Cryptocurrency fees can be confusing and daunting for newcomers. This guide will break down everything you need to know, from the different types of fees to how to save on them. You’ll be a crypto fee expert when you’re done reading!
The True Cost of Bitcoin Transactions
While the decentralized nature of Bitcoin and other cryptocurrencies offers many advantages, it also comes with a few drawbacks – one of which is the high cost of Bitcoin transactions. Let’s take a closer look at why Bitcoin transaction fees are so high and what that means for users.
Right now, the average Bitcoin transaction fee is $28. That might not seem like a lot if you’re transferring a large amount of money, but if you’re sending a smaller amount – say, $10 – that fee represents a whopping 28% of the total transaction! And unfortunately, those high fees don’t appear to be going anywhere; in April 2021, fees surged to an all-time high of $65 per transaction.
Why are Bitcoin transaction fees so high? One reason is that the cryptocurrency is often used to purchase illegal goods and services on the so-called “dark web.” That’s because transactions made with Bitcoin are incredibly difficult to trace. Another reason for the high fees is that too many people are trying to use the Bitcoin network at once. Daily transactions increased from approximately 200,000 in January 2017 to more than 400,000 in January 2021.
While the reasons for high Bitcoin transaction fees are understandable, they’re still a major drawback for users. After all, no one wants to pay 28% (or more!) in fees just to send or receive money. Fortunately, there are a few ways to get around those exorbitant fees.
The types of cryptocurrency trading fees
Many exchanges will charge a fee for deposits made in a currency other than the platform’s base currency. For example, you may be charged a deposit fee if you’re depositing Bitcoin into an exchange that only deals in Ethereum. Some exchanges don’t charge deposit fees, but they make up for it by charging higher trading fees. It’s important to check what deposit fees an exchange charges before making a deposit.
Trading fees are charged every time you make a trade on an exchange. The fee is usually a percentage of the total trade value. For example, if you’re trading $100 worth of cryptocurrency, you may be charged a $1 trading fee. Make sure to check what the trading fee is before making trades on an exchange. You can usually find this information in the “Fees” or “Settings” section of the exchange.
Withdrawal fees are charged when you withdraw cryptocurrency from an exchange to your personal wallet. The fee is usually a flat rate per withdrawal or a percentage of the total withdrawal amount. For example, if you’re withdrawing $100 worth of cryptocurrency, you may be charged a $1 withdrawal fee. Again, make sure to check what the withdrawal fee is before making withdrawals from an exchange. You can usually find this information in the “Fees” or “Settings” section of the exchange.
Network fees are charges levied by the blockchain network whenever a transaction is made. These fees go to miners who verify transactions and add them to the blockchain ledger. Network fees are often very small (usually just a few cents), but they can add up if you’re making a lot of transactions. Additionally, network fees are sometimes variable and depend on network congestion and transaction size. So, check what network fees will be before making any cryptocurrency transactions.
How To Minimize Crypto Trading Fees
Find an exchange with low fees.
This one is pretty straightforward. Not all exchanges charge the same fees for trading. Do the research and find an exchange with the lowest fees for the type of trading you want. For example, Coinbase has fairly high fees if you’re looking to trade frequently. However, their fees aren’t too bad if you’re looking to buy and hold. On the other hand, Binance has very low fees regardless of how often you trade. So, do your research and find the best exchange for your needs.
Use a credit or debit card with no foreign transaction fee.
If you’re looking to buy crypto with fiat currency (i.e., USD, EUR, etc.), then you will want to use a credit or debit card that doesn’t have a foreign transaction fee. That way, you won’t be losing any money to conversion fees. TRASTRA Visa is an excellent example: create an account, get it verified, and order one. You can then use the card as a payment method to acquire crypto on the TRASTRA platform while using the card as you would any other Visa – for online/offline shopping, bill payments, and so on.
Consider using a peer-to-peer marketplace instead of an exchange.
Peer-to-peer marketplaces connect buyers and sellers directly without the need for a middleman (i.e., an exchange). This means that there are no transaction fees involved in trading on a peer-to-peer marketplace like LocalBitcoins or Paxful. However, it’s important to remember that peer-to-peer marketplaces come with their own risks (e.g., scams) so you’d better stay vigilant at all times.
Minimizing crypto fees by participating in promotions
There are a few different ways to find crypto promotions. The first is by signing up for an account with an exchange that frequently offers promotional deals. Binance, for example, is known for running regular promotions that offer reduced or even waived fees for trades. Another way to find crypto promotions is by following industry news outlets and blogs (like this one!). These outlets will often announce new promotions as they become available.
How to Use Crypto Promotions
Once you’ve found a promotion that you’re eligible for, it’s time to start using it! To do this, make a trade on the exchange according to the terms of the promotion. For example, if the promotion is for reduced fees on trades made during certain hours, then make sure to place your trades during those hours. If the promotion is for a certain type of trade (like buying or selling), then make sure that your trade falls into that category. And last but not least, if the promotion is only valid for certain cryptocurrencies, then make sure that your trade involves one of those coins. By following these simple steps, you can offset your crypto trading fees and even trade for free.
Best ongoing crypto promotions right now
Binance is offering a promotion where you can earn up to $30 worth of Bitcoin when you trade on their platform. This promotion is available to new and existing Binance users.
Kucoin is offering a promotion where you can earn up to $50 worth of Bitcoin when you trade on their platform. This promotion is available to new and existing Kucoin users.
Cex.io is offering a promotion where you can earn up to $10 worth of Bitcoin when you buy or sell $100 worth of cryptocurrency on their platform. This promotion is available to new and existing Cex.io users.
Gemini is offering a promotion where you can earn up to $10 worth of Bitcoin when you buy or sell $100 worth of cryptocurrency on their platform. This promotion is available to new and existing Gemini users
The matter of how best to scale cryptocurrency is far from settled and the two sides – those who feel Bitcoin’s original design should be preserved at all costs and those who favor more radical changes – are deeply entrenched. While both groups have valid points, the truth is that neither has a clear advantage. In the meantime, it’s important for traders to understand the various types of fees associated with trading cryptocurrencies and take steps to minimize them. As always, remember that this is an ever-changing industry and things may change rapidly. Stay tuned for future updates!
What is the best way to minimize crypto trading fees?
The best way to minimize crypto trading fees is by taking advantage of promotions offered by exchanges, utilizing peer-to-peer marketplaces, and participating in cryptocurrency staking programs.
Are there any risks associated with using peer-to-peer marketplaces?
Yes, there are risks associated with using peer-to-peer marketplaces. These include the risk of scams and malicious actors attempting to take advantage of inexperienced traders. It’s important to stay vigilant when trading on these platforms.
What is cryptocurrency staking?
Cryptocurrency staking is a process whereby you “lock-in” a specific amount of cryptocurrency and receive rewards in return. These rewards are generally higher than the fees associated with trading on an exchange or using a peer-to-peer marketplace. However, it is important to remember that these rewards come at the cost of locking up your funds for a certain period.
What is the best ongoing crypto promotion right now?
The best ongoing crypto promotions right now include TRASTRA, Binance, Kucoin, Cex.io, and Gemini. Each one offers different types of rewards for trading on their platforms. It’s important to read through the terms and conditions of each promotion before taking advantage of them.
Are there any other ways to save money on trading fees?
Yes, some exchanges may offer discounted fees for high-volume traders or those who hold a certain amount of cryptocurrency in their wallets. It’s important to contact the exchange directly to inquire about any such discounts that may be available. Additionally, some exchanges offer referral programs which can help you save money on trading fees.