why are trading fees so high in a crypto wallet

Why are trading fees so high in a crypto wallet?

The fees in your crypto wallet are high only because of the blockchain fees. As most wallets do not charge a fee. But the blockchains taka a fee. 

When you are trading inside a cryptocurrency wallet you usually only pay 2 fees. The blockchain transaction fee and the DEX (Decentralized Exchange) fee. We rarely actually see the crypto wallet itself charge its users a (high) fee. Only for trading inside the wallet a routing fee is sometimes charged. Which should only be a small fee by itself. 

The real reason that you pay so much for trading inside a crypto wallet is because of the gas fee on a blockchain like Ethereum is super high. These days a lot of people try to use Ethereum at the same time making them bid against each other for their transaction to go through first. This makes the prices of the transaction fee go up. And eventually making trading expensive. 

How to not suffer from high trading fees in wallets?

Well, that’s simple. Just use another blockchain. For now, Ethereum just is expensive and will be till ETH2.0 works at its full potential. In the meantime, we can use other blockchains and sidechains. With BSC and Polygon both making it much cheaper to use Defi (Decentralized  Finance) and NFT collecting. You can easily add one of these chains to Metamask wallet if you want to start using them. 

Which cryptocurrency has the cheapest fees?

Many cryptocurrencies competed with each other for having the cheapest fees. But the clear winner has shown to be the Bitcoin on the lightning network.

Even tho there are many blockchains out there that try to have the lowest fees and make their network available to everyone. They all still charge at least some fees in the same range of often under 1$ cent. This makes us divide blockchains into 2 categories. Those with high fees and those with low ones. The chains that have a high gas cost are often the longer existing chains like Ethereum and Bitcoin (main chain). And the cheaper networks are usually the newer networks like Solana and Avalanche. 

These newer networks have a more upgraded system making them faster. But it does not mean they are always the cheapest. Especially because layer 2’s on the older more expensive networks can have the same effect. With the Bitcoin Lightning network charging fees as low as 0-1 Satoshi. Making it the cheapest possible way. 

do all crypto wallets charge a fee

Do all crypto wallets charge a fee?

No, the majority of all crypto wallets do not charge any fee for using their wallet. But receive their income from using Dapps or other extra features. 

This means that (with the majority of wallets) you can just send and receive as much as you like for free. Only will you have to pay the gas of that specific network. If you use a lot of Ethereum you can expect this to cost you at least 20$+ for each transaction. While if you use Cardano you can expect this to be lower than 1 cent. 

Crypto wallets do usually have their own way of making an earning. But this comes from other charges they have. Or sometimes from the fact that they have done a wallet token offering. Wallets that do so usually also have other products besides their wallet. With products like DEXes and NFT market places to make them profitable. In examples like these the wallet usually just functions as a promotion tool or a backbone to support their Dapp ecosystem. 

Which ETH wallet has the lowest fees?

Wallets like Metamask, Trust Wallet, TokenPocket. All come essentially without fees. So you could call them wallets with the lowest fees.

But the thing is a bit more complicated. Because like we mentioned before almost all the Ethereum wallets do not charge you a transaction fee for using their service. It is only the fees they place over the extra features within their wallet that charge you sometimes. We believe this is a great thing because wallet providers do not make it extra expensive for you to use a blockchain network. Especially in these times that  Ethereum has such high fees. 

How can I avoid high Ethereum fees?

Simply by timing right you can avoid high fees on the Ethereum blockchain. By searching for moments that not a lot of people use the network.

On websites like Etherscan.io you can find the current gas prices for Ethereum. If you want to really transact on the network but can not afford to pay 100$ for on trade on a DEX you could try to time it. If you can find a spot during the day that not so many people are using the network you could get a better gas price. Because the usage of the chain goes up and down during the day fewer people bid up the gas price. Making it possible for you to find a moment with a more affordable price so you can make a trade worthwhile for you.

FAQ

Why are Coinbase wallet fees so high?

Coinbase’s non-custodial wallet does not charge a fee. But the exchange platform’s wallet does charge a standard fee for trades.

Fees on all of Coinbase’s products differ a lot and are not the same for each product. These fees can change over time as well. For the current fees, it is best to check the Coinbase fee page to see what they are at the moment.

Where do Bitcoin fees go?

The fee you pay for using the Bitcoin network is paid out to the Bitcoin miners. AKA the people that confirm the transactions. 

These transaction fees function as an incentive for the miner to validate your transaction. This is important as the miners need to earn some money to fund their operations. They would not run the Bitcoin network if they would not get paid to do so. That is why Bitcoin transaction fees are super important for the miners and support the upholding of the whole Bitcoin network. 

How do I avoid Coinbase wallet fees?

You can avoid fees in the Coinbase wallet by only using the free options or avoiding the user peaks each day.

When we say this we are talking about the Coinbase non-custodial wallet. As the wallet does not charge you fees for normal transactions using the wallet. If you thus want to save on fees you will have to try to save on the blockchain fees. If this is still not good enough for you, you could try a custodial platform (of Coinbase). Here you will not have to pay direct transaction fees. But are also limited with what you can do with your crypto as you do not have direct control over your funds.