Understanding the transaction fee
When trading cryptocurrency, you must pay a transaction fee when sending transaction details. In particular, in the case of Ethereum, there are cases where the gas fee exceeds $100. Why is the transaction fee so expensive? Or, you may have had a frustrating experience because it took a long time for the transfer to be completed because the transaction details were not confirmed. In this article, we will look at transaction fees to understand the situation.
A fee is a reward paid to a person who does a job. For the decentralized blockchain network to be secure, a reward system is required for the participants to continue maintaining the network. If the coins that maintained the network is no longer issued or if there are too many transactions, how would the network be reasonably maintained?
Let's say you are a miner. Miners provide work and are rewarded with issued coins. However, as the coin system entered a stable period, it becomes no longer possible to receive coins as a reward through mining. Miners no longer have to work, and the blockchain is no longer secure. To avoid this situation, the fees used in the transaction serve as the compensation to miners.
Or what if more transactions occur when the number of transactions that can be processed on the network is limited? Assuming that the network can process about 100 transactions per second, if 10,000 transactions occurred, what criteria would be desirable to select 100 transactions? Since it is most reasonable for miners to preferentially select transactions with high fees, transactions with low fees will not be processed and will be pushed to a lower priority.
Therefore, users are in a situation where they have to pay a high fee if they want the transaction to complete quickly, and the fee increases as the transaction history increases. As such, the fee is paid as a reward to miners, and at the same time acts as a mechanism to induce competition among users who want their transactions processed faster than others.
Even so, why is the transaction history not being processed quickly and taking a long time? As explained above, if the fee is too low, it may not be processed. Among the numerous transactions waiting to be stored on the blockchain, if the priority of a transaction has dropped so low, there is no reason for miners to process it. In this case, you need to rewrite the transaction and increase the fee before making the transaction, but there are cases where the transaction is not processed and hangs on the network indefinitely.
As blockchain technology advances, transaction speeds are getting faster and fees are getting cheaper. Attempts have been made to expand the transaction capacity of the network and various solutions have been proposed to enable transactions with low fees.
However, the low fee of mainnet is a problem that needs to be approached with caution, as it may result in less motivation for participants and weakening of network security. These problems are collectively called scalability problems, and it would be interesting to see which projects will solve them in the future.