Comparing Crypto Fees: Which Cryptocurrency Has the Lowest Fees?
As interest in cryptocurrency buying keeps surging, so does the number of transactions on various networks, leading to varying levels of network congestion and, consequently, fluctuating fees. Crypto fees are an important aspect to consider when choosing a crypto asset for investment or everyday use. This article provides a comprehensive comparison of transaction fees in both major cryptocurrencies and lesser-known alternatives with low fee structures, as well as tips on how to minimise transaction fees, allowing users to optimise their experience when using cryptocurrencies.
Understanding cryptocurrency transaction fees
Cryptocurrency transaction fees, also known as network fees, are the costs associated with processing and verifying a transaction on a blockchain network. These fees are paid by the sender of a crypto transaction to incentivise miners or validators to include the transaction in the next block.
Transaction fees are typically denominated in the cryptocurrency being used, such as Bitcoin (BTC) or Ethereum (ETH). The amount of the fee is determined by the sender, who can choose to pay a higher fee to prioritise their transaction or a lower fee to save on costs.
Several factors can influence transaction fees on a blockchain network, including:
- Protocol design. The design of the blockchain protocol itself can influence transaction fees.
- Network congestion. High demand for transactions on a blockchain network can lead to congestion, resulting in increased fees as users compete for limited block space.
- Block size. Some blockchain networks, such as Bitcoin, have limited block sizes, constraining the number of transactions that can be included in each block. This scarcity of space can drive up transaction fees during periods of high demand.
- Block time. Cryptocurrencies with shorter block times, such as Dash (DASH) or Stellar (XLM), may have lower transaction fees due to faster confirmation times.
- Transaction priority. Users can choose to pay a higher fee to prioritise their transaction, ensuring it's processed more quickly.
- Fee structure (Layer-2 solutions). Some cryptocurrencies, like Bitcoin, have implemented layer-2 solutions like the Lightning Network, which allows for faster and cheaper transactions by processing them off-chain.
Major cryptocurrencies and their fees
Bitcoin (BTC)
Bitcoin, the first and most well-known cryptocurrency, has a fee structure that is primarily influenced by network congestion and transaction size. During periods of high network usage, Bitcoin transaction fees can increase significantly. However, the implementation of the Lightning Network, a layer-2 solution, has enabled faster and cheaper off-chain transactions, reducing the need for high on-chain fees.
Average transaction fee: $4.18.
Ethereum (ETH)
In the Ethereum network, transaction fees are denoted in "gas". Gas is a special unit of measurement that defines the amount of computing resources required to perform various operations on the blockchain. The more complex the operation, the more gas is needed to perform it. Gas prices are determined by market demand, with higher network usage leading to increased gas prices.
Average transaction fee: $2.03.
Binance Coin (BNB)
Binance Coin's fees on the Binance Smart Chain are generally lower than that of Ethereum, making it an attractive option for users seeking lower transaction fees.
Average transaction fee: $0.12.
Ripple (XRP)
Ripple is a digital payment protocol that aims to facilitate fast and low-cost cross-border transactions. The fees for Ripple transactions are very low, and confirmation times are only 3-5 seconds. However, it's worth noting that XRP transactions are processed through Ripple's centralised network, which differs from the decentralised nature of other cryptocurrencies.
Average transaction fee: $0.0014.
Solana (SOL)
Solana has a unique architecture, which combines a Proof of History (PoH) consensus mechanism with a Proof of Stake (PoS) validator system. That allows for extremely fast block times (400 ms) and low transaction fees.
Average transaction fee: $0.00165.
Top cryptocurrencies with the lowest fees
So, what are the cheapest crypto transfer fees? We have selected several well-known cryptocurrencies with the cheapest transactions.
Nano (XNO)
Nano, formerly known as Raiblocks, is a feeless cryptocurrency that utilises a block-lattice data structure allowing for instant and free transactions. Nano's architecture enables it to process thousands of transactions per second, making it a very fast network. However, the zero fee results in regular spam attacks that slow down the network.
Average transaction fee: Free.
Stellar (XLM)
Stellar is a decentralised payment network that offers low-cost and fast transactions. Its fee structure is highly competitive, with fees that can be as low as 0.00001 XLM (approximately $0.0000011) per transaction. Stellar's low fees and efficient processing capabilities have made it a popular choice for users seeking a cost-effective and reliable payment solution.
Average transaction fee: $0.002.
IOTA (IOTA)
IOTA is a feeless cryptocurrency that utilises a directed acyclic graph (DAG) data structure called the Tangle. Instead of miners, IOTA users validate transactions by contributing computational power to the network. Transaction confirmation time in the IOTA network is usually 1-3 minutes.
Average transaction fee: Free.
Dash (DASH)
Dash, known for its focus on privacy and speed, offers relatively low transaction fees compared to other cryptocurrencies. Its innovative Masternode network facilitates fast and cost-effective transactions, making Dash a compelling choice for users seeking efficient payment solutions. With its InstantSend feature, transactions can be confirmed in seconds enhancing the overall user experience while maintaining low fees.
Average transaction fee: $0.0012.
Bitcoin Cash (BCH)
Bitcoin Cash emerged as a fork of Bitcoin with a focus on scalability and lower transaction fees. Its larger block sizes and efficient fee market dynamics enable users to conduct transactions at a lower cost than Bitcoin, making it a viable option for cost-conscious users.
Litecoin (LTC)
Litecoin, often referred to as the silver to Bitcoin's gold, offers lower transaction fees and faster confirmation times compared to its predecessor. Its blockchain network can handle a high volume of transactions with minimal fees, making it a popular choice for users seeking cost-effective transactions.
Average transaction fee: $0.0049.
Tips for minimising cryptocurrency transaction fees
Although some blockchain networks have comparatively high fees, there are a number of tips that users can follow to reduce the costs associated with processing transactions on various blockchain networks.
- Choose the right time to send transactions. Transaction fees can fluctuate significantly depending on network congestion and demand. By monitoring network activity and choosing to send transactions during periods of low network usage, users can often reduce transaction fees. This can be particularly effective for cryptocurrencies with high transaction fees, such as Bitcoin and Ethereum.
- Use wallets with fee estimation tools. Many cryptocurrency wallets offer built-in fee estimation tools that can help users select the most cost-effective fee for their transactions. By utilising these tools, users can ensure that they are paying the lowest possible fee while still ensuring that their transactions are processed in a timely manner.
- Consider layer-2 solutions and sidechains. Layer-2 solutions, such as the Lightning Network for Bitcoin and sidechains, can offer significantly lower transaction fees and faster processing times compared to the main blockchain network.
- Consolidate transactions. Consolidating multiple smaller transactions into a single larger transaction can help minimise overall transaction fees.
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FAQ
Can I make transactions without any fees?
Although there are cryptocurrencies with feeless transactions, so far, they are the exception rather than the rule. At the same time, it's possible to find ways to reduce transaction fees, and in addition, there are many cryptocurrencies where transaction fees are negligible.
Are there any cryptocurrencies with zero transaction fees?
While most cryptocurrencies have transaction fees to incentivise miners or validators to process transactions and maintain the network, there are a few cryptocurrencies that aim to have zero transaction fees. Examples of such cryptocurrencies are Nano and IOTA.
Why do cryptocurrency fees change so often?
Cryptocurrency transaction fees change frequently due to a combination of many factors, such as network congestion, transaction volume, block size and time, fee market dynamics, network upgrades, miner and validator behaviour, etc.
