Bitcoin is a decentralized electronic currency based on blockchain technology with a market capitalization of more than a trillion dollars. No central government or central bank is in charge of creating new money or changing its value, and currency can be transacted without using an intermediary such as a bank or payment processor.
Even though Bitcoin, or BTC, is the most widely used cryptocurrency worldwide, many businesses are reluctant to accept it from their clients due to one expensive factor: high Bitcoin transaction costs. These excessive costs vary frequently and have in the past peaked at much over $25.
How can you give your consumers the most payment options while avoiding exorbitant Bitcoin transaction fees? It turns out there are several strategies for minimizing expenses while still accepting cryptocurrency tokens like Bitcoin. Let’s go over each method in more depth.
1. Select the Appropriate Exchange
The best cryptocurrency exchange can help you save money on costs, just like the best payment gateway or platform can. In exchange for handling any particular crypto token fees you may encounter, some exchanges charge modest costs while others charge large fees.
This might be advantageous depending on which crypto tokens you utilize the most frequently. You can save money by utilizing the same cryptocurrency exchange, for instance, if you choose one with a high monthly charge but only by using Bitcoin.
Trading Bitcoin involves a lot of research and knowledge. Visit https://www.chesworkshop.org/decentralized-finance/ to learn about DeFi.
2. Utilize A Wallet That Has Regular Fees
A crypto wallet, the software or hardware that enables you to store, send, and receive bitcoin, is where transactions take place. Many well-known, mainstream exchanges have wallets and can determine and pass along the charges of Bitcoin transactions.
You can choose your fee in various wallets, but doing so frequently means that a transaction you wish to make might not be prioritized or even go through immediately. While it might not matter to you if you only conduct a few or even one transaction, making this choice could be advantageous if you want to reduce the cost of your Bitcoin transaction.
3. Choose the Proper Payment Gateway/POS Platform
Especially if you are a business owner, select the best cryptocurrency payment gateway or POS platform. Different fees will be assessed for the services provided by specific cryptocurrency payment processors and gateways.
For instance, some gateway providers only charge transactional fees rather than also charging for the cost of the tokens you accept/use. Instead of the real transaction costs for tokens like Bitcoin, they are dependent on the percentage of your whole business sales. In this regard, using a POS platform or payment gateway that has a large monthly fee could be less expensive if they don’t also charge a fee for each Bitcoin transaction.
4. Multiple Transactions in One Batch
The amount of transactions you send into the restricted space available on the Bitcoin network is called batching. It is both economical and space-efficient to combine several payments into a single procedure.
By consolidating numerous transactions into one, batching allows you to lower your per-transaction fee. This is a popular strategy among businesses that have a large number of Bitcoin transactions each day or week and are ready to sacrifice immediate gratification for efficiency. Following this approach benefits you; however, it keeps transactions fee low for everybody.
5. Wait For The Blockchain To Be Less Congested
The Bitcoin network, like an expressway, becomes congested during rush hour. You can expect to pay greater transaction fees when the network is processing the highest transaction volumes. You can avoid this by delaying your charges submission. This is the course that many merchants take, and it generally pays off.
At the end of the week, when firms are shut and fewer transactions are presented, the blockchain is less clogged. To hold on until the end of the week, and it’s Monday or Tuesday, you can present your transactions soon after. When the blockchain has more freedom space, this occurs. The more you’re willing to stand by, the less traffic you’ll confront – and the lower your transaction fee will be.
6. Enter Custom Fees
With the use of the custom transaction fee feature offered by the Bitcoin network, you can encourage the network’s miners to give priority to your transactions. Of course, you can also choose to input a unique, minimal cost for your transaction.
As a result, you will save money, but remember that miners will probably process your transaction last on their queue. The opposite is accurate if you charge miners a hefty transaction fee. Your orders are marked on the Bitcoin mining network as having a high priority when there are large custom fees. Particularly during a rush hour or traffic jam when numerous transactions need to be verified, it may be a good idea to look at the fee market to understand what a “cheap” or costly fee would be.
7. Think About Allowing Lightning Transactions
A new network called the Lightning Network is built on top of the main Bitcoin network. It is unproven but has the potential to be fantastic. In other words, this might enable the network to handle more transactions overall, easing the bottleneck that drives up Bitcoin transaction costs.
For instance, a typical Bitcoin transaction can have a $25 fee. The same transaction might only cost a few hundredths of a penny on the Lightning Network. You must check to verify if Lightning transactions are supported by your wallet, unfortunately. You might need a new wallet if you wish to utilize this new network. Due to the Lightning Network’s ongoing development and implementation, not all parties accept transactions from it.
Investors are prone to focusing primarily on returns when developing a financial strategy. However, keeping track of how much you pay for investments is just as vital, if not more so. Fees can eat into your portfolio significantly, especially over time.
There is no exception to this rule when it comes to cryptocurrency. Even without the involvement of a third party like a brokerage business, there is a cost to trading cryptocurrency. To support their function, online networks must be managed, trades must be logged, and crypto exchanges must generate money.