There is an increasing interest in investing in crypto among investors around the world. Trading takes place through cryptocurrency exchanges. You can buy and sell cryptocurrencies on this exchange based on the current market value. The price of these currencies is determined according to the demand and supply. Just as shares are bought and sold on a stock exchange, one can buy cryptocurrencies on a cryptocurrency exchange at a fixed price and sell it when the profit is made. Like the stock exchange, there are many fees to be paid for trading on the cryptocurrency exchange. In such a situation, if you are planning to invest in crypto, then definitely know about the three types of transaction fees in their trading.
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- Exchange fees have to be paid to fulfill a crypto buy or sell order. Most of the cryptocurrency exchanges in India have a fixed fee model but the final cost of the transaction depends on the platform on which the transaction is completed. In such a situation, better research should be done about which cryptocurrency exchange is charging the lowest transaction fees.
- In addition to the fixed fee model, crypto exchange also has a maker-taker fee model. The seller of crypto is called maker and the one who buys it is called taker. Under this model, fees have to be paid according to the trading activity.
- Network fees are paid to cryptocurrency miners. These miners use powerful computers to verify and validate a transaction and add it to the blockchain. In a way, it can be said that it is the important task of these miners to ensure whether a transaction is right or wrong. Exchanges do not have direct control over network fees. This increases congestion on the network i.e. more transactions have to be verified and validated, then its fee increases.
- Usually, users are allowed to pre-set the transaction fee when using third party wallets, but on the exchange it is automatically set by the exchange itself so that there is no delay in the transfer. Users who are ready to pay higher fees, their transaction will be completed soon and those who have kept the fee limit low, their transaction may take some time to complete.
Miners are paid for electricity cost and processing power.
- Cryptocurrencies are kept in a digital wallet. This wallet is similar to an online bank account in which cryptocurrencies are kept safe. Most wallets do not charge any fees for depositing and storing cryptocurrencies, but there is a fee for withdrawing or sending it. This is basically network fees. Most of the exchanges offer the facility of in-built wallet.
- Crypto Wallets provides the option to buy systematic cryptocurrencies and recharge smartphones and DTS services through its integrated merchant gateway.
(Article: Shivam Thakral, CEO, BuyUcoin)
(Cryptocurrency suggestions in the story are those of the author and Financial Express Online takes no responsibility for them. Please consult your advisor before investing.)