What is a fee?

Learn about the existence of fees (expenses) in the case of sending and trading cryptocurrencies.

What is a fee?

There are two types of fees (expenses) crypto users should be familiar with. One is the blockchain transaction fee paid to the network, and the second is the transaction fee paid to the exchange if you are trading cryptocurrencies on it, or withdrawing cryptocurrency from the exchange.

Blockchain transaction fee

This fee is charged when the user is performing cryptocurrency transactions. This transaction can be sending crypto to someone's wallet or to the other personal wallet, sending to the exchange - in other words - every time a person is making a transaction, this transaction fee is charged.

How does this work?

When sending the transaction, the wallet will calculate the transaction fee for that sending. After ensuring that double spending has not occurred, the transaction will become part of the transaction pool, waiting for the miner to mine the block with the transaction in it. The miner who mines the block will collect the Mining Reward + transaction fee from all the transactions that are part of the block.

This blockchain fee is standard and applies to all transactions on the blockchain. The initial idea was this fee to be tiny, and in some blockchains, as Safex blockchain, it still is. However, some other blockchains sometimes can charge transaction fees big time. In some wallets, you can decide how fast your transaction will go, if you choose fast, you will pay more expensive fees, and therefore miners would rather pick your transaction than some others with less fee.

With Safex Cash blockchain transaction fee is quite cheap and depends on mixin (ring size). If you choose the smallest ring size - 2 (mixin = 1) transaction fee will be smaller than if you picked ring size 8. However, this fee is not significant in either case. Keep in mind that transaction fees of both Safex Token and Safex Cash are paid in Safex Cash (SFX).

Safex Transaction Fee

For example, in this transaction, mixin was 1, and the blockchain transaction fee was 0.136 SFX.

What else does the transaction fee depend on?

There are several factors that, in combination, determine the transaction fee for any particular transaction:

  • Current median block size and the corresponding dynamic fee calculation
  • Amount of data (eg. number of outputs) being included in the transaction
  • Mixin value being used for obfuscation purposes
  • Transaction Priority

More detailed information on transaction fees can be found in [Link to Safex Blockchain: How it Works]

Exchange transaction fee

Each transaction is charging a fee for the service they provide. We can differentiate between the trade fee and deposit/withdrawal fee. A trading fee is a fee that is charged when you are trading your cryptocurrency for some other crypto (or fiat) on the exchange. For example, on Xcalibra exchange, this fee is 0.25% of the total amount traded. These fees are paid in the cryptocurrency that the user is sending/trading.

Another fee exchanges are charging is the deposit and withdrawal fee. When you are sending some crypto to the exchange, this fee will be charged. Same when withdrawing crypto to the wallet or fiat to the bank account.

Xcalibra Trade Fee

For example, deposit fees on Xcalibra exchange do not exist.

Xcalibra Deposit and Withdrawal Fee

On the other side, exchanges do charge a withdrawal fee to earn money from customers and, therefore, keep successfully working. These fees are also small. However, you should be aware of their existence.

We can suggest checking out the Status and fees listed on the exchange before you start trading on it.