What Is a Transaction Fee?
A Mechanism for Network Security
Most cryptocurrency exchanges have fixed transaction fees, but users utilizing cryptocurrency wallets often have the ability to adjust the fees themselves.
Transaction fees were initially introduced in Bitcoin to deter malicious or fraudulent activity and prevent the network from becoming overloaded.
Other blockchain networks have also implemented transaction fees to maintain the efficiency and productivity of the mining process.
Queueing for Verification
All Bitcoin transactions enter a memory pool (mempool) queue, where miners prioritize which transactions to verify based on their fees.
Transactions with higher fees are typically prioritized by miners, which is why some users choose to increase their fees for more timely or urgent transactions.
In Ethereum, transaction fees are measured in gas, a small fraction of the ETH cryptocurrency.
Transaction fees play a more significant role in Ethereum than Bitcoin due to Ethereum’s advanced features, such as smart contracts and decentralized applications (dApps).