“Understanding the fees”
Updated: Aug 24, 2018
Explaining Bitcoin fees isn't very simple, nothing in this encrypted world is, there is lots more to understanding how it works.
Some significant details I did not mention in my previous blog is that a Bitcoin can be broken down just like any other currency known, for example, 1.00 USD can be broken down into different coins that make up the one dollarbill. Therefore the virtual coin can be divided, and you don't necessarily need to buy one entire Bitcoin, so basically you don't have to be rich to buy some you can start buying small amounts.
You can find out very quickly how much Bitcoins you get for a certain amount of money, for example: Tools Bitcoin
Example: A fraction of 1 Bitcoin
One bitcoin that has not been broken down, when it's transferred it will be recorded in the blockchain, and you just have to make one transfer, the tricky part when it comes to fees is that if you're making a transaction and the coins your sending have been broken down before you will have to make a different transaction for each part that your sending (that doesn't sound like fun). This transfer will take longer to mine into the blockchain there for a more expensive fee, because every part that your sending has its own history of transactions even though at the end it will all add up and the other person will receive one whole Bitcoin (everything added up).
Although this cryptocurrency mighthave solved many problems that users may have had with banks. Inventing a decentralized coin and having no third party involved in transactions sounds appealing for everyone who ever had an issue with bank procedures. If this coin wants to gain popularity in the future, I believe there must be a way to lower transaction fees because it's unreal when you are sending small amounts of coins.
These transaction fees are being paid to the miners; they are the ones who process transactions by verifying them and adding them to the public ledger or better known in this encrypted world as the blockchain. To have an idea on how the fees have been increased thought years here is the next chart
This Chart shows the amount of Bitcoin paid in total to all miners in fees, earned in a 24-hour period.
For example, according to the chart in May 10 2011, miners received a total of 8 Bitcoins and the price exchange at that time was 30.40 USD.
On December 25 2017 miners were paid in total 1000 Bitcoins price exchange at 13969420.00 USD.
Hope you enjoyed it, feel free to comment.