Abstract/Description:
What Are Network Fees?
Why does Advanced Mining Mining Wallet charge network fees?
What are miner's fees?
Why do I need to pay transaction fees?
Why do I need to pay transfer fees?
Error Message (if available):
Not available
Root Cause (if applicable):
Every blockchain network requires a network fee paid to the blockchain in order to process any cryptocurrency transfer. Advanced Mining Wallet does not charge any service fee or add-on fee on top of the network fees required to pay the blockchain network.
The cost of fees required depends on:
- number of bitcoin miners online
- network traffic/congestion (relative to the number of online miners)
- size of the transfer (in bytes)
- desired priority/speed
Generally, the more network traffic (number of transfers versus the number of bitcoin miners) and the larger the size of the transfer would correlate with higher fees. Historically speaking, significant increases or decreases in miner's fees had occurred when there is a large change in the number of online miners and/or the number of transactions.
Solution/Answer:
NOTE: For sake of consistency, transfer fee, transaction fee, and blockchain fee will be called network fee for the rest of this article. Miner's fee is a network fee paid to bitcoin miner's in the bitcoin blockchain for verifying bitcoin transactions. Gas fee is a network fee paid to the Ethereum network for transferring ethereum or smart contract tokens enabled by ethereum network.
NOTE-2: At the time of this article (May 10, 2021), Advanced Mining Wallet only supports bitcoin and bitcoin blockchain, so network fees here are Miner's fees.
Please note that Advanced Mining Wallet:
- Does not charge any processing fee for withdrawing cryptocurrency from a member's account
- Does not add on any additional fees for withdrawing cryptocurrency from a member's account
- Does not collect any percentage of network fees
- Does not earn any profit from network fees paid to each blockchain
- All network fees collected are paid to the target network to achieve the target transfer time and priority
NOTE-3: Although Advanced Mining Wallet does not charge any fees for withdrawing crypto, each member is responsible for paying network fees from their account balance for each transfer.
Transferring Bitcoin:
In order to transfer bitcoin through the bitcoin blockchain network (also known as on-chain transfer), the sender must determine the priority of the transfer (and how quickly the transfer should be confirmed by miners) then pay the miner's fee that aligns with that priority. The higher the requested priority the higher the miner's fee (and therefore the faster the transfer gets confirmed).
The miner's fee paid to the miners are in bitcoin (specifically satoshi unit of a bitcoin or 0.00000001 BTC). Because bitcoin price changes over time, we cannot provide the USD value of the miner's fee. You can get the current bitcoin price from your favorite exchange/marketplace and calculate the USD of the miner's fee.
Through survey, Advanced Mining Wallet members require an average target network transfer time of less than one hour.
In order to accomplish this, Advanced Mining Wallet retrieves the "half-hour" miner's fee from four sources:
- earn.com
- blockchain.info
- btc.com
- blockchair.com
The highest of the four sources is used as the miner's fee base. The fee is provided in form of satoshi per byte and a transaction average byte is about 224 bytes. Advanced Mining Wallet collects and updates the fee from these sources every 5 minutes.
Example:
- After aggregating the miner's fee from the 4 sources if the half-hour fee is 102 satoshi per byte, then the transfer fee is: 102 satoshi x 224 bytes = 22,848 satoshis.
- Each bitcoin has 100,000,000 satoshis.
- 22,848 satoshis is 22,848 / 100,000,000 = 0.00022848 bitcoin per transfer for between half-hour and 1 hour transfer.
Actual Fees Calculation Steps:
- Advanced Mining Wallet starts with the transfer size of 224 bytes (as this is the typical average of transferring a minimal $5)
- When a member is doing a transfer, they submit the transfer through Advanced Mining Wallet.
- Advanced Mining Wallet calculates the size of the transfer into bytes
- Advanced Mining Wallet computes network fee using the half-hour miner's fee per byte and multiplies by the actual size
- This updated fee is displayed in the form.
- The member's balance must have sufficient bitcoin to cover both the target transfer amount and the required half-hour miner's fee
Estimated transfer time per fee:
The fee provided by the network sources is an estimate. Although Advanced Mining Wallet collects the "half-hour" fee, this transfer time is not 100% guaranteed. Network fees also change per second. Between when the fee price was collected and when the fee was paid, the network fee may have increased or decreased. This could result in a slower than 30 minutes target or sometimes faster than 30 minutes target.
In order to consistently achieve a target transfer time of less than 1 hour, Advanced Mining Wallet collects the half-hour miner's fee from the member's balance on their behalf and pays the half-hour fee on their behalf.
Related Frequently Asked Questions:
- If the miner's fees paid are half-hour fees, why are my transfers faster than half-hour?
- Half-hour fees are estimated from the blockchain. They are usually 99% accurate, a sudden significant increase or decrease in network traffic can affect the transfer time. Furthermore from the time the fee is collected to the time the fee is paid, the network fee could have increased or decreased. A combination of significant reduction in network traffic and/or decrease of network fee would result in the transfer having higher priority than other transfers in the blockchain, therefore, attracting more miners to validate it more quickly.
- If the miner's fees paid are half-hour fees, why are my transfers slower than half-hour?
- Half-hour fees are estimated from the blockchain. They are usually 99% accurate, a sudden significant increase or decrease in network traffic can affect the transfer time. Furthermore from the time the fee is collected to the time the fee is paid, the network fee could have increased or decreased. A combination of significant increase in network traffic and/or increase of network fee would result in the transfer having a lower priority than other transfers in the blockchain, therefore, taking longer to attract more miners to validate it.
- Can I pay a lower miner's fee?
- At this time only a single standard fee is supported. The majority of our members requested a transfer time of 1-hour or less, therefore the half-hour fee is used as miner's fee cost basis.
- I need my transfer to be less than half-hour and N-minutes. Can I pay a higher fee to achieve this?
- At this time only a single standard fee is supported. The majority of our members requested a transfer time of 1-hour or less, therefore the half-hour fee is used as miner's fee cost basis.
References (if applicable):
None