#CryptoFees101
The topic of cryptocurrency fees can be divided into several key points:
Cryptocurrency Fees (CryptoFees101): A Simplified Guide
When dealing with cryptocurrencies, you will always encounter the concept of "fees." These fees are an essential part of how blockchain networks operate and serve multiple purposes. Understanding these fees helps you manage your transactions more effectively and avoid surprises.
What are cryptocurrency fees?
Simply put, they are small amounts paid when performing any operation on a blockchain network (such as sending cryptocurrency, executing a smart contract, or buying and selling). These fees do not necessarily go to one party; rather, they are distributed for various purposes.
Why are fees paid?
* Incentivizing miners/validators: Decentralized blockchain networks rely on "miners" (Proof of Work) or "validators" (Proof of Stake) to confirm transactions and add them to blocks. Fees are their rewards for their work, ensuring the network's continuity and security.
* Network regulation and spam prevention: If there were no fees, anyone could flood the network with endless transactions, slowing it down and making it unusable. Fees act as a simple barrier to prevent such behaviors.
* Resource allocation: Larger fees prioritize your transaction to be added to the block faster, especially during times of congestion.
