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Transaction Fee News

A transaction fee is an amount charged for any financial transaction a user conducts. The cost of a cryptocurrency transaction varies each time, based on the activity on the blockchain at the time of the transaction.

Due to the sheer number of users, blockchains can become busy with a stream of transactions, increasing the cost of fees and the confirmation time for transactions. Every node maintains a smaller database of unconfirmed or pending transactions called the mempool (memory pool). In the Bitcoin network, all the valid transactions are placed in the mempool for confirmation. A large mempool size points to traffic congestion, resulting in a longer confirmation time and higher priority fees.

To expedite transactions, users may pay higher transaction fees. The objective of levying fees is to prevent the clogging of the transactions and provide additional incentive to the miners/validators to secure the network. On some chains, such as Ethereum, crypto transactions with higher fees get priority. If a user is worried about their transaction fees, they can consolidate their microtransactions, wherever possible, into a single transaction of a greater amount. Moreover, if their transfer is not time-sensitive, they can wait until the average fee on the blockchain comes down.