In our previous post, we discussed what blockchain fees are and their types. Indeed, blockchain networks operate in a zero-trust environment and each new block added to the blockchain is seen for everyone around the network. That’s why the block cannot be just added automatically, every transaction is verified by miners operating blockchain nodes (computing units that build the blockchain network). Miners add users’ transactions to the block. Network fees are the way users pay miners for their services.
Other than network fees, there are platform or trading fees. These payments are similar to traditional banking fees when bank customers are charged extra if they send money or exchange currencies. There are different types of trading fees and they vary from platform to platform. The present post aims to explain how to minimize fees and don’t overpay while making blockchain transactions.
How to reduce cryptocurrency fees?
1. Look into the exchange fee structure
If users have to go to exchanges like Bitstamp, Coinbase, Kraken, Binance, etc, they should better peek into the customer support section on the website and check the fee structure. Not all exchanges speak loudly about their withdrawal fees. Sometimes the exchange looks great until you try to move your digital assets somewhere else.
To make sure that exchange withdrawal fees are acceptable, try to buy and withdraw a small sum of crypto first. This will help you find out where the hidden fees are and whether you should proceed with that exchange or not.
2. Use MPC crypto wallet for cryptocurrency transactions
Multi-party computation (MPC) technology helps to minimize the communication between the wallet and the blockchain by hosting transaction signing processes off-chain. To compare, a multisig wallet or a smart contract wallet involves a lot of communication with the blockchain when each stage of transaction signing requires network fees.
3. Find and use exchanges with trading fee discounts
Trading fee discounts are like loyalty points. Every transaction comes with additional points which could be used later as a payment for a transaction.
4. Go for crypto-to-crypto transactions
If we compare crypto-to-crypto transactions and crypto-to-fiat transactions, the first type is cheaper. Also, users may protect themselves against crypto volatility by swapping their crypto with stablecoins. Stablecoin is a cryptocurrency whose price is connected to the US dollar.
5. Make transactions when network load is low
It’s a well-known fact that the busier the network is, the higher the fees are. There are some websites that help users to estimate Ethereum or Bitcoin fees but the major rule is quite simple. The lowest transactions are on early mornings on working days as well as throughout Saturdays and Sundays.
6. Try not to rush to make a transaction
Usually, users of crypto wallets can define the transaction fee to some extent. If they want a transaction to be written in the block as soon as possible, the network fee will grow. If they have time to wait, then the fee will be optimal. If they are eager to wait for a long time and provide a very small fee, then there could be a situation when the transaction gets stuck for days or even gets canceled.
To sum up
The fees you have to pay in web3 cannot be eliminated but they can be treated cautiously. Network fees could be minimized if you operate MPC-powered crypto wallets, such as Spatium Wallet. If you would like to escape centralized exchange fees, you also should look in the direction of Spatium Feeless Wallet which will soon perform peer-to-peer swaps and provide crypto exchange functionality. Spatium is a self-custodial solution where only users can get access to their digital assets.
Get the Spatium Wallet App and enjoy how user-friendly and convenient it is. Protect your crypto assets with MPC cryptography and save on fees while sending transactions to blockchains. Moreover, soon Spatium will enable peer-to-peer crypto swaps when you don’t need to go to centralized exchanges to swap cryptocurrencies. Stay tuned!
Spatium Bitcoin MPC wallet is easy to use and free to download. It’s available on Android and iOS devices.
Try Spatium Feeless Bitcoin Wallet and the feature allowing you to pay a network fee in the currency you send instead of native chain tokens (currently available for USDC on Ethereum. More chains and tokens will be added soon).
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Keep a close eye on Spatium Feeless Bitcoin wallet which is building DeFi on Bitcoin and actively working toward the introduction of feeless crypto transactions and cheapest ever peer-to-peer crypto swaps without escrow.
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