2024 is starting on a pretty solid note for the crypto market 😋. Coin prices are doing well, and there’s a lot of confidence that we could be seeing a bull run coming 💪.
But, there’s also been a lot of talk about gas fees. Recently, several exchanges had to implement deposit minimums for Bitcoin (BTC) deposits on the Bitcoin network as gas fees have been on the rise 😮💨. While we apologize for any inconvenience, we also wanted to explain what these fees are and how they work.
So, let’s dive in:
What Are Crypto Gas Fees?
Cryptocurrencies run on networks called blockchains – everyone knows this. But, for a crypto transaction to be processed, it would need to be added to a block of other transactions and posted on the blockchain.
Before the transactions in a single block are processed, they will need to be validated by people who work on the blockchain ✅. Basically, these people ensure that every transaction in a block is legitimate, and there’s no fraud involved.
This is what is known as cryptocurrency mining ⛏️.
Here are some other facts you might need to know about mining:
- Different cryptocurrencies have their different mining techniques
- But, whatever the technique, the goal of mining is the same – to validate and process transactions ✨.
- For their work, miners are compensated with a fee 💰. That fee is known as the blockchain’s transaction fee – or gas fee.
Why Are Gas Fees Necessary?
One of the benefits of cryptocurrencies is that they make it easy for you to send and receive money without having to pay overly high fees ⚡. But, the fact that the fees are low doesn’t necessarily mean that there aren’t fees at all.
Whenever a transaction is processed, there are some costs. In the blockchain space, these costs are known as gas fees. The fees tend to differ, so ETH gas fees and BTC gas fees are usually not the same.
Without miners, blockchains will lose speed and security. So, these miners need to be compensated for their work, and that’s why gas fees are so necessary.
Why Do Gas Fees Rise?
The major question for most people at the moment is why gas fees are rising so much – especially on blockchains like Bitcoin 😮💨.
Over the past few years, crypto adoption has continued to grow. More people are looking to make transactions using crypto, create non-fungible tokens (NFTs), and much more 💥. As this adoption grows, mining has also been more difficult.
- Back in the day, you could mine BTC with just your computer 💻
- Today, BTC miners need specialized devices that cost money 🤑
- Plus, they need to also pay for things like electricity and utilities 🔌
- So, miners need to charge more money for their work. Otherwise, there won’t be much of a reason for them to do it.
Think about it like this – if you feel like your current salary isn’t enough to pay your bills, you might consider quitting your job or starting a side hustle 👷♀️. Miners are facing the same thing – as the cost of mining rises, they also have to charge more 😭.
Will Fees Go Back To Normal?
The beauty of blockchain technology is that it can correct itself. Today, developers are looking into ways to improve the Bitcoin network and make it more scalable, so it can process more transactions without raising fees at the same time 👍.
For now, we’ll continue to keep an eye out for these developments and see how they affect the network 👀. If you need any help, please reach out to us at [email protected]. Our Customer Success superheroes will be more than happy to help you out 🦸♀️.
