Does It Cost Money To Transfer Crypto to Another Wallet?

It’s safe to say that we now live in the era of cryptocurrency, and volatile as they’re, they are truly reshaping how we think about money. But with so many cryptocurrencies in the market today, users find themselves using different wallets and exchanges. If that’s your case, you’re probably wondering if it costs money to transfer crypto from one wallet to another.

Transferring crypto from one wallet to another costs money. Users transferring money across the blockchain will need to pay a small transaction fee, often referred to as the gas fee. This fee depends on the blockchain, transaction size, transaction confirmation time, and network congestion.

In this article, I’ll discuss important questions regarding cryptocurrencies, including the fees associated with transferring crypto from one wallet to the other and what these fees represent. Be sure to read this article before you move your crypto.

Fees Involved in Sending Crypto Across Wallets

Crypto exchanges are not regulated by any government agencies, which suggests that transactions across wallets would be free of charge. However, you’ll incur a blockchain fee that isn’t fixed and is externally determined.

This can be confusing, especially when you consider that crypto wallets such as eToro and Coinbase state on their websites that they don’t charge any fees for receiving or sending any transactions.

However, it’s essential to remember that these transactions are carried out over the blockchain, and unlike the individual wallets, users will incur blockchain fees.

In other words, the fee users need to pay for each transaction doesn’t come from the wallet, but from the other users that are facilitating the transaction, and it’s called ‘gas fee.’ Granted, this fee is much lower when compared to other forms of transferring cash, but you’ll want to keep this in mind when moving crypto across wallets.

Gas Fees

Using any blockchain network such as Ethereum, Bitcoin, and so on incurs a small transaction fee, often referred to as the miner’s fee. Miners are persons who invest resources and time to bolster processes that ensure secure transactions across these blockchain networks.

When these fees are paid to the network, they’re essentially being paid to these miners to make sure that these transactions are carried out quickly, securely, and reliably.

These transfer fees have also been put in place to prevent persons from flooding the network with ‘junk’ transfers. This is based on the notion that if these transactions were free of charge, then it would be possible for someone to compromise the speed and reliability of the network by spamming it with numerous junk transactions.

Besides being a security safeguard, these fees work as an incentive for miners to keep the network alive.

Transfer Fees Across the Same Crypto Wallet

Crypto wallets such as eToro and Coinbase note that there are no fees as long as you transfer crypto across wallets on the same platform.

For instance, there will be no transaction fee when you transfer crypto from your Coinbase account to a friend or family member with a Coinbase account.

This is indicated in Conbase’s pricing and fee disclosure information. Coinbase assumes and pays the transaction fees for users transacting on their network.

However, a fee is associated with transferring crypto assets from a trading account to a Money crypto wallet on both platforms. eToro notes that these kinds of transfers will not only attract a transaction fee but are usually associated with a crypto transfer fee.

It’s important to note that all of this doesn’t apply across the board. There are many different crypto wallets in the market, including Choice IRAS, Binance, Crypto.com, MetaTrader 4, UPHOLD, Active Trader Pro and many more, some of which don’t assume the transaction fee for their users.

Make sure to check the terms and fees of your crypto wallet service provider beforehand. If these aren’t clear, you can always contact them.

The blockchain experts at Exodus reiterate that virtually all blockchain transactions attract a network fee or a miner’s fee. While there are some exceptions, this transaction fee goes to the network.

Are Transaction Fees the Same Across Networks?

Transaction fees aren’t the same across networks and largely depend on how popular and how crowded a given network is. For instance, blockchain networks such as Ethereum and Blockchain are highly popular and attract a very high number of transactions.

Popular networks have higher fees when compared to other networks. You’ll be charged more in fees for transferring crypto over Bitcoin or Ethereum than other less crowded blockchain networks such as Litecoin, even though Litecoin has a shorter block time.

It’s also important to note that other platforms have their own fee calculation system, which mainly depends on the type of transaction. You’ll still be able to see the network fee for your transaction before you complete it.

Transaction fees can be influenced by numerous factors, including transaction confirmation times, the degree of network congestion, and the size of your transaction.

Your transaction fee will also be higher if your account has a history of micro-deposits, which are essentially small deposits over time. This increases the number of inputs for your transaction, which means your transaction will be larger.

How To Minimize Blockchain Fees

Crypto transaction fees can be high enough to become an issue, especially if you use popular and crowded blockchain networks such as Bitcoin. There are, however, a few things you can do to reduce the transaction fee.

  • Select a blockchain network that isn’t congested, busy, or currently loaded. Blockchain networks such as Bitcoin are notorious for congestion and rate fluctuations. You can reduce the transaction fees by transferring crypto over a blockchain network that isn’t busy at the time.
  • Monitor the mean blockchain fee. You should keep an eye on the average blockchain fee on your selected network. If you notice that the fee is high at the moment and your transaction isn’t time-sensitive, it’s wise to wait until this fee drops to transfer your crypto.
  • Consolidate small deposits. To limit larger fees as a result of multiple smaller transactions, consolidate these microdeposits in a third-party wallet. You can then wire them as part of a single transaction.

What Are Blockchain Networks?

Blockchain networks are infrastructures built to provide chaincode and ledger services to applications. These networks are decentralized and digitally distributed, allowing users to develop applications or send transactions without needing a central server or regulatory authority.

In other words, blockchains are databases. Blockchains are composed of all the independent peers connected to the network and save a copy of every transaction ever recorded on it. This is what allows for transactions to be secure without depending on a regulatory institution. There is no one entity in control—instead, all the users collectively guarantee the transparency of transactions.

Some of the most popular blockchain networks include:

  • Ethereum
  • Hyperledger Fabric
  • Corda
  • Ripple
  • Quorum
  • Bitcoin
  • Litecoin
  • Dragonchain

Conclusion

Crypto transfers from one wallet to the other will typically cost you money. The rate of transaction fees will vary due to things such as network congestion on the blockchain network and the size of the transaction. 

However, there are various steps you can take to reduce these fees. Try the approach that best works for you without making the process too complicated.

Sources

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