Understanding the Ethereum transaction fees: Is 20% normal?
As the second largest cryptocurrency after market capitalization according to Bitcoin, Ethereum has become a popular choice for people who make microtransactions and want to deal with providers. One question that many users confused is why the average transaction fee for Ethereum is around 20%. In this article we will deal with the reasons for these fees and examine what is considered normal.
What are transaction fees?
Transaction fees are a small amount of cryptocurrency calculated by the network for the processing of transactions. They serve as an incentive for developers to build and maintain the Ethereum network, which enables the execution of intelligent contracts and decentralized applications (DAPPS). The fee is usually paid in the form of ether (ETH), the native cryptocurrency of the Ethereum network.
Why are transaction fees high?
The main reasons why transaction fees for Ethereum are high are:
- Network overload : With over 200,000 active accounts, the Ethereum network can be overloaded, which leads to increased processing times and higher fees.
- Complexity of the contract : The increasing introduction of complex intelligent contracts has led to an increase in demand for the computing resources of Ethereum, which led to higher fees.
- Gas prices : Gas is the measurement unit for transaction costs in the Ethereum network. If the gas prices continue to rise, the transaction fees.
Is 20% a normal fee?
On today’s competitive cryptocurrency market, 20% can appear relatively high compared to other platforms. However, it is important to take the following factors into account:
- Transaction volume : If you carry out frequent transactions, your fees may be higher, since the network overload and the demand for computing resources have increased.
- Network capacity : The Ethereum network has a limited capacity, which can lead to higher fees if the network is fully used.
- Market competition : Other platforms such as Binance Smart Chain (BSC) or polygon offer lower transaction fees compared to Ethereum.
Nevertheless, 20% are considered relatively high by many users. For comparison:
- With Bitcoin Cash (BCH), a popular altcoin, the average transaction fee is around 1-2 cents.
- On Cardano (ADA), another blockchain platform, the average transaction fee is significantly lower at around 0.01 to 0.05 ETH.
Diploma
While 20% appear relatively high in Ethereum, it is important to take into account the capacity and market of the network if decides whether this fee is appropriate for your needs. While the cryptocurrency landscape is developing, we can expect the fees to decrease if the network is more used.
At the moment, if you are a frequent microtransaktor or regularly use Ethereum Dapps, 20% can still be paid for. However, if you are a light user with rare transactions, you may find 1-2 cents per transaction more appropriate. Ultimately, it is crucial to weigh up the costs and advantages of using Ethereum before drawing conclusions.
References:
- Coindesk.com: “Ethereum transaction fees increase as fees in some areas 5,000 US dollars”
- CINTELGRAPH.com: “Why does the Ethereum transaction fee reach record highs?”
- Ethereum.org: “Understand Ethereum transaction fees”