wallet sets the optimal transaction fee based on network congestion. However, this can still be manually overridden as per user discretion.