June 9, 2022
Cryptocurrencies have taken the world by storm, and many people are investing in them to diversify their portfolios. However, when it comes to investing in cryptocurrencies, transaction fees are a common concern.
There are many different types of transaction fees you may encounter when dealing with cryptocurrencies. As such, when entering the world of investing, you may want to identify cryptocurrencies with the lowest transaction fees and surprisingly, many cryptocurrencies charge remarkably low transaction fees.
If you are considering trying your hands in cryptocurrencies, it is imperative to understand all that exists in this decentralized paradise. In this post, you will find all you need to know about fees and some of the cryptocurrencies with the lowest transaction fees.
What is the crypto transaction fee?
As the name suggests, crypto transaction fees refer to fees charged when you are transferring coins or tokens from one crypto wallet to another. As with most other transactions, the fees charged are used to compensate crypto miners and transaction validators for their service.
The sum that has to be paid every time a transaction is being done varies from coin to coin and depends on a number of factors. Since blockchains receive transaction requests constantly, congestion occurs, causing delays in processing transactions. Crypto traders can trigger miners and validators to prioritize certain transactions by paying higher fees. Even so, paying higher fees doesn’t always result in faster transactions or quality service. That’s why it makes perfect sense to look out for cryptocurrencies with low fees.
Types of crypto transaction fees
There are three distinct types of transaction fees you might have to deal with in the trading world. Here is what you need to understand:
- Blockchain or network fee: This is a sum paid to the network and is usually used to incentivize the miners of the network. Part of the amount paid during each transaction is assigned to miners as an incentive for verifying and validating transactions on blockchains. It may be worth noting that transactions with lower fees may take longer to be validated as they are low priority to miners.
- Exchange fees: This can be compared with commissions. For crypto exchanges to make money, they charge fees from their users, so it is always a smart idea to look out for an exchange that charges the lowest fees. For this type of transaction fee, most platforms use a fixed-fee format.
- Wallet fees: Generally, most crypto wallets don’t charge any fees from the user, but depending on the wallet you are using, you may have to pay some fees to store your coins in that particular wallet.
Oftentimes, crypto transaction fees are meant to cater to verification and validation of transactions, so the corresponding platform keeps running and developing.
Cryptocurrencies with the lowest transaction fees
Naturally, investors are interested in finding the lowest fees. Here is a list of the cryptos that fulfill that criteria:
It sounds too good to be true for cryptocurrencies to charge zero transaction fees, but it happens. Nano is a lightweight cryptocurrency designed to facilitate secure and almost instant payments at no cost. It doesn’t get any cheaper than free. Nano utilizes Delegated Proof-of-Stake consensus mechanism with a Block Lattice architecture, where every user operates their own blockchain. Essentially, this means that there is no need to incentivize the miner.
The Block Lattice makes Nano more transparent while ensuring limitless expansion capabilities without compromising the network performance. Besides having the lowest fees, Nano takes the shortest time to confirm a transaction, typically within 0.14 seconds.
IOTA is not a blockchain; rather a distributed ledger that uses DAG to process transactions. It is yet another cryptocurrency with no transaction fee. However, users may be required to pay trading fees when trading coins through a crypto exchange.
Stellar blockchain is incredibly faster, and payments are verified and confirmed within seconds. Although the costs will go up when its prices increase, the average transaction fees are low at around $0.000004 per transaction, depending on Lumen’s pricing.
The project is overseen by the Stellar Development Foundation, so there are no worries over its supply. It is also different from other cryptocurrencies in that it is meant to be a medium of exchange.
Digibyte is one of the fast-growing open-source blockchains and PoW coins that takes great pride in its decentralized nature. Blocks are mined every 15 seconds, allowing for up to 1066 transactions per second. At $0.0005 per transaction, the transaction fees are low. On the other hand, confirmation times average at 5 minutes.
Litecoin is one of the oldest cryptocurrencies and was initially designed for payments, so it should be no surprise that its developers have kept the transaction fees as low as possible.
The cost of transferring Litecoin is around $ 0.03 to 0.04, and transactions are confirmed within approximately two minutes. Although it is not the cheapest, it is nearly identical to Bitcoin, which has increased its demand since it was coined.
An abbreviation of digital cash, Dash is an open-source blockchain and cryptocurrency designed to facilitate fast and cheap global payments. Since its inception, it has generated the interest of many crypto investors and users.
At $0.2 to $0.3, it is still one of the cheaper to transact cryptocurrencies. However, transactions take about 15 minutes to be validated and confirmed.
Cardano is yet another incredibly popular cryptocurrency that is fast, scalable, and eco-friendly. The blockchain has generated a lot of interest due to its rapid growth.
For Cardano, the transaction fees range between 0.15 and 0.18 ADA, which translates to around $0.27 on average. Verification and settlement of transactions are also faster.
Ripple is another payments-focused crypto with incredibly low transaction fees. On average, the XRP transaction fees are $0.00265 per transaction. Interestingly, transactions on Ripple’s open-source, decentralized blockchain are verified and settled in 3 to 5 seconds. Ripple has partnered with several financial institutions to deliver exceptional user experience, particularly with its cross-border payment network.
Prominent for its smart contracts and ability to host and support decentralized applications (DApps), Ethereum Classic is another great option for crypto users looking for crypto with low transaction costs. The average cost of transacting Ethereum Classic is $0.0022, and most transactions are verified and confirmed in 5 to 7.5 minutes.
It is worth noting that Ethereum Classic is set out to preserve the integrity of the older Ethereum blockchain.
TRON is one of the blockchains that provides developers with the capability to create and deploy decentralized apps (DApps) for virtually any purpose. The coins offer zero transaction fees, but the network takes Bandwidth and Energy, depending on market conditions. As such, depending on the complexity of the transaction, you may spend a lot per transaction.
Finding a cryptocurrency with a low transaction cost that aligns with your investment goals can be tricky. You need to consider all parameters that affect crypto transaction fees. Basically, you need to understand how busy the native network of the coin is, how the transaction fees compare to the current value of the coin or token, and the average time it takes for a transaction to be verified. For first-time investors, along with going for cryptos with low transaction fees, it is important to be cautious before putting your money into any cryptocurrency. This is critical considering that there have been cases of developers running with investors’ money.