What Is Cryptocurrency Transaction Fee?
A cryptocurrency transaction fee is a charge that users pay for conducting any transactions on the blockchain. This could be, for example, transferring crypto assets from one wallet to another, trading on DEXs and CEXs and other DeFi activities.
Important! Transaction fees are a necessary part of the ecosystem since they incentive validators to ensure blockchain’s security.
Fees can significantly vary depending on the tokens you transfer and the network’s demand for them. Thus, during times of severe network congestion, the transaction fee can be quite large. That’s why users should not only look for the crypto with the lowest transfer fees, but also understand how to minimize these transfer costs.
Crypto transaction fees exist for a number of reasons:
- Stimulating Network Security. Since networks need validators to process and confirm transactions, thereby maintaining the blockchain's security, transaction fees reward them for their contribution.
- Preventing Network Congestion. In times of high demand, users are ready to pay higher fees to prioritize their transactions, which in turn slows down transaction confirmation times for other users and prevents network congestion. In addition, the lack of commissions can also lead to spam attacks and low-value transactions, disrupting its functionality.
- Sustaining Decentralization. If fees were significantly reduced or eliminated, large entities or intruders could overwhelm the network with transactions. Therefore, transaction fees don’t allow any single entity to dominate the network.
What Are the Main Types of Crypto Transaction Fees?
Before looking at the cheapest crypto to transfer, it is important to understand what the main types of fees are:
Gas Fees
Gas fees are necessary to pay for computational resources that are required to execute transactions and smart contracts on the blockchain. Users pay gas fees to miners to prioritize their transactions. The cost of gas vary based on network congestion and transaction’s complexity.
Exchange Fees
Such commissions are charged by crypto exchanges for trading digital assets. Exchange fees mostly depend on trading volume, exchange and other factors.
Network Fees
Network fees are general fees for processing and confirming transactions on blockchains, rewarding miners or validators for their work.
Withdrawal Fees
Withdrawal fees are charged when transferring crypto from your exchange or a crypto account to an external bank account. This fee covers the cost of processing the withdrawal transaction and varies depending on crypto and the exchange chosen.
Top 7 Cheapest Coins to Transfer in 2024
Nano (XNO)
Nano crypto was launched in 2015 with the main focus on simple payments’ efficiency. NANO uniqueness lies in having zero transaction fees, which became possible due to its DAG (directed acyclic graph) architecture and the Block Lattice technology.
Important! Unlike traditional cryptos that rely on miners and transaction fees, NANO operates on a feeless network, allowing users can send NANO from one wallet to another without any transaction fees.
This feeless nature makes NANO an attractive option for microtransactions and day-to-day use. Besides it being the cheapest crypto to send, NANO also has near-instant transaction confirmations due to its Delegated Proof of Stake (DPoS consensus mechanism that minimizes energy consumption and processing time. NANO's zero transactions, rapid confirmations, and eco-friendly approach make it a great choice for those seeking efficient and cost-effective digital transfers.
Stellar (XLM)
Stellar is a crypto that aims to facilitate cross-border payments and serve the unbanked population. It has some of the cheapest transferring fees due to its efficient and cost-effective blockchain network.
Important! Stellar Consensus Protocol (SCP) made Stellar transactions as little as $0.0000035.
SCP allows for quick transaction confirmation times, usually within seconds, while maintaining security and decentralization. Moreover, Stellar's native DEX allows users to swap assets directly within the network, eliminating intermediaries and reducing costs associated with currency conversion. Thus, Stellar's low transaction fees, rapid confirmation times, and financial inclusion make it as one of the most cost-effective cryptos for transferring value.
ReddCoin (RDD)
ReddCoin is a social currency that has become widespread in the world of social media and online tipping. Since RDD's average transaction fee is only $0.000073 while transaction speed is almost instant, ReddCoin is a great solution for supporting content creators with small tips and donations.
RDD uses Proof of Stake Velocity (PoSV) algorithm, which is energy efficient and environmentally friendly, and also encourages users to hold and stake RDD coins. Thus, PoSV not only maintains the security and consensus of the network, but also reduces the computational costs characteristic of PoW cryptos.
Minimal transaction fees, almost instant transaction confirmation and energy efficiency make RDD an attractive option both for the world of social networks and for micro transfers.
Monero (XMR)
Monero is a crypto that focuses on security and uses a number of technologies (such as Tor/I2P support, ring signatures, RingCT) to ensure that the transaction participants stay anonymous to everyone. This privacy focus makes it difficult for third parties to trace or analyze transactions, enhancing security and reducing the risk of fraud.
Monero's transaction fees are calculated based on factors such as network demand and transaction size. Despite occasional fluctuations, Monero fees have historically remained relatively low and currently stand at approximately $0.00014.
Thus, XMR's commitment to privacy, cheap transactions and fast transaction speed (about 2 minutes) makes it a compelling choice for users who prioritize confidentiality and security in their crypto transactions.
XRP (XRP)
XRP can also be called one of the cheapest cryptocurrencies due to its economical fees of $0.0011 per transaction. XRP uses the Ripple Protocol Consensus Algorithm (RPCA), that rapid confirmation of transactions within seconds, making it significantly faster and more cost-effective compared to other cryptocurrencies.
Important! Ripple's XRP Ledger has low transaction fees - a fraction of a cent, making it perfect for microtransactions and cross-border payments.
XRP's main purpose is to facilitate real-time, cross-border payments between financial institutions and banks. It aims to leave third parties behind and reduce the time and cost associated with international money transfers. Thus, its unique technology, focus on efficiency and almost instant transaction confirmation makes XRP one of the cheapest cryptocurrencies to transfer and an attractive choice for investors.
IOTA (IOTA)
When users ask “which crypto has lowest transaction fees”, IOTA is one of the first to come to mind. IOTA is a cryptocurrency specifically created for the Internet of Things (IoT). It uses innovative distributed ledger technology “Tangle”, which allows it to provide fee-less transactions and high scalability.
Important! Tangle's scalability ensures that as the network grows, transaction speeds will also remain virtually instant, allowing IOTA to be used in both everyday transactions and complex operations.
Thus, its focus on secure payments, no transaction fees, instant transaction confirmation and IoT democratization make it one of the fastest and cheapest crypto to transfer.
Solana (SOL)
Solana is a unique smart contract platform that was founded in 2018 and widely adopted in 2021. The project uses a PoS consensus mechanism combined with a unique Proof-of-History algorithm, which allows it not only to process thousands of transactions per second, but also keep costs incredibly low and make Solana one of the cheapest blockchains.
With transaction costs on Solana as low as $0.00025, users can send SOLs and NFTs almost for free. Moreover, as a high-performance blockchain with high throughput, Solana completes transfers in approximately 2.5 seconds, making it an excellent option for dApps and other blockchain projects.
How to Minimize Cryptocurrency Transaction Fees?
Although most cryptocurrencies have a certain transaction fee, in some cases you can still reduce the costs.
Timing Transactions
It is important to conduct transactions during periods of less network congestion. During peak hours, most blockchains will have higher transaction costs.
Using Layer 2 Solutions
L2 networks’ main goals are to increase the scalability and efficiency of blockchain transactions. Thus, using solutions like Optimism or Polygon allows users not only to process transactions faster, but also to significantly reduce fees while maintaining security.
Choosing the Right Wallets
Some wallets allow users to manually set the fee amount, which determines the priority and speed of the transaction on the network. They can also provide dynamic fee adjustments based on network congestion, helping users balance cost and efficiency.
Closing Thoughts
Transaction fees are an important part of the crypto world as they help maintain network security and prevent its congestion. As the crypto space continues to evolve, reducing transaction fees can also be achieved through several strategies, for example, choosing off-peak hours to initiate transactions and using periods of lower network congestion. However, although they vary depending on the transaction time, the chosen network and other factors, some cryptos are cheaper than others.
Options like NANO and IOTA have no transaction fees at all due to innovative technologies, making them an excellent choice for fast and secure payments. The market also offers a number of cheap options with near-instant transaction approvals, such as XLM, RDD and SOL making them attractive choices for users seeking to reduce transaction fees.