Transaction fees are paid out to facilitate the transfer of tokens or cryptocurrency from one wallet to another. In Bitcoin, this transaction fee is deducted by miners from the amount being sent, which constitutes to a lesser amount for the recipient. This also makes sending exact amounts hard to do because of how transactions fees are variable according to network load.

Ethereum decoupled the transaction fee by implementing Gas which is the amount of ETH paid to miners to transfer ETH and tokens from one wallet to another thus ensuring that the amount being sent is exactly the amount that the receiver will recieve. Gas used for paying transaction fees in ETH is deducted from your wallet balance instead of from the amount being sent.

Other newer blockchains have also decoupled the transaction fee from the amount being sent. This is to enable more precise sending and receiving of tokens or cryptocurrencies which is particularly useful in e commerce or for tokensales.

 

Back to Crypto Glossary