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When trading cryptocurrencies, the first transaction fee a trader should know is the exchange fee.
New Delhi: Cryptocurrencies are gradually finding a place in the portfolios of private investors, as they assume that this asset class will soon emerge as the most lucrative asset class of the 21st century. Many retail investors are now opening accounts on cryptocurrency exchanges to trade / invest. This Asset Class As with stocks, the value of cryptocurrencies is determined by demand, supply and market dynamics. As with stocks, trading cryptocurrencies on an exchange involves certain transaction costs. New investors should be aware of the costs associated with trading cryptocurrencies. The various transaction costs charged by cryptocurrency exchanges.
Exchange / Trading Fees: The exchange fee or trading fee is the amount charged by the cryptocurrency exchange for executing a buy or sell transaction. Typically, cryptocurrency exchanges in India charge a transaction fee as a fixed percentage of the trade value.
Some cryptocurrency exchanges also follow a variable fee model based on trading volume. If you are an active trader or have traded high value over an extended period of rotation, you can negotiate a lower trading fee with the exchange. It is recommended that you do your own research before signing up on any particular exchange so that you can get the best brokerage based on your trading volume. It should be noted that the conversion fee is the primary source of income for crypto exchanges and is an integral part of their business model.
Network Fees: In addition to exchange fees or trading fees, cryptocurrency investors also have to pay a network fee, which is paid to cryptocurrency miners for the work they do. Miners play an essential role in crypto transactions by ensuring that tokens are not duplicated and that transactions are real and true. It is worth mentioning here that cryptocurrency exchanges have no direct control over network fees and the network miner / validator is paid. As the network fills up due to high demand, network charges may increase. Miners receive these fees for electricity and the large computing power required to process crypto transactions.
Wallet Fees: This fee is similar to the delay fee we pay for trading stocks. Cryptocurrencies are stored in a digital wallet, which is like an online bank account for cryptocurrency custody. These digital wallets make it easy for you to use the cryptocurrency and send it to others. Most wallets don’t charge any fees for holding the cryptocurrency, but they do charge a fee at the time the cryptocurrency is withdrawn / sent from the wallet, which are basically network charges.