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Understanding of commissions in cryptocurrency transactions
Cryptocurrencies, such as Bitcoin Ethereum, have revolutionized the way we think about money and financial transactions. However, one of the significant disadvantages of the use of cryptocurrencies is the high cost associated with the conversion to traditional Fiat currencies or to exchange them with other cryptocurrencies.
One of the main reasons why cryptocurrencies are expensive is due to the transaction commissions. These commissions can be collected by cryptocurrency exchanges, wallets and payment processors that facilitate these transactions. In this article, we will deepen the world of cryptocurrency commissions, exploring what they are, because they exist, as users influence and, above all, by providing a step-by-step guide on the management of cryptographic funds to minimize transaction commissions.
What are transaction commissions?
Transaction commissions are the costs associated with the sending or reception of cryptocurrencies. These commissions may vary from 0% more percent of the transaction amount. The commissions are generally charged with cryptocurrency exchanges, wallets and payment processors to cover the cost of processing transactions.
Here is a distribution of how commissions work:
* Exchange commissions
: When sending cryptocurrencies from your exchange account to the portfolio of another user, an exchange commission is deducted from the transaction amount.
* Portfolio commissions : some wallets charge a small fee for receiving or sending cryptocurrencies, while others may not charge any commission. However, these commissions are generally minimal and do not have a significant impact on the overall cost of transactions.
* Commissions of the payment processor : When using a payment processor to convert the cryptocurrency to the Fiat currency, a small percentage of the transaction amount is charged by the processor.
Why are there cryptocurrency commissions?
The main reason why there are cryptocurrencies is because of their scarcity. Unlike traditional currencies, which are created and printed at will, cryptocurrencies have a limited supply. This scarcity increases the demand, causing an increase in prices. To encourage users to participate in the network, cryptocurrency exchanges and wallets load the transaction commissions.
Types of transaction commissions
There are two main types of transaction commissions:
* Commission of transaction : a commission is charged by the sender to send a cryptocurrency.
* Transfer commission : a commission can be charged during the transfer of cryptocurrencies from one portfolio account to another.
Manage your cryptographic funds: suggestions and tricks
To minimize transaction commissions, follow these best practices:
- Use multi-firm portfolios : multi-firm wallets require users to check the sender’s identity before allowing them to send funds.
- Enable low fee options : some cryptocurrency exchanges offer low -treating options for specific cryptocurrencies.
- Transfer funds in small quantities : the transfer of small quantities of cryptocurrency is often cheaper than the transfer of a large amount.
- Use a high frequency trading platform : platforms such as Bitfinex and Binance offer high frequency trading options, which can reduce commissions by distributing transactions on multiple exchanges.
- Take into consideration the use of a custody portfolio
: custodian wallets are generally more expensive but offer additional safety features.
Conclusion
Cryptocurrency commissions have become a significant disadvantage of using these digital currencies. However, by understanding the different types of commissions and the way they work, you can take measures to minimize their impact on transactions. Following the best practices such as the use of multi-firm portfolios and the transfer of funds to small quantities, it is possible to significantly reduce transaction commissions.
Additional resources:
* COINBASE : A popular exchange of cryptocurrency with low fee options for many cryptocurrencies.