Understand Ethereum transaction rates: Is it a normal 20%?
As the second largest cryptocurrency for market capitalization after Bitcoin, Ethereum has become a popular option for people who seek to make microtransactions and deal with suppliers. However, a question that has baffled many users is why the average transaction rate in Ethereum is around 20%. In this article, we will deepen the reasons behind these rates and explore what is considered normal.
What are transaction rates?
Transaction rates are a small amount of cryptocurrency charged by the network for processing transactions. They serve as an incentive for developers to build and maintain the Ethereum network, allowing the execution of intelligent contracts and decentralized applications (DAPPS). The rate is generally paid in ether (ETH), the native cryptocurrency of the Ethereum network.
Why are transaction rates high?
The main reasons why the transaction rates in Ethereum are high are:
- Network congestion : With more than 200,000 active accounts, the Ethereum Network can be congested, which leads to an increase in processing times and higher rates.
- Complexity of the smart contract : The growing adoption of complex intelligent contracts has led to an increase in the demand for Ethereum computational resources, resulting in higher rates.
- Gas prices : Gas is the measurement unit for transaction costs in the Ethereum Network. As gas prices continue to increase, so they do transaction rates.
Is 20% a normal rate?
In the competitive cryptocurrency market today, 20% may seem relatively high compared to other platforms. However, it is essential to consider the following factors:
- Transaction volume : If you are making frequent transactions, your rates can be higher due to the greater congestion of the network and the demand for computational resources.
- Network capacity : The Ethereum network has a limited capacity, which can lead to higher rates when the network is completely used.
- Market competition : Other platforms, such as Binance Smart Chain (BSC) or polygon, offer lower transaction rates compared to Ethereum.
That said, 20% is considered relatively high by many users. For comparison:
- In Bitcoin Cash (BCH), a popular Altcoin, the average transaction rate is about 1-2 cents.
- In Cardano (ADA), another blockchain platform, the average transaction rate is significantly lower, with around 0.01-0.05 ETH.
Conclusion
While 20% may seem relatively high in Ethereum, it is essential to consider the capacity and competition of the network market by deciding whether this rate is reasonable for their needs. As the panorama of cryptocurrencies continues to evolve, we can expect rates to decrease as the network is used more.
For now, if you are a frequent micro-transactor or use Ethereum Dapps regularly, it is still worth paying 20%. However, if it is a light user with rare transactions, you can find 1-2 cents per more reasonable transaction. Ultimately, it is crucial to weigh the costs and benefits of the use of Ethereum before reaching conclusions.
References:
- COINDESK.com: “Ethereum’s transaction rates shoot as the rates exceed $ 5,000 in some areas”
- Cointelegraph.com: “Why is the Ethereum transaction rate reaching high records?”
- Ethereum.org: “Understand Ethereum’s transaction rates”
