Cryptocurrency has started to change how the world handles financial transactions. From the first Bitcoin purchase in 2009 to the release of over 10,000 cryptocurrencies globally, millions of people are using crypto daily.
Although crypto promises lightning fast transactions and low fees, how much does it actually cost to trade and use cryptocurrency?
We’ve reviewed a wide range of different cryptocurrency fees, how much you can expect to pay, what factors to consider when paying fees, and how to save money on crypto transaction fees.
How Much Are Cryptocurrency Fees?
Cryptocurrency fees depend on the type of transaction you’re executing, which platform you’re on, and which cryptocurrency you’re using. In general, cryptocurrency fees are a percentage of the overall transaction, and may include additional costs if you’re processing a transaction directly on the blockchain network.
When you are trading cryptocurrency on an exchange, fees range anywhere from 0.00% up to 5% or more, depending on the size of the transaction.
When trading on a decentralized exchange (DEX), fees usually range from 0.05% to 1.0% for the transaction, but there are network fees paid for processing transactions as well. When the network is experiencing high volume, these network fees can end up being $100 or more, depending on the network being used.
Overall, cryptocurrency fees range from fairly reasonable to outrageously expensive, depending on a variety of factors.
Types of Cryptocurrency Fees
Cryptocurrencies were originally designed as a peer-to-peer payment system, with the fees being paid going to those that operate the payment network. Fast-forward over a decade later, and there are many types of cryptocurrency fees, including exchange fees, network fees, and wallet fees.
We’ll cover the details of the different types of crypto fees below, and how to avoid overpaying.
Cryptocurrency exchanges have become the most popular way to buy, sell, and trade crypto. While fees can vary by exchange, most follow a fee schedule based on the Maker-Taker model.
Market makers place an order into the order book, and takers purchase the orders from the order book. Makers typically pay a smaller fee than takers, and most fee schedules offer discounts to users who trade a higher monthly volume.
Here’s an example of the Coinbase Advanced fee schedule:
|30-Day Volume (USD)||Maker fee||Taker fee|
|$10K to $50K||0.25%||0.40%|
|$50K to $100K||0.15%||0.25%|
|$100K to $1M||0.10%||0.20%|
|$1M to $20M||0.08%||0.18%|
|$20M to $100M||0.05%||0.15%|
|$100M to $300M||0.02%||0.10%|
|$300M to $500M||0.00%||0.08%|
In this example, traders who execute less than $10,000 in monthly trading volume pay the highest fees, and there are discounted fees for traders with higher volumes. Market makers are encouraged to trade by paying lower fees, as they increase the liquidity of the exchange.
Here’s another example from crypto exchange Kraken, which offers lower trading fees to users of its “Pro” platform:
|30-Day Volume (USD)||Maker fee||Taker fee|
|$0 to $50,000||0.16%||0.26%|
|$50,001 to $100,000||0.14%||0.24%|
|$100,001 to $250,000||0.12%||0.22%|
|$250,001 to $500,000||0.10%||0.20%|
|$500,001 to $1,000,000||0.08%||0.18%|
|$1,000,001 to $2,500,000||0.06%||0.16%|
|$2,500,001 to $5,000,000||0.04%||0.14%|
|$5,000,001 to $10,000,000||0.02%||0.12%|
In addition to Maker-Taker trade fees, crypto exchanges may offer a simple order form to buy cryptocurrency directly, but charge higher fees for this service. Coinbase, for example, allows users to buy or sell crypto with fiat currency (such as U.S. dollars), and charges an average 1.49% fee for transactions.
In addition to transaction fees, exchanges may add a surcharge to transactions that use a debit or credit card to purchase crypto. This can be up to 3.99% or more, depending on the exchange. This surcharge is added to cover the processing fees from the credit card companies, and can cause overall transaction fees to cost 5% or more.
Finally, some crypto exchanges charge deposit and withdrawal fees. These fees are paid in the cryptocurrency you’re depositing or withdrawing, and typically have a minimum transaction requirement. Exchanges typically waive deposit fees because they want to encourage users to transfer funds onto the platform. But many exchanges charge withdrawal fees to move crypto off the platform.
Although most of the trading volume for cryptocurrency happens on centralized exchanges (such as Coinbase), many transactions happen directly on the blockchain network. These transactions may be direct payments, interactions with a crypto-based application, or simply trading on a decentralized exchange.
Users of the network pay network fees — also known as “gas fees” — to the network operators. Because most blockchain networks consist of independent nodes (servers) that run the blockchain software, these node operators are paid a fee to process transactions on the network.
Fees can vary by network, as some blockchains charge much less than others. For example, Ethereum fees are typically more than $10 per transaction, while fees on the Solana network currently are less than $0.01 per transaction.
When there is a significant amount of traffic on the network, processing transactions requires more resources, increasing the fee price. This is especially true on the Ethereum network, which hosts a large volume of transactions compared to other blockchains, and fees have been known to eclipse $100 per transaction.
Overall, network fees vary wildly, and are dependent on the network you are using to transact. Most blockchain networks list the fees before processing your transaction, so you can evaluate whether you are willing to pay the network fee.
Cryptocurrency wallets are used to store crypto, transact on crypto networks, and interact with decentralized applications. Although most of the fees associated with trading crypto happen on exchanges or via network fees, there are some wallet fees to be aware of.
When depositing funds into a cryptocurrency exchange from your digital wallet, you may incur a
fee from the exchange you are depositing to. There may also be a fee for withdrawing cryptocurrency from an exchange directly to your digital wallet. These fees vary by exchange, but are typically paid in the cryptocurrency being transferred.
For example, when withdrawing bitcoin from the crypto exchange Kraken to your digital wallet, you are charged a 0.00002 BTC withdrawal fee. If the bitcoin price was $40,000 at that time, this equates to a $0.80 fee, or a 0.0002% fee.
Digital wallets are also used to pay for network fees when using your wallet on a crypto application, or when trading on a decentralized exchange. These network fees require using the native blockchain cryptocurrency to pay, such as ETH on the Ethereum network.
How to Avoid or Reduce Cryptocurrency Fees
Although paying cryptocurrency fees is required to trade or use your crypto, there are ways to lower your fees or avoid them altogether. Here are a few ways to save on crypto fees:
- Pay Using the Native Exchange Token. When trading on a crypto exchange, you may be able to save on fees by owning a certain amount of the native exchange token. For example, when trading on Binance, using the Binance Coin (BNB) to pay for transaction fees will net you a discount.
- Don’t Buy Crypto With a Credit Card. Many exchanges allow users to purchase crypto with a credit card or debit card, there is typically a massive surcharge on these transactions. Some charge up to 4% for buying crypto with a credit card!
- Avoid Trading During Volatility. When there is high volatility in the cryptocurrency market, network fees increase substantially. To avoid paying higher fees, don’t trade when there is massive network congestion.
- Buy and Hold. Crypto exchanges collect fees on every transaction, whether you are buying or selling. The most transactions you place, the more fees you will pay. To save on fees, you can simply buy and hold your cryptocurrency.
- Choose a Low-Fee Exchange. Exchange fees vary by quite a margin, and finding a high-quality cryptocurrency exchange that offers low fees can save you a bundle.
Although transaction fees cannot usually be avoided, these strategies can help you lower your overall costs when trading or using your cryptocurrency.
Cryptocurrency was designed to create a direct payment network across the globe. Although paying fees helps incentivize crypto networks to grow, cryptocurrency has expanded into an entirely new asset class, and there are more fees than ever.
Exchange fees can cost a bundle, but there are several ways to lower your costs. Understanding what costs are involved in trading crypto can help you compare crypto exchanges to find one that fits your needs.
When trading crypto on a decentralized exchange or using a crypto application, network fees can quickly become expensive. Avoiding times of volatility and using blockchains that offer lower fees can help you save money.
Overall, fees are required to trade and use cryptocurrency, but you don’t have to overpay if you know where to look.