Bitcoin Transaction Fees Explained – Everything You need to Know
One of the main features of cryptocurrencies is “low transaction fees” but it’s not the case with Bitcoin.
The Bitcoin was introduced for fast and cheaper transaction without the intervention of any third party or banks. But with the increasing volume of Bitcoin transactions, the average transaction time and fees are increasing with passing days.
Every Bitcoin user or investor should understand the transaction flow, fees and average time taken by the Bitcoin Blockchain
How Bitcoin Fees Work
On the Blockchain, the transaction fees are decided by free market forces and everyone is free to set their own transaction fees.
The Transaction fees are not dependent on “how much money you are sending”. The transaction fees are charged based on the “amount of data” taken by your transaction in the Block. So the transaction fees are measured in form of “Satoshis/per byte”.
Why Bitcoin Transaction Fees is High
The Bitcoin is based on Blockchain technology and transactions are verified in the blocks. The current size of Bitcoin Blocks is 1 MB or in other words, only 1 MB of data allowed every 10 minutes.
The Bitcoin blocks are almost full due to the high volume of transactions and there is no room for low fees transactions.
To use an analogy: Imagine there’s a city bus that comes along every 10 minutes and only has 12 seats. Seats go to the highest bidders and if you aren’t willing to pay more than the other 800 people waiting for one of the 12 seats, too bad. Maybe you’ll get lucky if you wait long enough, but you’ll still pay a lot.