Transaction fees can make the difference between using one cryptocurrency or looking elsewhere. In the current landscape, Bitcoin seemingly has the highest median fee. As far as alternatives are concerned, competition is rather fierce.
Bitcoin’s Median Fee Remains High
It is a well-known secret that some people find Bitcoin too expensive to use. The core layer of this protocol only allows for a handful of transactions to be processed per second. Additionally, one needs to wait at least 60 minutes until transactions are fully confirmed. This has created a bottleneck of sorts, but one that can be solved.
The Lightning Network, for example, removes nearly all of these constraints. It is a more efficient way of transacting in Bitcoin, for both small and large amounts. Until it is used more commonly, Bitcoin’s median fee will remain fairly high. Using the LN has some specific requirements, however, and it appears ill-suited for mainstream use at this time.
At the time of writing, the median fee in US Dollars is $2.33. That may seem little when transferring thousands of dollars on the network. However, this median fee also applies to any other transaction, both big or small. The crowd conducting smaller transactions are the ones who complain about higher transaction fees.
One also has to keep in mind the median fee will rise and fall over time. In late 2017, a Bitcoin transaction would cost up to $30 to complete. As such, paying $2.33 is not all that steep in comparison. However, in early 2019, the median fee was just $0.025. Returning to those levels seems very difficult at this point.
Finding Cheaper Alternatives
One can argue there are many other cryptocurrencies with a lower median fee. That is true, for most of the time. Ethereum recently saw a higher median fee than Bitcoin. That situation has resolved itself, resulting in a current fee of $0.67. Far more manageable, but there is still room for improvement.
Looking beyond Ethereum, the median fees tend to drop off very quickly. Cardano, Litecoin, Dogecoin, and Decred are all viable options to explore. However, when dealing with larger amounts of money, it may prove difficult to source liquidity. Particularly when converting crypto to fiat, these assets may prove a tad more difficult to use.
Further down the list, there are XRP and XLM. Neither of these assets is a traditional cryptocurrency by definition or user experience. However, they are among the cheapest networks to use for transferring value today. XRP’s median fee is lower than XLM, even though the latter option costs $0.00001 per transaction.
All of this shows there are different ways for cryptocurrencies to gain traction. Providing an alternative to high network fees is one way to make a big impact. Doing so doesn’t always lead to broader adoption for said currency, though.
Luke has had a long interest in financial technology, especially cryptocurrency and blockchain. With a Bachelors degree in Journalism and Media, Luke is dedicating his writing skills for the digital currency sphere.He can be contacted at email@example.com