What are transaction fees for moving cryptocurrencies
And why should I actually pay for something that my credit card and bank gives me for free. No way. While you don’t usually pay the bank and the payment system operator directly, the merchant pays it for you and includes it in the price. You are paying for your money to be safe with bitcoin and other cryptocurrencies it is exactly the same, only in the case of cryptocurrencies it is your free choice and you know exactly who and what you are paying for. And the security is an order of magnitude higher. when it comes to bitcoin, there is probably no safer network in the world of digital money.
Transaction fees, as the name suggests, are paid per transaction. Or rather, for approving a transaction, usually in that particular cryptocurrency. In a proof of work system, the network is secured by miners and nodes. The miners verify based on mathematical calculations and very expensive, energy-intensive machines called miners. To make this work and investment worthwhile, they need to be motivated. The most appropriate motivation is, of course, the cryptocurrencies themselves. Moreover, Bitcoin has had a relatively large scaling problem since the beginning, and so it is paradoxically quite important to keep the number of transactions at a certain level, which is what the fees help with.
So what actually affects the final price per transaction? First of all, the network load, the next thing is the price of the cryptocurrency itself, and you can influence the price yourself by how much you propose to pay per transaction. The principle is that whoever pays the most, the transaction is cleared first. In practice, it works so that if you pay, for example, 300 CZK, you have it cleared in seconds, if 60 CZK, it can take two days or even a week.
That would have cryptocurrencies working on the proof of work principle. How does proof of stake work? In principle, very similar, only with these cryptocurrencies the transaction fees tend to be much lower and the security of the network as I understand it is not nearly as high. I am not an expert on the proof of stake system, but I fear that its vulnerability will soon be revealed. The power is simply in the performance. Chia network brings an interesting system with Proof of space and time. That is, proof by disk space and time. It hasn’t yet been verified by time, so we’ll see.