Bitcoin itself is active whenever everyone is trying to make transactions at the same moment and this just creates a traffic in the chain, and miners are those who do the work of processing and verifying transactions and they tend to give preference to the ones with a higher fee. It is like paying someone to go for another meal and join the head of the line. Other popular cryptos also suffer from such congestion, including Ethereum or when there is an influx of transactions given the nature of an ICO or to date’s trending NFTs.
The nature of transactions where the transactions involve multiple complex instructions or procedures. Basic processes such as sending from one wallet to another wallet only a few bitcoins require little effort and cost less money. Some examples can be smart contracts these are digital contracts with minimally human intervention throughout their existence and fulfillment, which contain the actual code of the agreement terms. They depend on more computational power and therefore are associated with higher costs. Ethereum is associated with such smart contracts, and thus it is sometimes possible for Ethereum fees to go through the roof. But there is a problem of determining the right block size and block time.
Currently, Bitcoin for instance has a block size limit of 1MB, and it is computationally feasible to include a limited number of transactions in a block, and it takes about 10 minutes to mine one. Similarly, for exigent transaction, some people are ready to pay additional fee to ensure that their transactions are confirmed in the next block. In their turn, Litecoin possesses larger block sizes and has block times that are shorter on average hence, its fees are generally lower. The underlying driver is also worth considering. Current cryptocurrencies such as the bitcoins and ether utilize the Proof of Work (PoW) mechanism for validation of transactions, a process that is costly and power hungry. While, there are other newer cryptocurrencies that are still in the market and adopted Proof Stake (PoS) this model is cheaper and consumes less energy.
The nature of transactions where the transactions involve multiple complex instructions or procedures. Basic processes such as sending from one wallet to another wallet only a few bitcoins require little effort and cost less money. Some examples can be smart contracts these are digital contracts with minimally human intervention throughout their existence and fulfillment, which contain the actual code of the agreement terms. They depend on more computational power and therefore are associated with higher costs. Ethereum is associated with such smart contracts, and thus it is sometimes possible for Ethereum fees to go through the roof. But there is a problem of determining the right block size and block time.
Currently, Bitcoin for instance has a block size limit of 1MB, and it is computationally feasible to include a limited number of transactions in a block, and it takes about 10 minutes to mine one. Similarly, for exigent transaction, some people are ready to pay additional fee to ensure that their transactions are confirmed in the next block. In their turn, Litecoin possesses larger block sizes and has block times that are shorter on average hence, its fees are generally lower. The underlying driver is also worth considering. Current cryptocurrencies such as the bitcoins and ether utilize the Proof of Work (PoW) mechanism for validation of transactions, a process that is costly and power hungry. While, there are other newer cryptocurrencies that are still in the market and adopted Proof Stake (PoS) this model is cheaper and consumes less energy.
