One of the most asked questions on our platform is regarding the transaction fee for peer-to-peer crypto asset transfers. Before explaining the transaction fees, let’s find out what it is and why it is charged.
What is ‘transaction fee’?
If you want to execute an operation on a blockchain, it requires a certain level of effort to register your transaction on a block. Miners are responsible for putting in that effort. In order to incentivize miners for their work, most of the blockchains have introduced a transaction fee, often called gas in case of Ethereum.
When a miner verifies a block, he receives a double reward, with the first one being awarded by the blockchain ecosystem, and the second one in the form of transaction fees attached by users to their transactions.
Let’s take the case of Ether. Any transaction executed over the Ethereum blockchain requires a transaction fee, termed as gas. The amount of gas needed to complete a transaction rises in proportion to the amount of computation necessary to complete the transaction.
The Ethereum platform has set some standards, namely gas price, and gas limit. The transaction fee for a transaction can be calculated as:
Transaction fees= Gas Limit * Gas Price
Gas Limit represents the amount of gas you are ready to pay for completing a transaction. A gas limit of 21000 is considered sufficient for simple transfers and even for participating in token crowd sales. If you lower the gas limit beyond recommendation, your transaction is likely to fail, resulting in the loss of fees as well.
Gas Price is the cost of a single gas unit. It is usually calculated in gwei (1 Ether = 1000000000 gwei). It is set by miners and usually lies between 20 to 30 gwei, at the time of writing.
For a transaction with a gas limit of 21000 and gas price of 20 gwei, the total transaction fee will be 0.00042 Ether or $0.392 ($934.390 per Ether).
Transaction fee in Guarda
At Guarda, we do not compulsorily apply an additional fee for sending any of our supported currencies. Adding fee or excluding it is at the sole discretion of our users. The only fee you must pay is the gas cost, in case of Ether, required to process the transaction. Our wallets show a recommended fee for every transaction, which can be changed by the user. For instance, we suggest an average fee of 0.0042 for ETC. For our ETH and ETC wallet, a user can choose between two modes, gas limit or a flat fee.