What is the transaction fee in crypto?

Cryptocurrency networks rely on miners or validators to process transactions and secure the blockchain. To incentivize these individuals, a small fee known as a transaction fee or network fee is charged. This fee is paid in the same cryptocurrency that is being transferred, ensuring miners have a financial incentive to include the transaction in the blockchain.

The amount of the network fee can vary depending on several factors. One of the main determinants is the congestion of the network. When there are a high number of transactions waiting to be processed, miners may prioritize those that offer a higher fee. This creates a dynamic where fees can rise and fall based on network demand.

The size of the transaction also plays a role in determining the network fee. Larger transactions, which require more computational resources to process, may be subject to higher fees. This is because miners need to allocate more resources to verify and include these transactions in the blockchain.

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