Before you get started investing in Ethereum, it’s a good idea to understand what Ethereum’s transaction fees are all about.
Ethereum and its native cryptocurrency Ether (ETH) are steadily staying as a favorite among cryptocurrency investors and lovers. Although it’s still just behind Bitcoin in value, Ethereum recently made history as it outpaced Bitcoin’s active addresses for the first time ever.
And there’s no mystery as to why people around the world are diehard Ethereum fans. The unique blockchain platform has tons of potential. It’s predicted that Ethereum may revolutionize the way most applications we use in the future, function, and store user data. But before you jump on the Ethereum train, it’s best to fully understand not only what it is, but also how its transaction fee’s function.
What is Ethereum? A brief summary
Vitalik Buterin first launched the decentralized, self-executing smart contract blockchain, back in 2013, that we now call Ethereum. What’s unique about Ethereum is that its blockchain has a complete scripting language built into it. This allows it to run smart contracts across all its nodes and verifies consensus (without a third party) at the same time.
Lately, ETH has seen a huge surge in popularity, due to the recent boom of NFTs, which stands for non-fungible tokens. These special kinds of tokens are digital assets that show proof of ownership over one of a kind virtual item. These entertaining and valuable virtual items are helping ETH surge in popularity because they only run on Ethereum.
What is a transaction fee?
A transaction fee is a small fee that can be deducted from the end of the respective cryptocurrency or added on top of the value of the currency you wish to send. It all depends on the wallet and exchange that you end up using. But although the fee will vary depending on which wallet you use, the money will go towards the miners, not the wallet provider.
This fee is added to your transaction, each time you send or receive currency from your address to another. Depending on the state of the market, this fee will never be a set price, and it will fluctuate with changes in the networks.
And the most important fee variant will be which network you are using. Ethereum transaction fees won’t be the same as Bitcoin or Litecoin fees.
In the end, the amount of money you can expect to pay per transaction is calculated by how much money you intend on spending. The bigger the amount of money you’re sending or receiving, the larger the transaction fee will be.
What are Ethereum transaction fees and how do they work?
The process of where your ETH transaction fee comes from starts like this. First, the transaction is signed by your wallet keys. Then, the transaction is sent to something called the “mempool”, where cryptocurrency miners can find it and transform it into a block, where they will then attempt to quickly validate it. During busy periods, miners will prioritize transactions that have fees (larger amount of money sent or received).
What is the average Ethereum fee?
The average fee for an Ethereum transaction is around $2.15. And currently, this is the lowest average that ETH has seen for the last 6 months. But it hasn’t always been that way. On May 12th, ETH’s transaction fee shot up to nearly $70.00 USD. This was just after the cryptocurrency had set its record high value at $4,164. In December 2020, the average fee for ETH hit an all-time low for an average of $2.00 USD.
Transactions fees are just a part of the cryptocurrency process, and you should expect them to fluctuate accordingly. For the moment, Ethereum fees are much lower than those of Bitcoin, but only time will tell if that will change.
Where to buy ETH
When you’re ready to buy, sell or trade Ethereum, it’s important that you don’t settle for just any Crypto marketplace. A trusted exchange like Bitvavo is a great place to get started buying Ethereum as, “Bitvavo makes Ethereum as easy as possible. Answers to a few of the most common questions will serve as a kickstart in the world of digital assets.”
And if you’re interested in other kinds of cryptocurrency, Bitvavo has that too. They let you “trade, use and store digital assets using the Bitvavo platform. Bravo aims to make digital assets available for everyone through low and transparent fees, a wide range of assets, and a simple and easy to use interface”