CoinucationTransaction Fee
A transaction fee is the amount paid to miners or validators to include a transaction in a block; it rises when the network is busy.
Every blockchain transaction carries a fee that compensates the people producing blocks and protects the network from spam. On Bitcoin the fee is the difference between the inputs and outputs of a transaction, and it is measured in satoshis per virtual byte of data. On Ethereum it is called gas and is priced in gwei. Fees go to miners or validators, except on Ethereum where part of each fee is burned.
Fees are set by supply and demand for block space. When few people are transacting, a Bitcoin transaction might cost under a dollar. During peaks, such as the 2021 bull market or the 2023 Ordinals inscription wave, average fees rose above 30 dollars and sometimes much higher. Ethereum base layer fees have similarly ranged from under a dollar to well over 100 dollars for a swap.
Fees are independent of the amount sent. Moving 1 million dollars of bitcoin costs the same as moving 10 dollars if the transaction data is the same size. This makes base layer blockchains expensive for small payments, which is the problem that layer 2 networks like Lightning and rollups address.
What are gas fees? covers this in 6 minutes, with a quiz at the end.