This article will explain what the Network Fees are about and how it works. Trust Wallet is a fully decentralized app and follows the rules of the network it connects to. No funds are kept in the wallet and no fees are collected by the app.
What are Network Fees?
Every time you send any cryptocurrency, from your address to another, you incur a Network Transaction fee or simply called Network fee. Making trades on exchanges also require fees for every buy or sell transaction.
The actual fee you pay will vary according to the network you use. For example, a Bitcoin transaction will have a different fee in comparison to transactions placed on the Bitcoin Cash, Ethereum or Litecoin network. There are even tokens that require a secondary or “gas” token to pay for the Network fees.
Why is there a need for Network Fees?
Mining is the process through which cryptocurrency transactions are gathered, verified and recorded into a digital ledger known as blockchain.
For proof of work blockchains like Bitcoin and Ethereum, the miners get block rewards. Block reward refers to the cryptocurrency rewarded to a miner when they successfully validate a new block. A block is composed of transactions that are already verified or confirmed by the miners, and they are chained together to form what we call a blockchain.
Proof-of-Stake systems usually uses transaction fees as a reward. When a validator gets chosen to forge the next block, it will check if the transactions in the block are valid, signs the block and adds it to the blockchain. As a reward, the validator receives the transaction fees that are associated with the transactions in the block.
The work done by miners and validators are essential for maintaining the integrity of the network and is also responsible for introducing new coins into the system. And that is why these fees are essential in order for a network to work smoothly.
Trust Wallet does not collect any of the rewards or fees.
How are the Fees Calculated?
Fees can fluctuate depending on market demand and network capacity for confirmations. The amount you pay per transaction is determined by how much you’re willing to spend. The more you pay the faster your transaction is processed. For those who are paying less, their transactions are set aside until the miners do not see higher priority transactions.
Determining fees can be a bit of a challenge, due to the way Bitcoin works. The price you pay depends on a number of factors including the size in kilobytes i.e the amount of data that makes up the transaction. That’s why SegWit sends are generally cheaper: because you’re transmitting less data over the network.
Here are some sites that can help with calculating network fees:
- https://estimatefee.com - a Bitcoin Fee Calculator
- https://ethgasstation.info - site for tracking Gas fees on Ethereum Network
To make things simple, your Trust Wallet app will always set the best transaction fee based on network congestion. This can still be manually overriden if the user wants to.
Learn more about Cryptocurrency Mining here:
Additional information about Sending Cryptocurrencies: