Why does crypto have gas fees?

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Cryptocurrencies have changed the way we think about money and how it works. Unlike fiat currencies, cryptos can be transferred from one user to another instantaneously from anywhere around the world.

This is because digital assets like Bitcoin, Ethereum, Ripple, and Litecoin are totally decentralized. And this allows cryptocurrencies to be totally independent of traditional financial infrastructure.

All of which frees it up from the constraints faced by fiat currencies. Still, all of this does come at a price, in the form of gas fees, which is why, according to Tezro, people are looking for crypto wallets that have low fees.

So, What Are Gas Fees?

Gas fees refers to the transaction fees charged by the Ethereum blockchain. Other crypto blockchains use the term transaction or miner’s fees. Despite this difference the meaning is basically the same.

Why Do Cryptocurrencies Charge Gas Fees?

Cryptocurrencies exist on the blockchain, which is a ledger of transactions maintained by a decentralized network of computers. The blockchain is what makes it possible for cryptocurrencies to exist in a decentralized and unregulated environment.

However, maintaining the integrity of the blockchain is not free. And this is why gas/transaction fees are charged. Miners use their computing power to validate and confirm transactions made on the blockchain which they are compensated for in the form of gas fees.

In the case of Ethereum, more complicated transactions such as NFTs and smart contracts incur higher gas fees to compensate for the higher difficulty.

Due to the rising popularity of cryptocurrencies, blockchain networks have become increasingly congested. This is particularly noticeable for users of Bitcoin and Ethereum who have experienced higher transaction fees and slower response times.

In response, programmers have developed a range of cryptocurrencies intended to overcome these deficiencies. These include payment-focused coins with nearly limitless capabilities and lower gas fees.

Cryptocurrencies With The Lowest Gas Fees

Let’s take a look at a selection of cryptocurrencies with the lowest gas fees.

1. Nano (XNO) — Zero fees

What makes Nano so exciting is that it does not charge any transaction fees whatsoever. That’s right, you can transfer any amount you like without having to worry about expensive fees.

As an added plus, testers have found that Nano is capable of completing transactions in under less than a second. And because it makes use of technology known as “Block Lattice”, Nano is highly scalable and can quickly expand without compromising network performance.

The only downside to this currency is that it’s still relatively new to the market and has not yet been extensively tested.

2. Ripple (XRP) — Charges $0.00265 per transaction

Ripple or XRP is a tried and tested payment-focused cryptocurrency in use with financial institutions such as Bank of America , American Express, and Standard Chartered Bank. This token is favored because of its extremely low fees and incredibly fast settlement rates.

All of which should come as no surprise because the token’s framework is specially designed to support financial institutions. While XRP’s parent company is currently battling an SEC lawsuit in court, the cryptocurrency is still standing strong, so this shouldn’t be much of an issue.

3. Litecoin (LTC) — $0.0075 per transaction

Litecoin was specifically developed to correct the issues faced by Bitcoin, namely the lack of scalability and high transaction fees. Because of this, Litecoin’s fees are just $0.0075 per transaction and is capable of completing transactions in under 3 minutes.

This makes Litecoin a great option for those looking for a transactions-focused token. And it’s also widely accepted worldwide as one of the more established crypto assets.

Some Considerations

Keep in mind that cryptocurrencies are highly volatile assets which exist in an entirely unregulated environment. Because of this, token prices can suddenly shift with no warning at all.

So if you intend to participate in the crypto market, I highly recommend that you first understand the risks associated with these assets. And only invest what you’re prepared to lose.

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