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Chapter 1:  Blockchain

The Different Types of Crypto Fees Explained

Interesting Fact:
Did you know that there is a gas fee associated with every operation performed on Ethereum, including transmitting tokens or engaging with smart contracts?
easy
10 minutes

Hey, in this section, we’re going to talk about crypto fees, and everything associated with this topic!

Nowadays, fees are something that everyone is very used to - whether it be shopping online or interacting with different businesses, in any way, in many cases, you will need to pay some sort of a service or product fee. Cryptocurrency trading isn’t an exception, either!

Crypto gas (or, network) fees can be confusing, and that’s not to mention things like trading fees, or even withdrawal & deposit fees, too. At the same time, all of this information is very important, when you’re getting into crypto - it can really be the difference between you making a potential profit with your trades, or losing a lot of money on fees!

In this section, we’re talking about crypto fees. To be a bit more specific, we’ll talk about the different types of fees that you might come across, cover what are gas fees in crypto, and also look for cryptos with no transaction fee. Is that possible? Find the answer below!

Now, let’s get to it!

Crypto Fees Explained: How Not to Overpay? (Animated)

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Video Explainer: The Different Types of Crypto Fees Explained

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Crypto Fees Explained: How Not to Overpay? (Animated)

Crypto Fees Explained: How Not to Overpay? (Animated) Crypto Fees Explained: How Not to Overpay? (Animated)

The Different Types of Crypto Fees

Now, then - to start things off, and before we can get into the specifics of crypto fees, we should first establish what sorts of fees you might come across, when you’re buying, selling, or trading crypto.

Starting out from the top, you’ll find that the most interesting type of fees are the crypto gas fees, also known as blockchain fees. “Gas” is a strange term, I admit, but essentially, it refers to the fee that you need to pay to the network, in order for your transaction to be submitted and, eventually, approved. It’s something that I’ll elaborate on further.

You could look at it as actual gas that you put into your car, as well! Say, you want to travel to your friend’s house, but he lives a couple of hours away. In order for you to be able to drive to your friend, your car will need gas (or petrol, or diesel, or these days, electricity) - without it, the car won’t start, and you won’t be able to make the journey!

The principle is exactly the same with cryptocurrency transactions, too. If you want your transaction to be approved, you’ll need network miners or node validators to do so. They won’t do it for free, though, and will charge you a fee. Admittedly, the just-mentioned concepts are rather complex - if you’re not familiar with them, check out other sections on the Crypto 101 Handbook to find information about these and similar topics!

Crypto fees: Crypto gas fees VS transaction fees.

The next popular type of crypto fees is called “transaction fees”, or “trading fees”. This is the fee that you will pay to, say, a cryptocurrency exchange, in order for it to execute your trade, or to perform a cryptocurrency purchase with USD, EUR, or any other fiat currency.

Notably, transaction or trading fees are only paid when you actually make a cryptocurrency purchase or trade, on a specific exchange platform that specializes in this field. So, for example, if you only want to send some cryptocurrency to your friend, from your wallet to theirs, in most cases, the only fees that you’ll need to pay are the earlier-discussed gas, or blockchain, fees.

While you will find very different numbers being thrown around, depending on where you look, the general industry-average trading fee is considered to be 0,25% for both crypto buyers and sellers (or, rather - market makers and takers). Although, keep in mind that market takers (the ones who interact with an order created by the market makers) usually have to deal with higher fees!

Now, we got really technical there for a second. This is some advanced-level economics, mixed with cryptocurrency terminology - it’s not that simple to wrap your head around, I admit! Again, though - if certain concepts that we’ve discussed up to this point sound foreign to you, make sure to check out other sections in this Crypto 101 Handbook!

Another form of fees that you also need to know about are loan fees. Here, the concept is pretty simple - if you’re a lender, you will likely charge the borrower a fee, for them borrowing your cryptocurrency assets. Unlike with trading, however, loan fees don’t really have an intricate system that would determine the fee that you’d pay, before you even borrow the assets.

In fact, loan fees can vary, quite a bit. And that makes sense, too! If you were to lend your friend your car for the weekend, you might ask them to fill up the tank, once they’re done - however, if you would be asked to lend that same car, to a stranger, and for, say, an entire month, a filled tank probably wouldn’t suffice - you’d likely ask for some form of compensation, too!

In any case, lending (or, rather - borrowing) fees are unavoidable, if you plan to borrow crypto, for some reason. Make sure to look into the numbers on different lending platforms, however, and try to find the best deals!

Crypto fees: Loan fees VS deposit/withdrawal fees.

The last form of fees that we need to talk about is the deposit and withdrawal fees. As the terms might suggest, these fees are paid when you deposit or withdraw cryptocurrencies to and from an exchange. That’s a notable point to keep in mind, too - deposit and withdrawal fees only exist with cryptocurrency exchanges! Well, in most cases, at least.

Once again, you can view this from the perspective of the example I gave earlier. Let’s say that you’ve filled up your car’s gas tank, and are ready to travel to your friend’s house. As you go there, you need to drive through a few different roads - while most of them are free to travel through, a few have tools that need to be paid, in order for you to be able to drive on them, and not get a ticket.

This example illustrates the point I’ve made earlier - while some services will allow you to withdraw and deposit cryptocurrencies free of charge, others will have fees that you need to pay.

Solving the Mystery of Gas Fees

Now that you know about the main types of fees that you’ll encounter while dealing with cryptocurrencies, I’d like to go back to the concept that usually causes beginners the most amount of confusion - crypto gas fees.

Specifically, how do you know what the gas - or network - fees are going to be when you decide to send cryptocurrency to someone else? Is there a specific number, or does it depend on some factors?

Well, let me tell you - it’s all much simpler than it looks, when you hear about it for the first time!

For starters, no - there is no single number that would be associated with gas fees. Each network has its own fee model, and on top of that, there’s a myriad of variables that can impact those crypto gas fees, even more.

Crypto fees: Ethereum.

The simplest example can be found by taking a look at Ethereum. It’s the second-most-popular cryptocurrency in the world, so, as you can expect, there are a lot of transactions happening on the network, every single second. If you’ve ever bought ETH, or have sent it to your friend, you’ve participated in a transaction like that, too!

Sometimes, there are so many transactions happening on the Ethereum network, that a queue starts to form. One way to make sure that your transaction isn’t stuck in that queue for too long is to pay a higher gas fee - then, transaction validators will have a bigger incentive to confirm your transaction first, since they will receive a bigger reward for doing so!

Crypto fees: Paying a higher gas fee.

Cryptocurrency miners, transaction validators, and nodes are all a different topic that has to do with some advanced and technical transaction confirmation details - in other words, it requires a much deeper explanation in a separate section. Going back to crypto gas fees, the point I’m trying to make is simple - gas fees are not stable, and will depend on various factors.

Crypto Without Transaction Fees

Moving on, the final question that I’d like to address has to do with cryptos with no transaction fees. Specifically, do such cryptocurrencies even exist, in the first place?

Well… Kind of.

Crypto fees: Crypto without transaction fees.

As far as I could find, cryptocurrencies with ZERO transaction fees don’t really exist, with some exceptions (such as the NANO coin). However, there are many cryptos that offer the lowest transaction fees - so, you could say that there are PRACTICALLY no fees.

A great example would be IOTA. This cryptocurrency has very low transaction fees - you could go as far as to say that they’re negligible. Another very popular coin is Cardano - while the fees on this network are bigger, by comparison, they are still nearly non-existent.

If you yourself are looking to trade crypto without fees, it’s definitely a topic that requires a lot of research and know-how, as far as the market is concerned. There are new cryptocurrency projects popping up every single day - some of them do, for a fact, emphasize their “small transaction fee” benefits!

Also, if you’re looking for which crypto has the lowest transaction fees in order to save money on the fees that you’d pay while trading or sending it, remember that there are other factors involved in the process, too! For example, you would then also need to look for a cryptocurrency exchange platform that has small trading fees, as well as try to time your trades when the network isn’t majorly congested!

Wrapping Up

So, then - by now, you should have developed a pretty good understanding of cryptocurrency fees! This is true both when it comes to the types of fees that you may encounter, as well as what you can do to minimize and lower the amount of fees that you pay, for your transactions.

Remember - if you want to pay as small of a transaction fee as possible, you need to find cryptocurrencies with nearly-zero fees, and trade (or buy, sell, transfer) crypto when there aren’t a lot of people doing the same thing, at the same time.

Bitcoin and <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-ethereum-eth/">Ethereum. As you might be aware, both of these blockchains are very different from one another!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is bridging in crypto: The communication problem of blockchains.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_crypto_bridging_01-62ea3457bd369.o.png/" alt=\"What is bridging in crypto: The communication problem of blockchains.\" width=\"1000\" height=\"543\" \/><\/p>\n<p><strong>Ethereum<\/strong> is this super-smart global computer that allows its users to create and participate in <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-smart-contract/">smart contracts<\/strong><\/a>, <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-defi/">decentralized finance (or, DeFi)<\/strong><\/a>, and a variety of other revolutionary activities. On the flip side, <strong>Bitcoin<\/strong> is usually seen as the &ldquo;dumb&rdquo; blockchain - essentially, it has no &ldquo;smart&rdquo; functionality, and is mostly only used as a store of value.<\/p>\n<p>Note that, if some of the terms I&rsquo;ve mentioned earlier aren&rsquo;t familiar to you, do make sure to check out other sections in the Crypto 101 Handbook - you'll find dedicated sections on all of those topics! Moving on, though, you might ask - <em>so, where&rsquo;s the problem?<\/em><\/p>\n<p>Well, what if you want to, say, participate in some sort of a cool, new <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-are-decentralized-applications-dapps/">dApp on Ethereum, but you&rsquo;re only holding Bitcoin? <strong>This is where blockchain bridges come in to save the day!<\/strong><\/p>\n<p>You see, this is kind of the biggest problem that all blockchain networks face, in general - they have a pretty difficult time communicating with one another! Since many of these protocols are built using very different technology, they aren&rsquo;t able to connect with each other - it&rsquo;s like trying to install an Xbox game on your personal computer!<\/p>\n<h2>What is a Blockchain Bridge, and Where is it Used?<\/h2>\n<p>Moving on, in order to help different blockchain networks connect and &ldquo;communicate&rdquo; with one another, you need bridges. To answer the question of what is bridging in crypto simply, you can think of these bridges as<strong> special connections that allow two completely different blockchains to share data, coins &amp; tokens, and various other information.<\/strong><\/p>\n<p><strong><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is bridging in crypto: Coin VS Token.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_crypto_bridging_02-62ea345b00706.o.png/" alt=\"What is bridging in crypto: A blockchain bridge.\" width=\"1000\" height=\"726\" \/><\/strong><\/p>\n<p>Notice how I mention &ldquo;coins &amp; tokens&rdquo; - this part is very important! If you&rsquo;d like an in-depth explanation of what are the differences between crypto coins and tokens, <a href=https://www.bitdegree.org/"//crypto//learn//coin-vs-token/">check out this section<\/strong><\/a> - for now, though, just know that <strong>crypto coins have their own blockchains, while cryptocurrency tokens are built on the blockchains of other coins.<\/strong><\/p>\n<p><em>Feeling confused? <\/em>Well, look - let&rsquo;s illustrate that with an example.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is bridging in crypto: Ethereum VS BNB.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_crypto_bridging_03-62eb65a09adde.o.png/" alt=\"What is bridging in crypto: Ethereum VS BNB.\" width=\"1000\" height=\"363\" \/><\/p>\n<p>Once again, let&rsquo;s look at Ethereum - this is a blockchain that has a native coin of its own, by the same name. However, Ethereum is also home to a huge variety of different tokens, too - the Shiba Inu token, Bancor, the Basic Attention Token, and so on.<\/p>\n<p>Then, you have another network, such as the <strong>Binance Smart Chain.<\/strong> The native coin of this blockchain is BNB. Binance Smart Chain also has a variety of tokens built on it, too.<\/p>\n<p>Where do blockchain bridges come in? Well, think about it this way - what would happen if you wanted to use your Ethereum coins or tokens on the Binance Smart Chain? Traditionally, you couldn&rsquo;t &nbsp;- these are two completely different networks! <strong>However, crypto bridging allows you to do just that!<\/strong><\/p>\n<p>Up until this point, we&rsquo;ve talked about some pretty vague examples of blockchain bridging. Let&rsquo;s change that - allow me to give you a very specific example of what is bridging in crypto, and how you can use it, too!<\/p>\n<p>Imagine that you&rsquo;ve found an awesome yield-earning platform. The premise behind it is very simple - <strong>you put in some cryptocurrency that you hold, and then earn a passive interest over time.<\/strong> This platform supports a wide list of cryptocurrencies, so you start browsing and looking for the best numbers.<\/p>\n<p>During your research, you notice something interesting - if you were to deposit your ETH coins into it, you would earn a 1% annual yield. However, if you would instead deposit ETH coins that are based on the Binance Smart Chain, that percentage would double!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is bridging in crypto: ETH coins VS BSC-based ETH coins.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_crypto_bridging_04-62ea3364626cf.o.png/" alt=\"What is bridging in crypto: ETH coins VS BSC-based ETH coins.\" width=\"981\" height=\"224\" \/><\/p>\n<p>So, all that you need to do now is find a blockchain bridge, exchange your ETH coin to Binance Smart Chain Ethereum, and start earning a passive yield!<\/p>\n<p>An alternative example that you could think about would have to do with cryptocurrency <strong>lending<\/strong> <strong>and<\/strong> <strong>borrowing.<\/strong> This can be done in two types of platforms - centralized institutions, and some anonymity-preserving, decentralized applications. In most cases, however, crypto lending and borrowing are considered to be a form of DeFi, or decentralized finance.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is bridging in crypto: Bitcoin bridging.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_crypto_bridging_05-62ea3459711ee.o.png/" alt=\"What is bridging in crypto: Bitcoin bridging.\" width=\"1000\" height=\"257\" \/><\/p>\n<p>Most modern blockchain networks are advanced enough to allow their coin or token holders to participate in lending and borrowing. Older blockchains <em>(such as Bitcoin and Dogecoin)<\/em>, however, do not - <strong>in order to borrow or lend them out, you would need to bridge these assets<\/strong> on special applications that would allow you to do so, and that are based on other, &ldquo;smarter&rdquo; networks. <em>Makes sense?<\/em><\/p>\n<h2>Best Blockchain Bridges<\/h2>\n<p>Now, I admit - this is a pretty complex topic to tackle! That being said, though, now that you know what is bridging in crypto, and where these bridges are used, in the first place, there&rsquo;s one more thing that I&rsquo;d like to discuss - <strong>the best blockchain bridges, and how to find them!<\/strong><\/p>\n<p>First things first - this won&rsquo;t be a list of blockchain bridges for you to check out. Instead, I&rsquo;d like to tell you about<strong> the types of bridges that you might come across<\/strong>, and what to look for with each of those types, as well.<\/p>\n<p>So, to start things off, you should note that there are two major types of blockchain bridges - <strong>centralized, and decentralized ones.<\/strong> They are both very preference-based, and will thus suit different people, too. However, if you&rsquo;re just starting out, I&rsquo;d recommend you go with the centralized bridges - these are much simpler to use and get into, in general.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is bridging in crypto: Best blockchain bridges.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_crypto_bridging_06-62ea34556ceb6.o.png/" alt=\"What is bridging in crypto: Best blockchain bridges.\" width=\"1000\" height=\"555\" \/><\/p>\n<p>Essentially, some of the most popular centralized crypto bridges are those that are located on trusted and well-known crypto exchanges. These bridges work with the help of exchange-based <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-liquidity-pool/">liquidity pools<\/strong><\/a>. Now, it&rsquo;s a huge topic, in of its own, so if you&rsquo;re not familiar with it, I highly recommend reading <a href=https://www.bitdegree.org/"//crypto//learn//what-is-liquidity-pool-in-crypto/">a section about liquidity pools<\/strong><\/a>.<\/p>\n<p><strong>Put simply, though, the exchange houses two different pools - say, that of Bitcoin, and Ethereum-equivalent of BTC coins.<\/strong> When you visit the centralized exchange, and deposit your Bitcoin into it, you will receive an equivalent amount of Ethereum-based BTC. Your original BTC coins are locked up in the first pool - you can exchange your newly-acquired ETH-Bitcoins for your original coins at any point in time!<\/p>\n<p>The process looks pretty complex, when you put it that way, but swapping your crypto like this is actually pretty simple - many centralized institutions have special interfaces that allow you to do so in a clear and beginner-friendly manner.<\/p>\n<p>Now, if you decide to use the best centralized blockchain bridges, just keep in mind that <strong>you will need to really trust the platform that you&rsquo;ve chosen! <\/strong>I mean, think about it this way - it&rsquo;s like you meeting a stranger, and them telling you: <em>&ldquo;Hey, if you give me your money, I promise that I won&rsquo;t steal it from you, and that it won&rsquo;t magically disappear one day!&rdquo;.<\/em><\/p>\n<p>Well, I do admit that this is a bit of an exaggeration, but the general idea remains the same - <strong>you should use only the most-trustworthy cross-chain bridges!<\/strong><\/p>\n<p>The second type of crypto bridges that you can encounter are decentralized ones. These bridging options are quite a bit more complex than their centralized counterparts, and they do come with their own benefits and drawbacks, too.<\/p>\n<p><strong>Decentralized bridges work with the help of smart contracts. <\/strong>Once you deposit your cryptocurrency into a smart contract, it gets locked up, and you are automatically paid out the equivalent crypto, immediately. Since your original coins get locked up in the contract, there are no new cryptos coming into the market, and thus, there aren&rsquo;t any complex inflationary problems being caused, either.<\/p>\n<p>Decentralized cross-chain bridges are wonderful for anyone who wants to remain <strong>anonymous<\/strong> in their crypto swapping ventures. However, this comes with the drawback of these bridges often being <strong>less-secure than centralized ones. <\/strong>So, if you&rsquo;re adamant about using a smart contract-powered crypto bridging solution, you should take the time and do some thorough research!<\/p>\n<p>That concludes our discussion of what bridging in crypto is. As you&rsquo;ve probably gathered by now, bridging is a very important part of the cryptocurrency world! It is thus equally important that you educate yourself on the topic.<\/p>","definition":"Did you know that a blockchain bridge can be perceived by its literal meaning since it links two different blockchains?","status":"published","meta_title":"What is Bridging in Crypto and Why is It Useful?","meta_description":"Can't find a decent explanation about what is bridging in crypto? You're in luck because you'll find everything you need to know right here!","meta_keywords":"what is bridging in crypto, blockchain bridges, list of blockchain bridges, what are blockchain bridges, how do blockchain bridges work, best blockchain bridges","modified_content":"<p>In this section, I&rsquo;m going to tell you what is bridging in crypto!<\/p>\n<p>Imagine that you&rsquo;ve decided to visit a friend, who lives in a different city. It&rsquo;s a pretty long drive, so you pack up your things, and hit the road. Approaching the city where your friend&rsquo;s house is located, you notice that there&rsquo;s a river that needs to be crossed.<\/p>\n<p>Since you&rsquo;re driving a simple car, and not a futuristic car-boat, you can&rsquo;t just swim over the river! However, luckily, you notice that there&rsquo;s a bridge - you can use it to cross over, and meet your friend on the other side. <strong>From a somewhat philosophical point of view, this is how blockchain bridges work, too!<\/strong><\/p>\n<p>In this section, we&rsquo;re going to answer the question - what is bridging in crypto? Specifically, I&rsquo;m going to tell you about the problem that many blockchains face, what is crypto bridging &amp; how it can help eliminate that problem, and we&rsquo;ll also talk about the best blockchain bridges and how to spot them, too!<\/p>\n<p><em>Now, let&rsquo;s get to it!<\/em><\/p>\n<div class=\"container\">\n <div class=\"row justify-content-center\">\n <div class=\"col-md-10 suggested-comparisons pb-3 mb-4\">\n <div class=\"d-flex flex-row\">\n <div class=\"text-center\">\n <div class=\"img-block-yt\">\n <img src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//images//compare-crypto-exchanges.gif/"/n alt=\"What is a Crypto Bridge? (Explained with Animations)\"\n title=\"What is a Crypto Bridge? (Explained with Animations)\" class=\"border-0\">\n <p>Video Explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"col-xs-10 col-sm-10 col-md-10 text-left py-3 yt-info\">\n <h4 class=\"mb-1\">Video Explainer: The Key Notion Behind the Concept of Bridging in Crypto<\/h4>\n <p class=\"py-1 mb-0 youtube-video-subtitle\">Reading is not your thing? Watch the \"The Key Notion Behind the Concept of Bridging in Crypto\" video explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div class=\"col-12 col-md-11 px-3\">\n <div class=\"wrapper mb-0\">\n <div class=\"position-relative youtube mb-4 bg-transparent p-0 video-modal-popup\" data-toggle=\"modal\"\n data-target=\"#video-modal\" data-id=\"T4yAxcluIho\" data-title=\"CryptoFinallyExplained\">\n <div class=\"video-gradient-top\"><\/div>\n <p class=\"text-left dyk-video-title\">What is a Crypto Bridge? (Explained with Animations)<\/p>\n <img data-srcset=\"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/what-is-a-crypto-bridge-explained-with-animations.jpg?tr=w-420 500w,\n https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/what-is-a-crypto-bridge-explained-with-animations.jpg?tr=w-760 1000w\"\n alt=\"What is a Crypto Bridge? (Explained with Animations)\"\n title=\"What is a Crypto Bridge? (Explained with Animations)\"\n class=\"p-0 lazyload\">\n <img class=\"play-button lazyload\" data-target=\"#video-modal\"\n data-src=\"https:\/\/assets.bitdegree.org\/crypto\/assets\/video-button.png?tr=w-85\"\n alt=\"What is a Crypto Bridge? (Explained with Animations)\">\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div>\n <a href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n class=\"btn yt-promo mb-2\" target=\"_blank\" rel=\"nofollow noopener noindex\">\n <div class=\"row justify-content-center align-items-center mx-0 text-center\">\n <div class=\"col-4 col-md-4\">\n <i class=\"fab fa-youtube yt-dyk-btn\"><\/i>\n <\/div>\n <div class=\"col-8 col-md-8 text-center yt-promo-text\">\n <h4 class=\"m-0 text-white\">SUBSCRIBE<\/h4>\n <span>ON YOUTUBE<\/span>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n<div class=\"modal fade\" id=\"video-modal\" tabindex=\"-1\" role=\"dialog\">\n <div class=\"modal-dialog modal-dialog-centered modal-lg\" role=\"document\">\n <div class=\"modal-content\">\n <div class=\"modal-body p-0\">\n <button type=\"button\" class=\"video-modal-close close\" data-dismiss=\"modal\" aria-label=\"Close\">\n <i aria-hidden=\"true\" class=\"fas fa-times\"><\/i>\n <\/button>\n <div id=\"iframe\"><\/div>\n <\/div>\n <a class=\"text-decoration-none\"\n href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n rel=\"nofollow noopener noindex\" target=\"_blank\">\n <div class=\"modal-footer p-0 d-block bg-white\">\n <div class=\"row justify-content-center m-0\">\n <div class=\"col-3 col-md-4 col-lg-2 p-0\">\n <img class=\"w-100 h-100\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//crypto-subscribe.jpg/" alt=\"Subscribe\">\n <\/div>\n <div class=\"col-9 col-md-8 col-lg-2 px-0 d-flex\">\n <div class=\"modal-subscribe w-100\">\n <p class=\"m-0 mt-1 mr-3\">SUBSCRIBE<br>\n <span class=\"m-0\">ON YOUTUBE<\/span>\n <\/p>\n <\/div>\n <\/div>\n <div class=\"col-12 col-md-12 col-lg-8 p-0 text-center d-flex justify-content-center align-items-center\">\n <div class=\"modal-subscribe-text\">\n <h4 class=\"m-0\">Understand crypto with ease<\/h4>\n <span>New explainer videos every week!<\/span>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n<\/div>\n<h2>The Communication Problem of Blockchains<\/h2>\n<p>So, for starters, allow me to elaborate on the example I gave in the introduction, as we move on to discuss what are blockchain bridges, and how do they work.<\/p>\n<p>In the example, both you and your friend represent two different blockchain networks. For the sake of this example, let&rsquo;s say, <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoin and <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-ethereum-eth/">Ethereum. As you might be aware, both of these blockchains are very different from one another!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is bridging in crypto: The communication problem of blockchains.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_crypto_bridging_01-62ea3457bd369.o.png/" alt=\"What is bridging in crypto: The communication problem of blockchains.\" width=\"1000\" height=\"543\" \/><\/p>\n<p><strong>Ethereum<\/strong> is this super-smart global computer that allows its users to create and participate in <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-smart-contract/">smart contracts<\/strong><\/a>, <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-defi/">decentralized finance (or, DeFi)<\/strong><\/a>, and a variety of other revolutionary activities. On the flip side, <strong>Bitcoin<\/strong> is usually seen as the &ldquo;dumb&rdquo; blockchain - essentially, it has no &ldquo;smart&rdquo; functionality, and is mostly only used as a store of value.<\/p>\n<p>Note that, if some of the terms I&rsquo;ve mentioned earlier aren&rsquo;t familiar to you, do make sure to check out other sections in the Crypto 101 Handbook - you'll find dedicated sections on all of those topics! Moving on, though, you might ask - <em>so, where&rsquo;s the problem?<\/em><\/p>\n<p>Well, what if you want to, say, participate in some sort of a cool, new <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-are-decentralized-applications-dapps/">dApp on Ethereum, but you&rsquo;re only holding Bitcoin? <strong>This is where blockchain bridges come in to save the day!<\/strong><\/p>\n<p>You see, this is kind of the biggest problem that all blockchain networks face, in general - they have a pretty difficult time communicating with one another! Since many of these protocols are built using very different technology, they aren&rsquo;t able to connect with each other - it&rsquo;s like trying to install an Xbox game on your personal computer!<\/p>\n<h2>What is a Blockchain Bridge, and Where is it Used?<\/h2>\n<p>Moving on, in order to help different blockchain networks connect and &ldquo;communicate&rdquo; with one another, you need bridges. To answer the question of what is bridging in crypto simply, you can think of these bridges as<strong> special connections that allow two completely different blockchains to share data, coins &amp; tokens, and various other information.<\/strong><\/p>\n<p><strong><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is bridging in crypto: Coin VS Token.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_crypto_bridging_02-62ea345b00706.o.png/" alt=\"What is bridging in crypto: A blockchain bridge.\" width=\"1000\" height=\"726\" \/><\/strong><\/p>\n<p>Notice how I mention &ldquo;coins &amp; tokens&rdquo; - this part is very important! If you&rsquo;d like an in-depth explanation of what are the differences between crypto coins and tokens, <a href=https://www.bitdegree.org/"//crypto//learn//coin-vs-token/">check out this section<\/strong><\/a> - for now, though, just know that <strong>crypto coins have their own blockchains, while cryptocurrency tokens are built on the blockchains of other coins.<\/strong><\/p>\n<p><em>Feeling confused? <\/em>Well, look - let&rsquo;s illustrate that with an example.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is bridging in crypto: Ethereum VS BNB.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_crypto_bridging_03-62eb65a09adde.o.png/" alt=\"What is bridging in crypto: Ethereum VS BNB.\" width=\"1000\" height=\"363\" \/><\/p>\n<p>Once again, let&rsquo;s look at Ethereum - this is a blockchain that has a native coin of its own, by the same name. However, Ethereum is also home to a huge variety of different tokens, too - the Shiba Inu token, Bancor, the Basic Attention Token, and so on.<\/p>\n<p>Then, you have another network, such as the <strong>Binance Smart Chain.<\/strong> The native coin of this blockchain is BNB. Binance Smart Chain also has a variety of tokens built on it, too.<\/p>\n<p>Where do blockchain bridges come in? Well, think about it this way - what would happen if you wanted to use your Ethereum coins or tokens on the Binance Smart Chain? Traditionally, you couldn&rsquo;t &nbsp;- these are two completely different networks! <strong>However, crypto bridging allows you to do just that!<\/strong><\/p>\n<p>Up until this point, we&rsquo;ve talked about some pretty vague examples of blockchain bridging. Let&rsquo;s change that - allow me to give you a very specific example of what is bridging in crypto, and how you can use it, too!<\/p>\n<p>Imagine that you&rsquo;ve found an awesome yield-earning platform. The premise behind it is very simple - <strong>you put in some cryptocurrency that you hold, and then earn a passive interest over time.<\/strong> This platform supports a wide list of cryptocurrencies, so you start browsing and looking for the best numbers.<\/p>\n<p>During your research, you notice something interesting - if you were to deposit your ETH coins into it, you would earn a 1% annual yield. However, if you would instead deposit ETH coins that are based on the Binance Smart Chain, that percentage would double!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is bridging in crypto: ETH coins VS BSC-based ETH coins.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_crypto_bridging_04-62ea3364626cf.o.png/" alt=\"What is bridging in crypto: ETH coins VS BSC-based ETH coins.\" width=\"981\" height=\"224\" \/><\/p>\n<p>So, all that you need to do now is find a blockchain bridge, exchange your ETH coin to Binance Smart Chain Ethereum, and start earning a passive yield!<\/p>\n<p>An alternative example that you could think about would have to do with cryptocurrency <strong>lending<\/strong> <strong>and<\/strong> <strong>borrowing.<\/strong> This can be done in two types of platforms - centralized institutions, and some anonymity-preserving, decentralized applications. In most cases, however, crypto lending and borrowing are considered to be a form of DeFi, or decentralized finance.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is bridging in crypto: Bitcoin bridging.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_crypto_bridging_05-62ea3459711ee.o.png/" alt=\"What is bridging in crypto: Bitcoin bridging.\" width=\"1000\" height=\"257\" \/><\/p>\n<p>Most modern blockchain networks are advanced enough to allow their coin or token holders to participate in lending and borrowing. Older blockchains <em>(such as Bitcoin and Dogecoin)<\/em>, however, do not - <strong>in order to borrow or lend them out, you would need to bridge these assets<\/strong> on special applications that would allow you to do so, and that are based on other, &ldquo;smarter&rdquo; networks. <em>Makes sense?<\/em><\/p>\n<h2>Best Blockchain Bridges<\/h2>\n<p>Now, I admit - this is a pretty complex topic to tackle! That being said, though, now that you know what is bridging in crypto, and where these bridges are used, in the first place, there&rsquo;s one more thing that I&rsquo;d like to discuss - <strong>the best blockchain bridges, and how to find them!<\/strong><\/p>\n<p>First things first - this won&rsquo;t be a list of blockchain bridges for you to check out. Instead, I&rsquo;d like to tell you about<strong> the types of bridges that you might come across<\/strong>, and what to look for with each of those types, as well.<\/p>\n<p>So, to start things off, you should note that there are two major types of blockchain bridges - <strong>centralized, and decentralized ones.<\/strong> They are both very preference-based, and will thus suit different people, too. However, if you&rsquo;re just starting out, I&rsquo;d recommend you go with the centralized bridges - these are much simpler to use and get into, in general.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is bridging in crypto: Best blockchain bridges.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_crypto_bridging_06-62ea34556ceb6.o.png/" alt=\"What is bridging in crypto: Best blockchain bridges.\" width=\"1000\" height=\"555\" \/><\/p>\n<p>Essentially, some of the most popular centralized crypto bridges are those that are located on trusted and well-known crypto exchanges. These bridges work with the help of exchange-based <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-liquidity-pool/">liquidity pools<\/strong><\/a>. Now, it&rsquo;s a huge topic, in of its own, so if you&rsquo;re not familiar with it, I highly recommend reading <a href=https://www.bitdegree.org/"//crypto//learn//what-is-liquidity-pool-in-crypto/">a section about liquidity pools<\/strong><\/a>.<\/p>\n<p><strong>Put simply, though, the exchange houses two different pools - say, that of Bitcoin, and Ethereum-equivalent of BTC coins.<\/strong> When you visit the centralized exchange, and deposit your Bitcoin into it, you will receive an equivalent amount of Ethereum-based BTC. Your original BTC coins are locked up in the first pool - you can exchange your newly-acquired ETH-Bitcoins for your original coins at any point in time!<\/p>\n<p>The process looks pretty complex, when you put it that way, but swapping your crypto like this is actually pretty simple - many centralized institutions have special interfaces that allow you to do so in a clear and beginner-friendly manner.<\/p>\n<p>Now, if you decide to use the best centralized blockchain bridges, just keep in mind that <strong>you will need to really trust the platform that you&rsquo;ve chosen! <\/strong>I mean, think about it this way - it&rsquo;s like you meeting a stranger, and them telling you: <em>&ldquo;Hey, if you give me your money, I promise that I won&rsquo;t steal it from you, and that it won&rsquo;t magically disappear one day!&rdquo;.<\/em><\/p>\n<p>Well, I do admit that this is a bit of an exaggeration, but the general idea remains the same - <strong>you should use only the most-trustworthy cross-chain bridges!<\/strong><\/p>\n<p>The second type of crypto bridges that you can encounter are decentralized ones. These bridging options are quite a bit more complex than their centralized counterparts, and they do come with their own benefits and drawbacks, too.<\/p>\n<p><strong>Decentralized bridges work with the help of smart contracts. <\/strong>Once you deposit your cryptocurrency into a smart contract, it gets locked up, and you are automatically paid out the equivalent crypto, immediately. Since your original coins get locked up in the contract, there are no new cryptos coming into the market, and thus, there aren&rsquo;t any complex inflationary problems being caused, either.<\/p>\n<p>Decentralized cross-chain bridges are wonderful for anyone who wants to remain <strong>anonymous<\/strong> in their crypto swapping ventures. However, this comes with the drawback of these bridges often being <strong>less-secure than centralized ones. <\/strong>So, if you&rsquo;re adamant about using a smart contract-powered crypto bridging solution, you should take the time and do some thorough research!<\/p>\n<p>That concludes our discussion of what bridging in crypto is. As you&rsquo;ve probably gathered by now, bridging is a very important part of the cryptocurrency world! It is thus equally important that you educate yourself on the topic.<\/p>","youtube_video":{"id":33,"channel_id":1,"sort":63,"video_title":"What is a Crypto Bridge? (Explained with Animations)","description":"What is a crypto bridge?\n\nCryptocurrency bridges are some of the most important elements of the crypto world. However, they are also a complex topic that not many people are truly familiar with! Truth be told, you might have even used a cross-chain bridge before, without even knowing it! \n\nIn this video, I\u2019ll tell you all about what is bridging in crypto. Furthermore, I will reveal the biggest problem that all cryptocurrencies face, and will also explain how crypto bridges help solve that problem, in general. We will also look into the best blockchain bridges, and how to find them.\n\nHave you ever used a blockchain bridge before? Share your experiences, in the comment section below!\n\nVideo Time Table:\n\n0:00 Introduction to What is a Crypto Bridge\n0:59 How do the Crypto Bridges Work?\n3:38 Example of Bridging in Crypto\n5:10 Best Blockchain Bridges\n7:57 Wrap-up: What is a Crypto Bridge? \n\n? Best Types of Blockchains Explained\nhttps:\/\/www.youtube.com\/watch?v=sCp9U3vr9RI\n? Blockchain Transaction Easily Explained\nhttps:\/\/www.youtube.com\/watch?v=h1zkHIBFiS4\n? What is a Smart Contract?\nhttps:\/\/www.youtube.com\/watch?v=0VCMtKx9AxU\n? What is DeFi in Crypto?\nhttps:\/\/www.youtube.com\/watch?v=GVeoES3lKfQ\n\nGet Quick Crypto Tips on Twitter - Follow:\nhttps:\/\/twitter.com\/crypto_xplained\n\n#WhatisaCryptoBridge #HowtoBridgeCrypto #WhatDoesitMeantoBridgeinCrypto","video_id":"T4yAxcluIho","duration":510,"view_count":644,"thumbnail_url":"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/what-is-a-crypto-bridge-explained-with-animations.jpg","thumbnail_width":1280,"thumbnail_height":720,"published_at":"2022-08-04T14:33:11.000000Z","created_at":"2022-08-04T23:00:02.000000Z","updated_at":"2024-01-09T23:00:04.000000Z","channel":{"id":1,"title":"CryptoFinallyExplained","channel_id":"UCOryUY0yxC08eJtK23mNgiA","main_playlist_id":"UUOryUY0yxC08eJtK23mNgiA"}}}" :prev-section="{"id":29,"chapter_id":1,"order":3,"featured_image_id":3060,"youtube_video_id":30,"author_id":1,"created_at":"2022-07-12T08:33:11.000000Z","updated_at":"2023-12-22T07:49:37.000000Z","slug":"blockchain-transaction","title":"What is a Blockchain Transaction in Crypto?","content":"<p>In this section, I&rsquo;m going to tell you what is a <strong>blockchain transaction<\/strong>, in crypto!<\/p>\n<p><a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-blockchain/">Blockchain transactions are something that every single cryptocurrency holder has performed, or rather, does perform, very often. If you deal with cryptocurrencies in any way, shape, or form, you&rsquo;ve definitely &ldquo;transacted&rdquo; before.<\/p>\n<p>That being said, while the term might seem very self-explanatory, I wouldn&rsquo;t be writing a dedicated section on the topic, now would I? <strong>A &ldquo;transaction&rdquo; is actually a very broad term<\/strong>, as far as crypto is concerned - that&rsquo;s why it&rsquo;s important to understand it, from all sides of the deal.<\/p>\n<p>In this section, we&rsquo;re going to cover what is a transaction. To be a bit more specific, I&rsquo;ll tell you about the most common types of transactions, as well as cover the broader meaning behind the term, as far as cryptocurrencies and blockchain tech are concerned.<\/p>\n<p><em>Now, let&rsquo;s get to it!<\/em><\/p>\n<h2>What is a Transaction?<\/h2>\n<p>So, let&rsquo;s start off from the very beginning, and answer the most obvious question - <strong>what is a transaction?<\/strong><\/p>\n<p>Well, there are multiple examples that could be used to illustrate transactions - allow me to give two, though.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Blockchain transaction: What is a transaction?\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_blockchain_transaction_01.o.jpg/" alt=\"Blockchain transaction: What is a transaction?\" width=\"1000\" height=\"803\" \/><\/p>\n<p>First, imagine that you and your friend decided to trade two items - you&rsquo;ll give your friend a chocolate bar for his banana. Once you trade the two items, both of you just participated in a transaction!<\/p>\n<p>Another example would be you buying milk and bread at the shop. You purchase these groceries for money - USD, EUR, or any other currency that&rsquo;s present in your country. Once you walk away from the cashier, once again, you&rsquo;ve just participated in a transaction - you&rsquo;ve traded your money for physical goods!<\/p>\n<p>Now, these examples are very, well&hellip; Obvious! However, what is a blockchain transaction in crypto?<\/p>\n<p><strong>Well, whenever you send or receive cryptocurrency, this is called a transaction.<\/strong> Even if, say, you receive crypto, and don&rsquo;t send or pay anything for it <em>(in other words, you don&rsquo;t perform a trade)<\/em>, this is still considered a transaction, nonetheless.<\/p>\n<p>Once again, up to this point, things are pretty obvious. With that out of the way, though, let&rsquo;s get down to some of the more-interesting aspects of transactions, when it comes to crypto.<\/p>\n<h2>Everything is a Transaction in Crypto<\/h2>\n<p>Probably one of the most important things to know about blockchain-based crypto transactions is that <strong>everything you do on the blockchain can be considered (or, called) a &ldquo;transaction&rdquo;.<\/strong><\/p>\n<p>So, allow me to give you an example.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Blockchain transaction: Crypto-based game.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_blockchain_transaction_02.o.jpg/" alt=\"Blockchain transaction: Crypto-based game.\" width=\"1000\" height=\"527\" \/><\/p>\n<p>Imagine that you&rsquo;ve just found the coolest cryptocurrency game ever - it&rsquo;s action-packed, allows you to earn passive cryptocurrency tokens as you play, and is super-fun, in general.<\/p>\n<p>Now, the game allows you to create a custom character of your own. As you play, you will have the opportunity to upgrade your character with high-level armor and weapons. <em>Cool stuff!<\/em><\/p>\n<p>All of these assets, though - the armor, the weapons, and all other equipable items in the game - come in the form of <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-non-fungible-token-nft/">NFTs, or non-fungible tokens. If you&rsquo;re not familiar with what these are, I highly recommend you go and check a <a href=https://www.bitdegree.org/"//crypto//learn//what-are-nfts/">dedicated section on the topic<\/strong><\/a>, and then come back to this one - it&rsquo;s a whole, huge topic!<\/p>\n<p>So, you can earn all of that equipment simply by playing the game, or you can purchase it on the in-game marketplace, for some cryptocurrency coins or tokens. <strong>For the sake of this example, let&rsquo;s assume that you&rsquo;ve chosen to earn the NFTs<\/strong> - say, perhaps you&rsquo;ve gotten lucky, and received a rare piece of armor from a boss fight.<\/p>\n<p>Well, even though you&rsquo;ve received the armor in-game, as soon as it goes into your inventory, this will be considered a crypto transaction - specifically, the game will transfer the armor, in the form of an NFT, into your cryptocurrency wallet, so that it will be 100% provable that you&rsquo;re now the owner of the item!<\/p>\n<p>I know, I&rsquo;ve gotten ahead of myself there - it&rsquo;s a complex topic, when you start breaking it down! If all of that sounded like a foreign language to you, I highly advise going through the whole Crypto 101 Handbook, where you&rsquo;ll find dedicated and in-depth sections on all of the terms we&rsquo;ve just ran through!<\/p>\n<p>That being said, though, I do hope that the core idea is clear - <strong>in the world of crypto, a &ldquo;blockchain transaction&rdquo; is any form of interaction between an individual (or an organization) and the blockchain. <\/strong>Buying, selling, and sending cryptocurrencies ARE NOT the only &ldquo;transactions&rdquo; that you can perform!<\/p>\n<p>Now, if we were to get a bit more technical and specific, I&rsquo;d like to say - a transaction happens anytime that you interact with a <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-smart-contract/">smart contract<\/strong><\/a>. Smart contracts are special, automated agreements that are based on the blockchain - they allow users to trust blockchain-powered projects, since everything happens automatically, without the intervention of a <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-intermediary-middleman/">middleman (or, simply - a human).<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Blockchain transaction: Everything is a transaction in crypto.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_blockchain_transaction_03.o.jpg/" alt=\"Blockchain transaction: Everything is a transaction in crypto.\" width=\"1000\" height=\"526\" \/><\/p>\n<p>To make it even clearer, allow me to give you another example.<\/p>\n<p>Imagine that you&rsquo;ve come across a gambling application - one that&rsquo;s based on the blockchain, and is powered by smart contracts. Meaning, you are able to check how the rules are enforced for each game on the platform, and whether or not everything is provably fair.<\/p>\n<p>As you gamble your cryptocurrency on the application, each time you place a bet, or the winnings are paid out to you, a transaction occurs - either you send funds from your cryptocurrency wallet to the platform, or the smart contract pays out your winnings into your wallet, automatically.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Blockchain transaction: Bet transaction.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_blockchain_transaction_04.o.jpg/" alt=\"Blockchain transaction: Bet transaction.\" width=\"1000\" height=\"257\" \/><\/p>\n<p>So, the core takeaway is simple - <strong>every single action that you perform on the blockchain is considered a transaction.<\/strong> That being said, though, why is it even important, in the first place?<\/p>\n<h2>The Public Nature of Transactions on the Blockchain<\/h2>\n<p>You see, one of the main wonders of blockchain technology is that all of the events happening on the network are completely public, and available for anyone to see. Of course, there are exceptions, but the general idea is still that.<\/p>\n<p>Naturally, you are able to remain completely anonymous while you perform these transactions - instead, what others will see are the <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-transaction-id-txid/">crypto transaction ID (hash)<\/strong><\/a>, <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-public-address/">your public wallet address<\/strong><\/a>, the total amount of crypto sent, as well as the address of the receiver.<\/p>\n<p>Think about the example I gave earlier - the one with you trading a chocolate bar for a banana with your friend. Now, imagine that, instead of trading something, your friend asked you to lend him some <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoin, for a project that he&rsquo;s working on. So, being the awesome friend that you are, you&rsquo;ve sent your friend the BTC that he asked for.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Blockchain transaction: The public nature of transactions on the blockchain.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_blockchain_transaction_05.o.jpg/" alt=\"Blockchain transaction: The public nature of transactions on the blockchain.\" width=\"1000\" height=\"284\" \/><\/p>\n<p>The moment that the network receives your transaction information, it will become public, and everyone will be able to see that one wallet sent another wallet an X amount of BTC. However, no one will know who the wallets belong to, since there&rsquo;s absolutely no identifying information that would give your identity away.<\/p>\n<p>Well, unless you tell everyone your public wallet address, though. If that&rsquo;s the case, your transactions might not be all that anonymous!<\/p>\n<p><strong>The public nature of cryptocurrency transactions is considered to be the cornerstone of blockchain technology.<\/strong> It enables a lot of transparency within the industry, and prevents a lot of potential scams and hacking attempts, since you can always track all of the assets, no matter how many wallets they might get transferred through!<\/p>\n<h2>The Importance of Understanding How Transactions Work in Crypto<\/h2>\n<p>The last big thing that I want to emphasize in this section is the WHY - <strong>WHY you should even know and care about how do cryptocurrency transactions work, in the first place.<\/strong><\/p>\n<p>For starters, you will be transacting with crypto, every single day. Well, at least if you plan to trade, sell, purchase, and transfer cryptocurrencies between wallets - many crypto enthusiasts do just that!<\/p>\n<p>Understanding how transactions work - rather, what is classified as a transaction, in crypto - is <strong>super-valuable when you&rsquo;re dealing with taxes<\/strong>, too. All countries have their own, specific tax laws and regulations, and in some areas, you might get taxed for every transaction that you perform!<\/p>\n<p>In situations like these, it&rsquo;s important to know how to track all your transactions, as well. Online, you will find a variety of different cryptocurrency tax calculators and crypto transaction trackers - you can put in your wallet address, download Excel files, create spreadsheets, and organize your transactions in a way that would be presentable to the relevant tax authorities.<\/p>\n<p>Understanding cryptocurrency transactions is <strong>valuable when it comes to the<\/strong> <strong>security of your crypto assets<\/strong>, too! Imagine that you&rsquo;ve sent some crypto to a stranger, in exchange for a service. Later that day, that person contacts you, and says that they haven&rsquo;t received their payment, and that you should resend it.<\/p>\n<p>Well, if you understand how transactions work, you can simply go and check your transaction ID on the blockchain explorer, and see that the payment was, in fact, successful - then, you can rest assured that you have proof of paying the individual!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Blockchain transaction: The proof of transaction.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_blockchain_transaction_06-62cd4c9d3ad69.o.jpg/" alt=\"Blockchain transaction: The proof of transaction.\" width=\"1000\" height=\"499\" \/><\/p>\n<p>Lastly, understanding blockchain transactions will allow you to start looking for cryptos with no transaction fees, or fastest crypto transaction speeds, depending on your own preferences. These are some advanced topics, but once you understand blockchain transactions, they will start becoming clearer to you, too!<\/p>\n<p>I can go on and on with the examples, but the underlying sentiment remains the same - understanding cryptocurrency transactions is one of the first steps that everyone should take when starting out and learning about crypto.<\/p>\n<h2>Wrapping Up<\/h2>\n<p>In this section, we&rsquo;ve only scratched the surface of what are cryptocurrency transactions, and how do they work. You can go much deeper, studying what happens on the blockchain when someone performs a transaction, or what to do when a transaction is stuck, but these are topics that deserve their own sections!<\/p>","definition":"Did you know that around $6 billion of daily transactions are completed by Bitcoin alone?","status":"published","meta_title":"What is a Blockchain Transaction and How Does It Work?","meta_description":"Trying to figure out what is a blockchain transaction? How does it function? What benefits does it offer? Find all the answers right here.","meta_keywords":"blockchain transaction, block chain transaction, what is a transaction, what is a pending transaction, crypto transaction fees, crypto transaction tracker, crypto transaction, lowest crypto transaction fees, crypto transaction id hash, which crypto has lowest transaction fees, track crypto transaction, fastest crypto transaction speed, crypto with no transaction fee","modified_content":"<p>In this section, I&rsquo;m going to tell you what is a <strong>blockchain transaction<\/strong>, in crypto!<\/p>\n<p><a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-blockchain/">Blockchain transactions are something that every single cryptocurrency holder has performed, or rather, does perform, very often. If you deal with cryptocurrencies in any way, shape, or form, you&rsquo;ve definitely &ldquo;transacted&rdquo; before.<\/p>\n<p>That being said, while the term might seem very self-explanatory, I wouldn&rsquo;t be writing a dedicated section on the topic, now would I? <strong>A &ldquo;transaction&rdquo; is actually a very broad term<\/strong>, as far as crypto is concerned - that&rsquo;s why it&rsquo;s important to understand it, from all sides of the deal.<\/p>\n<p>In this section, we&rsquo;re going to cover what is a transaction. To be a bit more specific, I&rsquo;ll tell you about the most common types of transactions, as well as cover the broader meaning behind the term, as far as cryptocurrencies and blockchain tech are concerned.<\/p>\n<p><em>Now, let&rsquo;s get to it!<\/em><\/p>\n<div class=\"container\">\n <div class=\"row justify-content-center\">\n <div class=\"col-md-10 suggested-comparisons pb-3 mb-4\">\n <div class=\"d-flex flex-row\">\n <div class=\"text-center\">\n <div class=\"img-block-yt\">\n <img src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//images//compare-crypto-exchanges.gif/"/n alt=\"Blockchain Transaction Easily Explained! (Animated)\"\n title=\"Blockchain Transaction Easily Explained! (Animated)\" class=\"border-0\">\n <p>Video Explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"col-xs-10 col-sm-10 col-md-10 text-left py-3 yt-info\">\n <h4 class=\"mb-1\">Video Explainer: What is a Blockchain Transaction in Crypto?<\/h4>\n <p class=\"py-1 mb-0 youtube-video-subtitle\">Reading is not your thing? Watch the \"What is a Blockchain Transaction in Crypto?\" video explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div class=\"col-12 col-md-11 px-3\">\n <div class=\"wrapper mb-0\">\n <div class=\"position-relative youtube mb-4 bg-transparent p-0 video-modal-popup\" data-toggle=\"modal\"\n data-target=\"#video-modal\" data-id=\"h1zkHIBFiS4\" data-title=\"CryptoFinallyExplained\">\n <div class=\"video-gradient-top\"><\/div>\n <p class=\"text-left dyk-video-title\">Blockchain Transaction Easily Explained! (Animated)<\/p>\n <img data-srcset=\"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/blockchain-transaction-easily-explained-animated.jpg?tr=w-420 500w,\n https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/blockchain-transaction-easily-explained-animated.jpg?tr=w-760 1000w\"\n alt=\"Blockchain Transaction Easily Explained! (Animated)\"\n title=\"Blockchain Transaction Easily Explained! (Animated)\"\n class=\"p-0 lazyload\">\n <img class=\"play-button lazyload\" data-target=\"#video-modal\"\n data-src=\"https:\/\/assets.bitdegree.org\/crypto\/assets\/video-button.png?tr=w-85\"\n alt=\"Blockchain Transaction Easily Explained! (Animated)\">\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div>\n <a href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n class=\"btn yt-promo mb-2\" target=\"_blank\" rel=\"nofollow noopener noindex\">\n <div class=\"row justify-content-center align-items-center mx-0 text-center\">\n <div class=\"col-4 col-md-4\">\n <i class=\"fab fa-youtube yt-dyk-btn\"><\/i>\n <\/div>\n <div class=\"col-8 col-md-8 text-center yt-promo-text\">\n <h4 class=\"m-0 text-white\">SUBSCRIBE<\/h4>\n <span>ON YOUTUBE<\/span>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n<div class=\"modal fade\" id=\"video-modal\" tabindex=\"-1\" role=\"dialog\">\n <div class=\"modal-dialog modal-dialog-centered modal-lg\" role=\"document\">\n <div class=\"modal-content\">\n <div class=\"modal-body p-0\">\n <button type=\"button\" class=\"video-modal-close close\" data-dismiss=\"modal\" aria-label=\"Close\">\n <i aria-hidden=\"true\" class=\"fas fa-times\"><\/i>\n <\/button>\n <div id=\"iframe\"><\/div>\n <\/div>\n <a class=\"text-decoration-none\"\n href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n rel=\"nofollow noopener noindex\" target=\"_blank\">\n <div class=\"modal-footer p-0 d-block bg-white\">\n <div class=\"row justify-content-center m-0\">\n <div class=\"col-3 col-md-4 col-lg-2 p-0\">\n <img class=\"w-100 h-100\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//crypto-subscribe.jpg/" alt=\"Subscribe\">\n <\/div>\n <div class=\"col-9 col-md-8 col-lg-2 px-0 d-flex\">\n <div class=\"modal-subscribe w-100\">\n <p class=\"m-0 mt-1 mr-3\">SUBSCRIBE<br>\n <span class=\"m-0\">ON YOUTUBE<\/span>\n <\/p>\n <\/div>\n <\/div>\n <div class=\"col-12 col-md-12 col-lg-8 p-0 text-center d-flex justify-content-center align-items-center\">\n <div class=\"modal-subscribe-text\">\n <h4 class=\"m-0\">Understand crypto with ease<\/h4>\n <span>New explainer videos every week!<\/span>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n<\/div>\n<h2>What is a Transaction?<\/h2>\n<p>So, let&rsquo;s start off from the very beginning, and answer the most obvious question - <strong>what is a transaction?<\/strong><\/p>\n<p>Well, there are multiple examples that could be used to illustrate transactions - allow me to give two, though.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Blockchain transaction: What is a transaction?\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_blockchain_transaction_01.o.jpg/" alt=\"Blockchain transaction: What is a transaction?\" width=\"1000\" height=\"803\" \/><\/p>\n<p>First, imagine that you and your friend decided to trade two items - you&rsquo;ll give your friend a chocolate bar for his banana. Once you trade the two items, both of you just participated in a transaction!<\/p>\n<p>Another example would be you buying milk and bread at the shop. You purchase these groceries for money - USD, EUR, or any other currency that&rsquo;s present in your country. Once you walk away from the cashier, once again, you&rsquo;ve just participated in a transaction - you&rsquo;ve traded your money for physical goods!<\/p>\n<p>Now, these examples are very, well&hellip; Obvious! However, what is a blockchain transaction in crypto?<\/p>\n<p><strong>Well, whenever you send or receive cryptocurrency, this is called a transaction.<\/strong> Even if, say, you receive crypto, and don&rsquo;t send or pay anything for it <em>(in other words, you don&rsquo;t perform a trade)<\/em>, this is still considered a transaction, nonetheless.<\/p>\n<p>Once again, up to this point, things are pretty obvious. With that out of the way, though, let&rsquo;s get down to some of the more-interesting aspects of transactions, when it comes to crypto.<\/p>\n<h2>Everything is a Transaction in Crypto<\/h2>\n<p>Probably one of the most important things to know about blockchain-based crypto transactions is that <strong>everything you do on the blockchain can be considered (or, called) a &ldquo;transaction&rdquo;.<\/strong><\/p>\n<p>So, allow me to give you an example.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Blockchain transaction: Crypto-based game.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_blockchain_transaction_02.o.jpg/" alt=\"Blockchain transaction: Crypto-based game.\" width=\"1000\" height=\"527\" \/><\/p>\n<p>Imagine that you&rsquo;ve just found the coolest cryptocurrency game ever - it&rsquo;s action-packed, allows you to earn passive cryptocurrency tokens as you play, and is super-fun, in general.<\/p>\n<p>Now, the game allows you to create a custom character of your own. As you play, you will have the opportunity to upgrade your character with high-level armor and weapons. <em>Cool stuff!<\/em><\/p>\n<p>All of these assets, though - the armor, the weapons, and all other equipable items in the game - come in the form of <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-non-fungible-token-nft/">NFTs, or non-fungible tokens. If you&rsquo;re not familiar with what these are, I highly recommend you go and check a <a href=https://www.bitdegree.org/"//crypto//learn//what-are-nfts/">dedicated section on the topic<\/strong><\/a>, and then come back to this one - it&rsquo;s a whole, huge topic!<\/p>\n<p>So, you can earn all of that equipment simply by playing the game, or you can purchase it on the in-game marketplace, for some cryptocurrency coins or tokens. <strong>For the sake of this example, let&rsquo;s assume that you&rsquo;ve chosen to earn the NFTs<\/strong> - say, perhaps you&rsquo;ve gotten lucky, and received a rare piece of armor from a boss fight.<\/p>\n<p>Well, even though you&rsquo;ve received the armor in-game, as soon as it goes into your inventory, this will be considered a crypto transaction - specifically, the game will transfer the armor, in the form of an NFT, into your cryptocurrency wallet, so that it will be 100% provable that you&rsquo;re now the owner of the item!<\/p>\n<p>I know, I&rsquo;ve gotten ahead of myself there - it&rsquo;s a complex topic, when you start breaking it down! If all of that sounded like a foreign language to you, I highly advise going through the whole Crypto 101 Handbook, where you&rsquo;ll find dedicated and in-depth sections on all of the terms we&rsquo;ve just ran through!<\/p>\n<p>That being said, though, I do hope that the core idea is clear - <strong>in the world of crypto, a &ldquo;blockchain transaction&rdquo; is any form of interaction between an individual (or an organization) and the blockchain. <\/strong>Buying, selling, and sending cryptocurrencies ARE NOT the only &ldquo;transactions&rdquo; that you can perform!<\/p>\n<p>Now, if we were to get a bit more technical and specific, I&rsquo;d like to say - a transaction happens anytime that you interact with a <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-smart-contract/">smart contract<\/strong><\/a>. Smart contracts are special, automated agreements that are based on the blockchain - they allow users to trust blockchain-powered projects, since everything happens automatically, without the intervention of a <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-intermediary-middleman/">middleman (or, simply - a human).<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Blockchain transaction: Everything is a transaction in crypto.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_blockchain_transaction_03.o.jpg/" alt=\"Blockchain transaction: Everything is a transaction in crypto.\" width=\"1000\" height=\"526\" \/><\/p>\n<p>To make it even clearer, allow me to give you another example.<\/p>\n<p>Imagine that you&rsquo;ve come across a gambling application - one that&rsquo;s based on the blockchain, and is powered by smart contracts. Meaning, you are able to check how the rules are enforced for each game on the platform, and whether or not everything is provably fair.<\/p>\n<p>As you gamble your cryptocurrency on the application, each time you place a bet, or the winnings are paid out to you, a transaction occurs - either you send funds from your cryptocurrency wallet to the platform, or the smart contract pays out your winnings into your wallet, automatically.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Blockchain transaction: Bet transaction.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_blockchain_transaction_04.o.jpg/" alt=\"Blockchain transaction: Bet transaction.\" width=\"1000\" height=\"257\" \/><\/p>\n<p>So, the core takeaway is simple - <strong>every single action that you perform on the blockchain is considered a transaction.<\/strong> That being said, though, why is it even important, in the first place?<\/p>\n<h2>The Public Nature of Transactions on the Blockchain<\/h2>\n<p>You see, one of the main wonders of blockchain technology is that all of the events happening on the network are completely public, and available for anyone to see. Of course, there are exceptions, but the general idea is still that.<\/p>\n<p>Naturally, you are able to remain completely anonymous while you perform these transactions - instead, what others will see are the <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-transaction-id-txid/">crypto transaction ID (hash)<\/strong><\/a>, <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-public-address/">your public wallet address<\/strong><\/a>, the total amount of crypto sent, as well as the address of the receiver.<\/p>\n<p>Think about the example I gave earlier - the one with you trading a chocolate bar for a banana with your friend. Now, imagine that, instead of trading something, your friend asked you to lend him some <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoin, for a project that he&rsquo;s working on. So, being the awesome friend that you are, you&rsquo;ve sent your friend the BTC that he asked for.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Blockchain transaction: The public nature of transactions on the blockchain.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_blockchain_transaction_05.o.jpg/" alt=\"Blockchain transaction: The public nature of transactions on the blockchain.\" width=\"1000\" height=\"284\" \/><\/p>\n<p>The moment that the network receives your transaction information, it will become public, and everyone will be able to see that one wallet sent another wallet an X amount of BTC. However, no one will know who the wallets belong to, since there&rsquo;s absolutely no identifying information that would give your identity away.<\/p>\n<p>Well, unless you tell everyone your public wallet address, though. If that&rsquo;s the case, your transactions might not be all that anonymous!<\/p>\n<p><strong>The public nature of cryptocurrency transactions is considered to be the cornerstone of blockchain technology.<\/strong> It enables a lot of transparency within the industry, and prevents a lot of potential scams and hacking attempts, since you can always track all of the assets, no matter how many wallets they might get transferred through!<\/p>\n<h2>The Importance of Understanding How Transactions Work in Crypto<\/h2>\n<p>The last big thing that I want to emphasize in this section is the WHY - <strong>WHY you should even know and care about how do cryptocurrency transactions work, in the first place.<\/strong><\/p>\n<p>For starters, you will be transacting with crypto, every single day. Well, at least if you plan to trade, sell, purchase, and transfer cryptocurrencies between wallets - many crypto enthusiasts do just that!<\/p>\n<p>Understanding how transactions work - rather, what is classified as a transaction, in crypto - is <strong>super-valuable when you&rsquo;re dealing with taxes<\/strong>, too. All countries have their own, specific tax laws and regulations, and in some areas, you might get taxed for every transaction that you perform!<\/p>\n<p>In situations like these, it&rsquo;s important to know how to track all your transactions, as well. Online, you will find a variety of different cryptocurrency tax calculators and crypto transaction trackers - you can put in your wallet address, download Excel files, create spreadsheets, and organize your transactions in a way that would be presentable to the relevant tax authorities.<\/p>\n<p>Understanding cryptocurrency transactions is <strong>valuable when it comes to the<\/strong> <strong>security of your crypto assets<\/strong>, too! Imagine that you&rsquo;ve sent some crypto to a stranger, in exchange for a service. Later that day, that person contacts you, and says that they haven&rsquo;t received their payment, and that you should resend it.<\/p>\n<p>Well, if you understand how transactions work, you can simply go and check your transaction ID on the blockchain explorer, and see that the payment was, in fact, successful - then, you can rest assured that you have proof of paying the individual!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Blockchain transaction: The proof of transaction.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_blockchain_transaction_06-62cd4c9d3ad69.o.jpg/" alt=\"Blockchain transaction: The proof of transaction.\" width=\"1000\" height=\"499\" \/><\/p>\n<p>Lastly, understanding blockchain transactions will allow you to start looking for cryptos with no transaction fees, or fastest crypto transaction speeds, depending on your own preferences. These are some advanced topics, but once you understand blockchain transactions, they will start becoming clearer to you, too!<\/p>\n<p>I can go on and on with the examples, but the underlying sentiment remains the same - understanding cryptocurrency transactions is one of the first steps that everyone should take when starting out and learning about crypto.<\/p>\n<h2>Wrapping Up<\/h2>\n<p>In this section, we&rsquo;ve only scratched the surface of what are cryptocurrency transactions, and how do they work. You can go much deeper, studying what happens on the blockchain when someone performs a transaction, or what to do when a transaction is stuck, but these are topics that deserve their own sections!<\/p>","youtube_video":{"id":30,"channel_id":1,"sort":66,"video_title":"Blockchain Transaction Easily Explained! (Animated)","description":"Blockchain Transaction Easily Explained! (Animated)\nWhat is a blockchain transaction in crypto?\n\nBlockchain transactions are something that every cryptocurrency holder has participated in, at least once - whether it be buying or selling crypto, trading with your friends, or transferring your cryptocurrency assets from one wallet to another. \n\nThat said, the question \u201cwhat is a transaction\u201d can hold multiple meanings, in the cryptocurrency and blockchain world! In this video, you will learn about all of those main meanings, and find out why it\u2019s important to understand this term, in the first place!\n\nWhat are the most common types of blockchain transactions that you perform? Share your experiences in the comments down below!\n\nVideo Time Table:\n\n0:00 Introduction to What is a Blockchain Transaction\n0:58 What is a Transaction?\n4:45 The Nature of Blockchain Transactions\n6:14 The Importance of Understanding Blockchain Transactions\n7:59 Wrap-up: What is a Blockchain Transaction?\n\nMore Related Videos:\n? What is Blockchain? https:\/\/www.youtube.com\/watch?v=O2-XxMo5PFs\n? What is an NFT? https:\/\/www.youtube.com\/watch?v=YL0-sEzDDNI\n? What is a Smart Contract? https:\/\/www.youtube.com\/watch?v=0VCMtKx9AxU\n? How to Avoid Crypto Taxes? https:\/\/www.youtube.com\/watch?v=ERzU_Xz_P-o\n\nGet Quick Crypto Tips on Twitter - Follow:\nhttps:\/\/twitter.com\/crypto_xplained\n\n#BlockchainTransaction #WhatisaTransaction #CryptoTransactionFees","video_id":"h1zkHIBFiS4","duration":502,"view_count":911,"thumbnail_url":"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/blockchain-transaction-easily-explained-animated.jpg","thumbnail_width":1280,"thumbnail_height":720,"published_at":"2022-07-15T17:36:41.000000Z","created_at":"2022-07-15T23:00:02.000000Z","updated_at":"2024-01-09T23:00:04.000000Z","channel":{"id":1,"title":"CryptoFinallyExplained","channel_id":"UCOryUY0yxC08eJtK23mNgiA","main_playlist_id":"UUOryUY0yxC08eJtK23mNgiA"}}}" :model="{"id":30,"chapter_id":1,"order":4,"featured_image_id":3061,"youtube_video_id":31,"author_id":1,"created_at":"2022-07-19T10:07:57.000000Z","updated_at":"2023-12-22T09:29:20.000000Z","slug":"crypto-fees","title":"The Different Types of Crypto Fees Explained","content":"<p>Hey, in this section, we&rsquo;re going to talk about <strong>crypto fees<\/strong>, and everything associated with this topic!<\/p>\n<p>Nowadays, fees are something that everyone is very used to - whether it be shopping online or interacting with different businesses, in any way, in many cases, you will need to pay some sort of a service or product fee. Cryptocurrency trading isn&rsquo;t an exception, either!<\/p>\n<p>Crypto gas (or, network) fees can be confusing, and that&rsquo;s not to mention things like trading fees, or even withdrawal &amp; deposit fees, too. At the same time, all of this information is very important, when you&rsquo;re getting into crypto - it can really be the difference between you making a potential profit with your trades, or losing a lot of money on fees!<\/p>\n<p>In this section, we&rsquo;re talking about crypto fees. To be a bit more specific, we&rsquo;ll talk about the different types of fees that you might come across, cover what are gas fees in crypto, and also look for cryptos with no transaction fee. Is that possible? Find the answer below!<\/p>\n<p><em>Now, let&rsquo;s get to it!<\/em><\/p>\n<h2>The Different Types of Crypto Fees<\/h2>\n<p>Now, then - to start things off, and before we can get into the specifics of crypto fees, we should first establish what sorts of fees you might come across, when you&rsquo;re buying, selling, or trading crypto.<\/p>\n<p>Starting out from the top, you&rsquo;ll find that the most interesting type of fees are the <strong>crypto gas fees, also known as blockchain fees. <\/strong>&ldquo;Gas&rdquo; is a strange term, I admit, but essentially, it refers to the fee that you need to pay to the network, in order for your transaction to be submitted and, eventually, approved. It&rsquo;s something that I&rsquo;ll elaborate on further.<\/p>\n<p>You could look at it as actual gas that you put into your car, as well! Say, you want to travel to your friend&rsquo;s house, but he lives a couple of hours away. In order for you to be able to drive to your friend, your car will need gas (or petrol, or diesel, or these days, electricity) - without it, the car won&rsquo;t start, and you won&rsquo;t be able to make the journey!<\/p>\n<p>The principle is exactly the same with cryptocurrency transactions, too. If you want your transaction to be approved, you&rsquo;ll need <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-miner/">network miners<\/strong><\/a> or <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-validator/">node validators<\/strong><\/a> to do so. They won&rsquo;t do it for free, though, and will charge you a fee. Admittedly, the just-mentioned concepts are rather complex - if you&rsquo;re not familiar with them, check out other sections on the Crypto 101 Handbook to find information about these and similar topics!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Crypto fees: Crypto gas fees VS transaction fees.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto_fees_01.o.jpg/" alt=\"Crypto fees: Crypto gas fees VS transaction fees.\" width=\"1000\" height=\"736\" \/><\/p>\n<p>The next popular type of crypto fees is called <strong>&ldquo;transaction fees&rdquo;, or &ldquo;trading fees&rdquo;. <\/strong>This is the fee that you will pay to, say, a <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-exchange/">cryptocurrency exchange<\/strong><\/a>, in order for it to execute your trade, or to perform a cryptocurrency purchase with USD, EUR, or any other <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-fiat/">fiat currency<\/strong><\/a>.<\/p>\n<p>Notably,<strong> transaction or trading fees are only paid when you actually make a cryptocurrency purchase or trade<\/strong>, on a specific exchange platform that specializes in this field. So, for example, if you only want to send some cryptocurrency to your friend, from your wallet to theirs, in most cases, the only fees that you&rsquo;ll need to pay are the earlier-discussed gas, or blockchain, fees.<\/p>\n<p>While you will find very different numbers being thrown around, depending on where you look, <strong>the general industry-average trading fee is considered to be 0,25% for both crypto buyers and sellers<\/strong> (or, rather - market makers and takers). Although, keep in mind that market takers (the ones who interact with an order created by the market makers) usually have to deal with higher fees!<\/p>\n<p>Now, we got really technical there for a second<em>. <\/em>This is some advanced-level economics, mixed with cryptocurrency terminology - it&rsquo;s not that simple to wrap your head around, I admit! Again, though - if certain concepts that we&rsquo;ve discussed up to this point sound foreign to you, make sure to check out other sections in this Crypto 101 Handbook!<\/p>\n<p>Another form of fees that you also need to know about are <strong>loan fees.<\/strong> Here, the concept is pretty simple - if you&rsquo;re a lender, you will likely charge the borrower a fee, for them borrowing your cryptocurrency assets. Unlike with trading, however, <strong>loan fees don&rsquo;t really have an intricate system that would determine the fee that you&rsquo;d pay<\/strong>, before you even borrow the assets.<\/p>\n<p>In fact, loan fees can vary, quite a bit. And that makes sense, too! If you were to lend your friend your car for the weekend, you might ask them to fill up the tank, once they&rsquo;re done - however, if you would be asked to lend that same car, to a stranger, and for, say, an entire month, a filled tank probably wouldn&rsquo;t suffice - you&rsquo;d likely ask for some form of compensation, too!<\/p>\n<p>In any case, lending (or, rather - borrowing) fees are unavoidable, if you plan to borrow crypto, for some reason. Make sure to look into the numbers on different lending platforms, however, and try to find the best deals!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Crypto fees: Loan fees VS deposit\/withdrawal fees.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto_fees_02.o.jpg/" alt=\"Crypto fees: Loan fees VS deposit\/withdrawal fees.\" width=\"1000\" height=\"745\" \/><\/p>\n<p>The last form of fees that we need to talk about is the <strong>deposit and withdrawal fees.<\/strong> As the terms might suggest, these fees are paid when you deposit or withdraw cryptocurrencies to and from an exchange. That&rsquo;s a notable point to keep in mind, too - <strong>deposit and withdrawal fees only exist with cryptocurrency exchanges!<\/strong> <em>Well, in most cases, at least.<\/em><\/p>\n<p>Once again, you can view this from the perspective of the example I gave earlier. Let&rsquo;s say that you&rsquo;ve filled up your car&rsquo;s gas tank, and are ready to travel to your friend&rsquo;s house. As you go there, you need to drive through a few different roads - while most of them are free to travel through, a few have tools that need to be paid, in order for you to be able to drive on them, and not get a ticket.<\/p>\n<p>This example illustrates the point I&rsquo;ve made earlier - <strong>while some services will allow you to withdraw and deposit cryptocurrencies free of charge, others will have fees that you need to pay.<\/strong><\/p>\n<h2>Solving the Mystery of Gas Fees<\/h2>\n<p>Now that you know about the main types of fees that you&rsquo;ll encounter while dealing with cryptocurrencies, I&rsquo;d like to go back to the concept that usually causes beginners the most amount of confusion - crypto gas fees.<\/p>\n<p>Specifically, how do you know what the gas - or network - fees are going to be when you decide to send cryptocurrency to someone else? Is there a specific number, or does it depend on some factors?<\/p>\n<p>Well, let me tell you - it&rsquo;s all much simpler than it looks, when you hear about it for the first time!<\/p>\n<p>For starters, no - <strong>there is no single number that would be associated with gas fees<\/strong>. Each network has its own fee model, and on top of that, there&rsquo;s a myriad of variables that can impact those crypto gas fees, even more.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Crypto fees: Ethereum.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto_fees_03.o.jpg/" alt=\"Crypto fees: Ethereum.\" width=\"1000\" height=\"465\" \/><\/p>\n<p>The simplest example can be found by taking a look at <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-ethereum-eth/">Ethereum. It&rsquo;s the second-most-popular cryptocurrency in the world, so, as you can expect, there are a lot of transactions happening on the network, every single second. If you&rsquo;ve ever bought ETH, or have sent it to your friend, you&rsquo;ve participated in a transaction like that, too!<\/p>\n<p>Sometimes, there are so many transactions happening on the Ethereum network, that a queue starts to form. <strong>One way to make sure that your transaction isn&rsquo;t stuck in that queue for too long is to pay a higher gas fee <\/strong>- then, transaction validators will have a bigger incentive to confirm your transaction first, since they will receive a bigger reward for doing so!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Crypto fees: Paying a higher gas fee.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto_fees_04.o.jpg/" alt=\"Crypto fees: Paying a higher gas fee.\" width=\"1000\" height=\"486\" \/><\/p>\n<p>Cryptocurrency miners, transaction validators, and nodes are all a different topic that has to do with some advanced and technical transaction confirmation details - in other words, it requires a much deeper explanation in a separate section. Going back to crypto gas fees, the point I&rsquo;m trying to make is simple - <strong>gas fees are not stable, and will depend on various factors.<\/strong><\/p>\n<h2>Crypto Without Transaction Fees<\/h2>\n<p>Moving on, the final question that I&rsquo;d like to address has to do with <strong>cryptos with no transaction fees.<\/strong> Specifically, do such cryptocurrencies even exist, in the first place?<\/p>\n<p><em>Well&hellip; Kind of.<\/em><\/p>\n<p><em><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Crypto fees: Crypto without transaction fees.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto_fees_05.o.jpg/" alt=\"Crypto fees: Crypto without transaction fees.\" width=\"1000\" height=\"453\" \/><\/em><\/p>\n<p>As far as I could find, cryptocurrencies with ZERO transaction fees don&rsquo;t really exist, with some exceptions (such as <strong>the NANO coin<\/strong>). However, there are many cryptos that offer the lowest transaction fees - so, you could say that there are PRACTICALLY no fees.<\/p>\n<p>A great example would be <strong>IOTA.<\/strong> This cryptocurrency has very low transaction fees - you could go as far as to say that they&rsquo;re negligible. Another very popular coin is <strong>Cardano<\/strong> - while the fees on this network are bigger, by comparison, they are still nearly non-existent.<\/p>\n<p>If you yourself are looking to trade crypto without fees, it&rsquo;s definitely a topic that requires a lot of research and know-how, as far as the market is concerned. There are new cryptocurrency projects popping up every single day - some of them do, for a fact, emphasize their <em>&ldquo;small transaction fee&rdquo;<\/em> benefits!<\/p>\n<p>Also, if you&rsquo;re looking for which crypto has the lowest transaction fees in order to save money on the fees that you&rsquo;d pay while trading or sending it, remember that there are other factors involved in the process, too! For example, you would then also need to look for a cryptocurrency exchange platform that has small trading fees, as well as try to time your trades when the network isn&rsquo;t majorly congested!<\/p>\n<h2>Wrapping Up<\/h2>\n<p>So, then - by now, you should have developed a pretty good understanding of cryptocurrency fees! This is true both when it comes to the types of fees that you may encounter, as well as what you can do to minimize and lower the amount of fees that you pay, for your transactions.<\/p>\n<p>Remember - if you want to pay as small of a transaction fee as possible, you need to find <strong>cryptocurrencies with nearly-zero fees, and trade (or buy, sell, transfer) crypto when there aren&rsquo;t a lot of people doing the same thing, <\/strong>at the same time.<\/p>","definition":"Did you know that there is a gas fee associated with every operation performed on Ethereum, including transmitting tokens or engaging with smart contracts?","status":"published","meta_title":"Types of Crypto Fees and How Do They Differ?","meta_description":"Feeling overwhelmed due to a huge variety of crypto fees? Can't seem to figure out the difference between them? Find all answers right here!","meta_keywords":"crypto fees, crypto gas fees, gas fees crypto, what are gas fees crypto, trade crypto without fees, crypto, transaction fees, block chain fees, lowest crypto transaction fees, which crypto has lowest transaction fees, crypto with no transaction fee","modified_content":"<p>Hey, in this section, we&rsquo;re going to talk about <strong>crypto fees<\/strong>, and everything associated with this topic!<\/p>\n<p>Nowadays, fees are something that everyone is very used to - whether it be shopping online or interacting with different businesses, in any way, in many cases, you will need to pay some sort of a service or product fee. Cryptocurrency trading isn&rsquo;t an exception, either!<\/p>\n<p>Crypto gas (or, network) fees can be confusing, and that&rsquo;s not to mention things like trading fees, or even withdrawal &amp; deposit fees, too. At the same time, all of this information is very important, when you&rsquo;re getting into crypto - it can really be the difference between you making a potential profit with your trades, or losing a lot of money on fees!<\/p>\n<p>In this section, we&rsquo;re talking about crypto fees. To be a bit more specific, we&rsquo;ll talk about the different types of fees that you might come across, cover what are gas fees in crypto, and also look for cryptos with no transaction fee. Is that possible? Find the answer below!<\/p>\n<p><em>Now, let&rsquo;s get to it!<\/em><\/p>\n<div class=\"container\">\n <div class=\"row justify-content-center\">\n <div class=\"col-md-10 suggested-comparisons pb-3 mb-4\">\n <div class=\"d-flex flex-row\">\n <div class=\"text-center\">\n <div class=\"img-block-yt\">\n <img src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//images//compare-crypto-exchanges.gif/"/n alt=\"Crypto Fees Explained: How Not to Overpay? (Animated)\"\n title=\"Crypto Fees Explained: How Not to Overpay? (Animated)\" class=\"border-0\">\n <p>Video Explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"col-xs-10 col-sm-10 col-md-10 text-left py-3 yt-info\">\n <h4 class=\"mb-1\">Video Explainer: The Different Types of Crypto Fees Explained<\/h4>\n <p class=\"py-1 mb-0 youtube-video-subtitle\">Reading is not your thing? Watch the \"The Different Types of Crypto Fees Explained\" video explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div class=\"col-12 col-md-11 px-3\">\n <div class=\"wrapper mb-0\">\n <div class=\"position-relative youtube mb-4 bg-transparent p-0 video-modal-popup\" data-toggle=\"modal\"\n data-target=\"#video-modal\" data-id=\"c1NItwMjjAs\" data-title=\"CryptoFinallyExplained\">\n <div class=\"video-gradient-top\"><\/div>\n <p class=\"text-left dyk-video-title\">Crypto Fees Explained: How Not to Overpay? (Animated)<\/p>\n <img data-srcset=\"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/crypto-fees-explained-how-not-to-overpay-animated.jpg?tr=w-420 500w,\n https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/crypto-fees-explained-how-not-to-overpay-animated.jpg?tr=w-760 1000w\"\n alt=\"Crypto Fees Explained: How Not to Overpay? (Animated)\"\n title=\"Crypto Fees Explained: How Not to Overpay? (Animated)\"\n class=\"p-0 lazyload\">\n <img class=\"play-button lazyload\" data-target=\"#video-modal\"\n data-src=\"https:\/\/assets.bitdegree.org\/crypto\/assets\/video-button.png?tr=w-85\"\n alt=\"Crypto Fees Explained: How Not to Overpay? (Animated)\">\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div>\n <a href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n class=\"btn yt-promo mb-2\" target=\"_blank\" rel=\"nofollow noopener noindex\">\n <div class=\"row justify-content-center align-items-center mx-0 text-center\">\n <div class=\"col-4 col-md-4\">\n <i class=\"fab fa-youtube yt-dyk-btn\"><\/i>\n <\/div>\n <div class=\"col-8 col-md-8 text-center yt-promo-text\">\n <h4 class=\"m-0 text-white\">SUBSCRIBE<\/h4>\n <span>ON YOUTUBE<\/span>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n<div class=\"modal fade\" id=\"video-modal\" tabindex=\"-1\" role=\"dialog\">\n <div class=\"modal-dialog modal-dialog-centered modal-lg\" role=\"document\">\n <div class=\"modal-content\">\n <div class=\"modal-body p-0\">\n <button type=\"button\" class=\"video-modal-close close\" data-dismiss=\"modal\" aria-label=\"Close\">\n <i aria-hidden=\"true\" class=\"fas fa-times\"><\/i>\n <\/button>\n <div id=\"iframe\"><\/div>\n <\/div>\n <a class=\"text-decoration-none\"\n href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n rel=\"nofollow noopener noindex\" target=\"_blank\">\n <div class=\"modal-footer p-0 d-block bg-white\">\n <div class=\"row justify-content-center m-0\">\n <div class=\"col-3 col-md-4 col-lg-2 p-0\">\n <img class=\"w-100 h-100\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//crypto-subscribe.jpg/" alt=\"Subscribe\">\n <\/div>\n <div class=\"col-9 col-md-8 col-lg-2 px-0 d-flex\">\n <div class=\"modal-subscribe w-100\">\n <p class=\"m-0 mt-1 mr-3\">SUBSCRIBE<br>\n <span class=\"m-0\">ON YOUTUBE<\/span>\n <\/p>\n <\/div>\n <\/div>\n <div class=\"col-12 col-md-12 col-lg-8 p-0 text-center d-flex justify-content-center align-items-center\">\n <div class=\"modal-subscribe-text\">\n <h4 class=\"m-0\">Understand crypto with ease<\/h4>\n <span>New explainer videos every week!<\/span>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n<\/div>\n<h2>The Different Types of Crypto Fees<\/h2>\n<p>Now, then - to start things off, and before we can get into the specifics of crypto fees, we should first establish what sorts of fees you might come across, when you&rsquo;re buying, selling, or trading crypto.<\/p>\n<p>Starting out from the top, you&rsquo;ll find that the most interesting type of fees are the <strong>crypto gas fees, also known as blockchain fees. <\/strong>&ldquo;Gas&rdquo; is a strange term, I admit, but essentially, it refers to the fee that you need to pay to the network, in order for your transaction to be submitted and, eventually, approved. It&rsquo;s something that I&rsquo;ll elaborate on further.<\/p>\n<p>You could look at it as actual gas that you put into your car, as well! Say, you want to travel to your friend&rsquo;s house, but he lives a couple of hours away. In order for you to be able to drive to your friend, your car will need gas (or petrol, or diesel, or these days, electricity) - without it, the car won&rsquo;t start, and you won&rsquo;t be able to make the journey!<\/p>\n<p>The principle is exactly the same with cryptocurrency transactions, too. If you want your transaction to be approved, you&rsquo;ll need <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-miner/">network miners<\/strong><\/a> or <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-validator/">node validators<\/strong><\/a> to do so. They won&rsquo;t do it for free, though, and will charge you a fee. Admittedly, the just-mentioned concepts are rather complex - if you&rsquo;re not familiar with them, check out other sections on the Crypto 101 Handbook to find information about these and similar topics!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Crypto fees: Crypto gas fees VS transaction fees.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto_fees_01.o.jpg/" alt=\"Crypto fees: Crypto gas fees VS transaction fees.\" width=\"1000\" height=\"736\" \/><\/p>\n<p>The next popular type of crypto fees is called <strong>&ldquo;transaction fees&rdquo;, or &ldquo;trading fees&rdquo;. <\/strong>This is the fee that you will pay to, say, a <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-exchange/">cryptocurrency exchange<\/strong><\/a>, in order for it to execute your trade, or to perform a cryptocurrency purchase with USD, EUR, or any other <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-fiat/">fiat currency<\/strong><\/a>.<\/p>\n<p>Notably,<strong> transaction or trading fees are only paid when you actually make a cryptocurrency purchase or trade<\/strong>, on a specific exchange platform that specializes in this field. So, for example, if you only want to send some cryptocurrency to your friend, from your wallet to theirs, in most cases, the only fees that you&rsquo;ll need to pay are the earlier-discussed gas, or blockchain, fees.<\/p>\n<p>While you will find very different numbers being thrown around, depending on where you look, <strong>the general industry-average trading fee is considered to be 0,25% for both crypto buyers and sellers<\/strong> (or, rather - market makers and takers). Although, keep in mind that market takers (the ones who interact with an order created by the market makers) usually have to deal with higher fees!<\/p>\n<p>Now, we got really technical there for a second<em>. <\/em>This is some advanced-level economics, mixed with cryptocurrency terminology - it&rsquo;s not that simple to wrap your head around, I admit! Again, though - if certain concepts that we&rsquo;ve discussed up to this point sound foreign to you, make sure to check out other sections in this Crypto 101 Handbook!<\/p>\n<p>Another form of fees that you also need to know about are <strong>loan fees.<\/strong> Here, the concept is pretty simple - if you&rsquo;re a lender, you will likely charge the borrower a fee, for them borrowing your cryptocurrency assets. Unlike with trading, however, <strong>loan fees don&rsquo;t really have an intricate system that would determine the fee that you&rsquo;d pay<\/strong>, before you even borrow the assets.<\/p>\n<p>In fact, loan fees can vary, quite a bit. And that makes sense, too! If you were to lend your friend your car for the weekend, you might ask them to fill up the tank, once they&rsquo;re done - however, if you would be asked to lend that same car, to a stranger, and for, say, an entire month, a filled tank probably wouldn&rsquo;t suffice - you&rsquo;d likely ask for some form of compensation, too!<\/p>\n<p>In any case, lending (or, rather - borrowing) fees are unavoidable, if you plan to borrow crypto, for some reason. Make sure to look into the numbers on different lending platforms, however, and try to find the best deals!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Crypto fees: Loan fees VS deposit\/withdrawal fees.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto_fees_02.o.jpg/" alt=\"Crypto fees: Loan fees VS deposit\/withdrawal fees.\" width=\"1000\" height=\"745\" \/><\/p>\n<p>The last form of fees that we need to talk about is the <strong>deposit and withdrawal fees.<\/strong> As the terms might suggest, these fees are paid when you deposit or withdraw cryptocurrencies to and from an exchange. That&rsquo;s a notable point to keep in mind, too - <strong>deposit and withdrawal fees only exist with cryptocurrency exchanges!<\/strong> <em>Well, in most cases, at least.<\/em><\/p>\n<p>Once again, you can view this from the perspective of the example I gave earlier. Let&rsquo;s say that you&rsquo;ve filled up your car&rsquo;s gas tank, and are ready to travel to your friend&rsquo;s house. As you go there, you need to drive through a few different roads - while most of them are free to travel through, a few have tools that need to be paid, in order for you to be able to drive on them, and not get a ticket.<\/p>\n<p>This example illustrates the point I&rsquo;ve made earlier - <strong>while some services will allow you to withdraw and deposit cryptocurrencies free of charge, others will have fees that you need to pay.<\/strong><\/p>\n<h2>Solving the Mystery of Gas Fees<\/h2>\n<p>Now that you know about the main types of fees that you&rsquo;ll encounter while dealing with cryptocurrencies, I&rsquo;d like to go back to the concept that usually causes beginners the most amount of confusion - crypto gas fees.<\/p>\n<p>Specifically, how do you know what the gas - or network - fees are going to be when you decide to send cryptocurrency to someone else? Is there a specific number, or does it depend on some factors?<\/p>\n<p>Well, let me tell you - it&rsquo;s all much simpler than it looks, when you hear about it for the first time!<\/p>\n<p>For starters, no - <strong>there is no single number that would be associated with gas fees<\/strong>. Each network has its own fee model, and on top of that, there&rsquo;s a myriad of variables that can impact those crypto gas fees, even more.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Crypto fees: Ethereum.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto_fees_03.o.jpg/" alt=\"Crypto fees: Ethereum.\" width=\"1000\" height=\"465\" \/><\/p>\n<p>The simplest example can be found by taking a look at <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-ethereum-eth/">Ethereum. It&rsquo;s the second-most-popular cryptocurrency in the world, so, as you can expect, there are a lot of transactions happening on the network, every single second. If you&rsquo;ve ever bought ETH, or have sent it to your friend, you&rsquo;ve participated in a transaction like that, too!<\/p>\n<p>Sometimes, there are so many transactions happening on the Ethereum network, that a queue starts to form. <strong>One way to make sure that your transaction isn&rsquo;t stuck in that queue for too long is to pay a higher gas fee <\/strong>- then, transaction validators will have a bigger incentive to confirm your transaction first, since they will receive a bigger reward for doing so!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Crypto fees: Paying a higher gas fee.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto_fees_04.o.jpg/" alt=\"Crypto fees: Paying a higher gas fee.\" width=\"1000\" height=\"486\" \/><\/p>\n<p>Cryptocurrency miners, transaction validators, and nodes are all a different topic that has to do with some advanced and technical transaction confirmation details - in other words, it requires a much deeper explanation in a separate section. Going back to crypto gas fees, the point I&rsquo;m trying to make is simple - <strong>gas fees are not stable, and will depend on various factors.<\/strong><\/p>\n<h2>Crypto Without Transaction Fees<\/h2>\n<p>Moving on, the final question that I&rsquo;d like to address has to do with <strong>cryptos with no transaction fees.<\/strong> Specifically, do such cryptocurrencies even exist, in the first place?<\/p>\n<p><em>Well&hellip; Kind of.<\/em><\/p>\n<p><em><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Crypto fees: Crypto without transaction fees.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//crypto_fees_05.o.jpg/" alt=\"Crypto fees: Crypto without transaction fees.\" width=\"1000\" height=\"453\" \/><\/em><\/p>\n<p>As far as I could find, cryptocurrencies with ZERO transaction fees don&rsquo;t really exist, with some exceptions (such as <strong>the NANO coin<\/strong>). However, there are many cryptos that offer the lowest transaction fees - so, you could say that there are PRACTICALLY no fees.<\/p>\n<p>A great example would be <strong>IOTA.<\/strong> This cryptocurrency has very low transaction fees - you could go as far as to say that they&rsquo;re negligible. Another very popular coin is <strong>Cardano<\/strong> - while the fees on this network are bigger, by comparison, they are still nearly non-existent.<\/p>\n<p>If you yourself are looking to trade crypto without fees, it&rsquo;s definitely a topic that requires a lot of research and know-how, as far as the market is concerned. There are new cryptocurrency projects popping up every single day - some of them do, for a fact, emphasize their <em>&ldquo;small transaction fee&rdquo;<\/em> benefits!<\/p>\n<p>Also, if you&rsquo;re looking for which crypto has the lowest transaction fees in order to save money on the fees that you&rsquo;d pay while trading or sending it, remember that there are other factors involved in the process, too! For example, you would then also need to look for a cryptocurrency exchange platform that has small trading fees, as well as try to time your trades when the network isn&rsquo;t majorly congested!<\/p>\n<h2>Wrapping Up<\/h2>\n<p>So, then - by now, you should have developed a pretty good understanding of cryptocurrency fees! This is true both when it comes to the types of fees that you may encounter, as well as what you can do to minimize and lower the amount of fees that you pay, for your transactions.<\/p>\n<p>Remember - if you want to pay as small of a transaction fee as possible, you need to find <strong>cryptocurrencies with nearly-zero fees, and trade (or buy, sell, transfer) crypto when there aren&rsquo;t a lot of people doing the same thing, <\/strong>at the same time.<\/p>","youtube_video":{"id":31,"channel_id":1,"sort":65,"video_title":"Crypto Fees Explained: How Not to Overpay? (Animated)","description":"What are Gas fees and any other crypto fees? Here is my explainer with all crypto fees clearly explained with animation!\n\nCrypto fees are going to be a relevant topic, no matter what you do in the space. Every single time you trade crypto, send some coins or tokens to your friends, or purchase an NFT, you pay a few different fees. Tracking all of them can get quite confusing, fast! \n\nIn this video, I\u2019ll tell you all about the different types of crypto fees that you might come across, when interacting with cryptocurrencies. I will also introduce and explain what are crypto gas fees, as well as give you some tips on how you can find cryptos with the lowest transaction fees, too!\n\nDo you have any tips on how to minimize crypto trading fees? If so, do share them in the comment section below the video!\n\nVideo Time Table:\n\n0:00 Introduction to What Are Crypto Fees\n1:03 The Different Types of Crypto Fees\n4:59 Gas Fees Explained\n6:27 Crypto Without Transaction Fees\n7:42 Wrap-up: What Are Crypto Fees\n\nMore Related Videos:\n? Blockchain Transaction Explained https:\/\/www.youtube.com\/watch?v=h1zkHIBFiS4\n? Best Types of Blockchain https:\/\/www.youtube.com\/watch?v=h1zkHIBFiS4\n? How to Get Free Crypto? https:\/\/www.youtube.com\/watch?v=aNjehGx3WqM\n? How to Avoid Crypto Taxes? https:\/\/www.youtube.com\/watch?v=ERzU_Xz_P-o\n\nGet Quick Crypto Tips on Twitter - Follow:\nhttps:\/\/twitter.com\/crypto_xplained\n\n#CryptoFees #CryptoGasFees #GasFeesCrypto","video_id":"c1NItwMjjAs","duration":505,"view_count":415,"thumbnail_url":"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/crypto-fees-explained-how-not-to-overpay-animated.jpg","thumbnail_width":1280,"thumbnail_height":720,"published_at":"2022-07-20T19:20:21.000000Z","created_at":"2022-07-20T23:00:02.000000Z","updated_at":"2024-01-09T23:00:04.000000Z","channel":{"id":1,"title":"CryptoFinallyExplained","channel_id":"UCOryUY0yxC08eJtK23mNgiA","main_playlist_id":"UUOryUY0yxC08eJtK23mNgiA"}},"featured_image":{"id":3061,"uuid":"08608dcc-d7ca-468c-82eb-e78f2b16987b","name":"crypto-fees-featured-image.o.jpg","url":"https:\/\/assets.bitdegree.org\/crypto\/storage\/media\/crypto-fees-featured-image.o.jpg","path":"crypto\/storage\/media\/crypto-fees-featured-image.o.jpg","mime_type":"image\/jpeg","disk":"digitalOceanSpaces","size":80798,"width":768,"height":478,"custom_properties":null,"created_at":"2023-06-19T06:58:36.000000Z","updated_at":"2023-06-19T06:58:36.000000Z"}}" :chapter-list="[{"id":1,"title":"Blockchain","slug":"blockchain","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-blockchain.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/blockchain-101.jpg","rating":100,"sections":[{"chapter_id":1,"order":1,"slug":"what-is-blockchain","title":"What is the Blockchain?","status":"published","modified_content":null},{"chapter_id":1,"order":2,"slug":"decentralized-blockchain","title":"Anonymous & Decentralized Blockchains: The Cornerstone of Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":3,"slug":"blockchain-transaction","title":"What is a Blockchain Transaction in Crypto?","status":"published","modified_content":null},{"chapter_id":1,"order":4,"slug":"crypto-fees","title":"The Different Types of Crypto Fees Explained","status":"published","modified_content":null},{"chapter_id":1,"order":5,"slug":"what-is-bridging-in-crypto","title":"The Key Notion Behind the Concept of Bridging in Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":6,"slug":"types-of-blockchains","title":"Different Types of Blockchains: What to Look Out For?","status":"published","modified_content":null}]},{"id":2,"title":"Cryptocurrencies","slug":"cryptocurrencies","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-cryptocurrencies.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/cryptocurrencies-101.jpg","rating":100,"sections":[{"chapter_id":2,"order":1,"slug":"what-is-a-cryptocurrency","title":"What is a Cryptocurrency?","status":"published","modified_content":null},{"chapter_id":2,"order":2,"slug":"how-does-cryptocurrency-work","title":"How Does Cryptocurrency Work?","status":"published","modified_content":null},{"chapter_id":2,"order":3,"slug":"is-cryptocurrency-a-good-investment","title":"Is Cryptocurrency a Good Investment? 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Standards","status":"published","modified_content":null},{"chapter_id":3,"order":5,"slug":"how-to-buy-crypto","title":"From Fiat to Crypto: How to Buy Crypto for the First Time","status":"published","modified_content":null},{"chapter_id":3,"order":6,"slug":"fiat-to-crypto","title":"Taking Profits: Turning Crypto Into Fiat","status":"published","modified_content":null},{"chapter_id":3,"order":7,"slug":"how-to-use-crypto","title":"You\u2019ve Got Crypto: What Can You Do With It?","status":"published","modified_content":null}]},{"id":4,"title":"Crypto Wallets","slug":"crypto-wallets","updated":false,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-crypto-wallets.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-wallets-101.jpg","rating":80,"sections":[{"chapter_id":4,"order":1,"slug":"what-is-a-crypto-wallet","title":"What is a Crypto Wallet?","status":"published","modified_content":null},{"chapter_id":4,"order":2,"slug":"hot-wallet-vs-cold-wallet","title":"Hot Wallet VS Cold Wallet: Which One to Pick?","status":"published","modified_content":null},{"chapter_id":4,"order":3,"slug":"non-custodial-wallet","title":"What are Non-Custodial Crypto Wallets?","status":"published","modified_content":null},{"chapter_id":4,"order":4,"slug":"what-is-metamask","title":"Metamask: The Leading Non-Custodial Wallet","status":"published","modified_content":null},{"chapter_id":4,"order":37,"slug":"how-safe-is-cryptocurrency","title":"The Key Crypto Wallet Safety Practices: How Safe Can Crypto Be?","status":"published","modified_content":null}]},{"id":5,"title":"NFTs","slug":"nfts","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-nfts.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/nfts-101.jpg","rating":100,"sections":[{"chapter_id":5,"order":2,"slug":"how-to-trade-nfts","title":"NFT Trading: The Ins and Outs","status":"published","modified_content":null},{"chapter_id":5,"order":3,"slug":"buying-nft","title":"Tips and Tricks of Choosing the Right NFTs","status":"published","modified_content":null},{"chapter_id":5,"order":4,"slug":"how-to-store-nft","title":"How to Store NFTs: Best Practices","status":"published","modified_content":null},{"chapter_id":5,"order":5,"slug":"how-to-create-an-nft","title":"How to Create Your Own NFTs?","status":"published","modified_content":null},{"chapter_id":5,"order":6,"slug":"how-to-make-passive-money-with-nft","title":"Making Passive Money with NFTs","status":"published","modified_content":null}]},{"id":6,"title":"dApps & Defi","slug":"dapps-and-defi","updated":true,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-dapps.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/dapps-defi-101.jpg","rating":80,"sections":[{"chapter_id":6,"order":1,"slug":"what-are-nfts","title":"What are Non-Fungible Tokens (NFTs)?","status":"published","modified_content":null},{"chapter_id":6,"order":1,"slug":"what-is-defi","title":"What is Decentralized Finance (DeFi)?","status":"published","modified_content":null},{"chapter_id":6,"order":2,"slug":"what-is-defi-2-0","title":"DeFi 2.0: The New Version of Decentralized Finance","status":"published","modified_content":null},{"chapter_id":6,"order":3,"slug":"what-are-dapps-in-crypto","title":"What Are dApps and How Do They Work?","status":"published","modified_content":null},{"chapter_id":6,"order":4,"slug":"defi-dapps","title":"Picking the Right dApps: Dos and Don'ts","status":"published","modified_content":null},{"chapter_id":6,"order":5,"slug":"what-is-web-3-0","title":"Web 3.0: The Future of the Internet","status":"published","modified_content":null},{"chapter_id":6,"order":6,"slug":"what-are-smart-contracts","title":"What is the Core Purpose of Smart Contracts?","status":"published","modified_content":null},{"chapter_id":6,"order":7,"slug":"what-is-a-dao-in-crypto","title":"The Notion of a Decentralized Autonomous Ogranization (DAO)","status":"published","modified_content":null},{"chapter_id":6,"order":8,"slug":"what-is-staking-in-crypto","title":"What is the Goal of Staking Crypto Assets?","status":"published","modified_content":null},{"chapter_id":6,"order":9,"slug":"what-is-liquidity-pool-in-crypto","title":"What is a Liquidity Pool and How Does It Work?","status":"published","modified_content":null},{"chapter_id":6,"order":10,"slug":"what-is-automated-market-maker","title":"Automated Market Maker: the Cornerstone of the Decentralized Crypto Exchange Industry","status":"published","modified_content":null},{"chapter_id":6,"order":11,"slug":"what-is-yield-farming-in-crypto","title":"The Main Yield Farming Techniques","status":"published","modified_content":null},{"chapter_id":6,"order":12,"slug":"what-is-an-oracle-in-crypto","title":"Crypto Oracles: The Link Between Blockchain and Outside World Data","status":"published","modified_content":null},{"chapter_id":6,"order":13,"slug":"crypto-gambling","title":"The Peculiarities of Decentralized Crypto Gambling","status":"published","modified_content":null},{"chapter_id":6,"order":14,"slug":"what-is-the-metaverse","title":"Metaverse: A New Perception of Reality","status":"published","modified_content":null}]},{"id":7,"title":"Trading & Investing","slug":"trading-and-investing","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-crypto-trading.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-trading-101.jpg","rating":80,"sections":[{"chapter_id":7,"order":1,"slug":"where-to-trade-crypto","title":"Where Can You Trade 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Date","status":"published","modified_content":null},{"chapter_id":7,"order":8,"slug":"what-is-fud","title":"What is FUD: How to Use It to Your Advantage While Investing in Crypto?","status":"published","modified_content":null},{"chapter_id":7,"order":9,"slug":"investing-in-cryptocurrency","title":"Investing in Cryptocurrency: How to Manage Your Risks?","status":"published","modified_content":null},{"chapter_id":7,"order":10,"slug":"what-is-a-rug-pull-in-crypto","title":"What is a Rug Pull in Crypto?","status":"published","modified_content":null},{"chapter_id":7,"order":11,"slug":"how-to-avoid-rug-pulls-in-crypto","title":"How to Spot and Avoid Rug Pulls?","status":"published","modified_content":null},{"chapter_id":7,"order":12,"slug":"how-to-avoid-crypto-taxes","title":"The Key Legal Techniques of Avoiding Crypto Taxes","status":"published","modified_content":null}]},{"id":8,"title":"Crypto 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Tokens?","status":"published","modified_content":null},{"chapter_id":8,"order":5,"slug":"how-to-research-crypto","title":"Crypto Research Fundamentals & Social Signals: Your Daily Trading Strategy","status":"published","modified_content":null},{"chapter_id":8,"order":46,"slug":"portfolio-diversification-definition","title":"Portfolio Diversification: The Whats, the Whys, and the Hows","status":"published","modified_content":null}]},{"id":9,"title":"Mining","slug":"mining","updated":false,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-crypto-mining.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-mining-101.jpg","rating":80,"sections":[{"chapter_id":9,"order":1,"slug":"what-is-crypto-mining","title":"Crypto Mining: What It is and How Does It Work?","status":"published","modified_content":null},{"chapter_id":9,"order":2,"slug":"what-is-a-mining-pool","title":"Mining Pools: Is Collective Mining Better Than Solo Mining?","status":"published","modified_content":null},{"chapter_id":9,"order":3,"slug":"what-is-staking-crypto","title":"An Advanced Look into What is Staking Crypto","status":"published","modified_content":null},{"chapter_id":9,"order":4,"slug":"what-is-proof-of-stake-vs-proof-of-work","title":"Proof-of-Work VS Proof-of-Stake: The Differences That Matter","status":"published","modified_content":null},{"chapter_id":9,"order":5,"slug":"what-is-crypto-mining-rig","title":"Crypto Mining Rig: What It is and How to Build One?","status":"published","modified_content":null}]},{"id":10,"title":"Crypto Terms","updated":false,"chapter":"crypto\/assets\/crypto-book\/chapters\/crypto-101-glossary.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-glossary-101.jpg","rating":100,"sections":["A","B","C","D","E","F","G","H","I","J","K","L","M","N","O","P","Q","R","S","T","U","V","W","X","Y","Z"]}]" current-chapter="blockchain" current-section="crypto-fees">