ALT

How can you invest in cryptocurrency? Learn about the different types of exchange fees

Earn 30 Reward Points by commenting the blog post

You can trade (buy or sell) between cryptocurrencies on an online platform called cryptocurrency exchanges. These platforms are based on the actual market price of each cryptocurrency. Market participants and investors determine demand and supply in order to value a cryptocurrency. It is similar in concept to a stock exchange, where shares of companies may be purchased or sold.

A cryptocurrency exchange allows a person to buy cryptocurrency and then sell it when its price rises to make a profit. It is crucial to get into and out of a market at just the right time. Transaction fees are also levied on trades made on crypto exchanges. We’ll be covering the fees charged by exchanges that investors need to know.

There are generally three types if transaction fees in cryptocurrency trading. Investors are welcome and encouraged to inquire about them.

Exchange fee

These are the first fees investors should be aware when using exchanges. An exchange fee is the cost charged to process a user’s purchase or sell order. While most exchanges charge fixed fees, smart investors should research the best exchanges to save money on their final transaction costs.

The Maker-Taker fee model is another aspect of crypto exchange fees. The Maker-Taker fee model is where the trader who provides liquidity for order books using limit orders is the maker, while the taker trader withdraws liquidity using market or other orders. As a reward, the manufacturer’s fee tends to be lower than the taker’s fees. In his model, the exchanges incentivize traders who trade larger volumes.

Exchange fees are the main source income for cryptocurrency exchanges. They remain an integral part their business practices and existence.

Cryptowisser publishes report on exchanges with lowest fees| Cryptowisser publishes report on exchanges with lowest fees

Network charges

Network fees are what makes crypto unique and legitimate as a healthy, efficient store of value. The miners are the backbone of any cryptocurrency network. A crypto miner can be an individual or group that uses powerful computers to validate and verify transactions. This includes verifying that tokens have not been spent twice and that all transactions are true and current. This makes cryptocurrency mining a very profitable income source and is rapidly growing in popularity.

Network fees are charged by investors and payable directly at miners only when investors move crypto from one exchange to another.

It is important to remember that exchanges don’t have any direct control over network fee and they are paid directly for the work of miners or validators. When the network becomes congested or very busy, network charges can rise.

Similar reading: Venezuela opens Bitcoin Mining Museum| Bitcoin Mining Museum opens in Venezuela. Is this the first?

Fees for cryptocurrency wallet

A digital wallet is where cryptocurrencies can be stored. It acts as an online bank account, where users can store their crypto. To store, send and receive cryptocurrency, a cryptocurrency wallet can be used. While wallets don’t charge fees for depositing or storing cryptocurrency, they do charge fees for withdrawing from the wallet. These fees are basically network fees. Many wallets offer systematic purchasing options for cryptocurrency. Some wallets also integrate merchant gateways that allow you to interact with real-world applications.

All exchanges offer a built-in wallet that allows users to store their crypto in one location. There are no fees for storage or deposits.

Similar reading: Wallets: How To Store, Send, And Receive Cryptocurrencies| Wallets: How to Store, Send, and Receive Cryptocurrencies

Together, transaction costs as well as commissions play a significant role in the operation and growth of the financial services and investment industry. Companies that have made it possible to allow traders and institutions to invest crypto from their offices and homes with just a few clicks on digital platforms online are extremely grateful for the funds raised. These services are managed by dedicated professionals and are part of the fintech revolution, which is gradually replacing traditional financial institutions. You can find a list of all crypto exchanges ranked. Here.

Total market capitalization of cryptocurrencies
The total market capitalization of cryptocurrency has quadrupled in the past year. Source: TradingView.com – CRYPTOCAP
Featured image by iStockPhoto, Charts at TradingView.com

Source

Related Articles

Back to top button