What are miner fees?
Miner fees are amounts of cryptocurrency given to incentivize miners (and their operators) to confirm transactions. Miners are the special pieces of hardware that confirm and secure transactions on the network. Miner fees pay miners for the service they provide. Miner fees do not go to BitPay. If you are wondering why your recommended fee may have been high, check out our help article “Why is my recommended bitcoin miner fee so high?”
The above is valid for most cryptocurrencies, however, each cryptocurrency and network has their own peculiarities.
What do miner fees do?
Miners confirm and secure transactions by adding blocks to the blockchain. A block is a group of transactions. The blockchain is the shared public record of all transactions. Miners must add transactions to the blockchain so the transaction becomes final. No one is able to reverse a transaction after miners add it to the blockchain. How do bitcoin block confirmations work?
Miners use the miner fees attached to transactions to decide which transactions to confirm first. A sufficient miner fee makes it more likely that your transaction will confirm in a short period of time. If you use a low miner fee (or no fee at all), your transaction may take days or even weeks to confirm. The bitcoin network may even reject your transaction altogether and return the funds to your wallet, other cryptocurrencies may have a different behavior in relation to this point.
It is important to note whatever happens after the transaction has been broadcast, does not depend on BitPay.
How do I send miner fees?
Most true wallets include a miner fee in all outgoing transactions. To make sure your wallet includes a correct miner fee, change your settings to include a dynamically-calculated fee. That will help make sure your transaction arrives on time, even when the network is busy.
Wallets like the Coin Wallet include this setting by default. If you would like to customize your bitcoin miner fee on the Coin Wallet.
Note: some bitcoin exchanges won't send a miner fee when they transfer funds. Instead, they will deduct the miner fee cost from your outbound transaction.
How do miner fees work in the ETH network?
Fees on the ETH network work in a similar way as previously described, however, there are some key differences.
The Ethereum fee is called Gas. Ethereum transactions are instructions executed on the Ethereum network, each instruction has an associated cost in Gas units, and Gas is calculated as follows:
Gas = Gas Limit x Gas Price
The Gas price depends on the network congestion and the Gas amount depends on the number of instructions involved in the transaction.
Gas limit is the maximum number of Gas units you are willing to spend on the transaction broadcast. Gas limit works as follows:
- If you include the exact amount of Gas required (this is hard to know, the BitPay app does the estimation for you), the transaction will go through.
- If the Gas limit included is lower than the required, the transaction will fail and the Gas will be spent. No refund will be given in this case.
- If the Gas limit exceeds the amount required, the remaining Gas units are not spent and go back to your wallet.
When ETH transactions fail either because of a low fee or a contract issue, the transaction is not broadcast but the fees are spent. Again, these fees do not go to Coin, but to the miners.
What about ERC20 tokens (USDC, BUSD, WBTC, etc)?
Every token transaction happens on the Ethereum network and implies one or more contract executions. When you make a payment either with Ether or any Ethereum token the Gas is paid in Ether, so, in order to send tokens out of your wallet you need to have enough Ether to cover the transaction cost, in the Ethereum wallet linked to the token wallet.
How can I save on fees
Some coins normally have higher fees than others, and for coins like Bitcoin and Ethereum, the fees grow with the coin price, so you can expect higher fees as the asset price goes up.
Know how to customize the transaction fees.
On Ethereum and ERC20 tokens, there are not many recommendations other than sending funds when the price is low and avoiding the use of Multisig wallets.
For Bitcoin, there are three we can recommend:
* Use the Lightning Network
* Use a SegWit wallet. New Bitcoin wallets on the BitPay app are by default SegWit wallets.
* Include more than one recipient on the same transaction. In case you have to make more than one payment, you can add all of the recipients and specify the amount for each.
When speaking about moving funds, the options that currently require less miner fees among the coins supported by the Coin Wallet app are:
These coins normally have lower fees than the other supported coins.
Keep in mind you always deal with volatility using any non-stable coin. Stable coins and any Ethereum tokens are often the most expensive way to move funds in terms of fees.