What is the transaction cost? Pay the required price in the process of purchasing and selling products to obtain the required goods. However, many complex procedures include finding, transferring and processing every economic transaction. These additional steps usually lead to "transaction costs", thus increasing the final price. Although it may not be easy to find transaction costs in daily procurement, they will have a significant impact on the economy. So, does cryptocurrency have transaction costs? The following content will answer for you.

1、 What is transaction cost?

Transaction cost is the cost of transferring or confirming the payment transaction. Although the final price has included these costs, they are not part of the market value of the underlying assets. In addition, transaction costs will not flow directly to the seller. When you pay the transaction fee, the money will be transferred to a third party (such as a bank or broker) to help confirm your transaction.

Although transaction costs are usually related to fees paid in legal tender, they may represent more abstract expenditures. For example, time, travel expenses and labor are transaction costs. The professional knowledge or legal authority of a company can also be considered as a transaction cost.

For example, a clothing company needs to consider the extra time to manufacture and deliver products to the store. Although these "costs" may not explicitly include expenses, they will affect the company's total expenditure. The shopkeeper must consider the time and effort spent on researching and comparing manufacturers and transportation suppliers. Transaction costs can motivate individuals to establish the system we use to exchange value. If you can't make money by building these systems, they won't exist.

Most of the transaction costs fall into one of the following three categories:

1. Search and information

Search and information costs are paid for services involved in finding and sharing relevant data with both parties. For example, brokers in exchanges such as the Stock Exchange (NYSE) will provide this service when matching stock buyers and sellers. Real estate agents also charge search and information fees when they study real estate for interested buyers.

2. Bargaining

The buyer buys a product after finding a seller willing to sell. At this stage, the cost of various products can be compared and the preferred price can be negotiated. Third parties, such as stockbrokers or real estate agents, can charge "bargaining transaction costs" to find the best price. Comparing the cost ratios of different mutual funds is an example of bargaining.

3. Supervision

The third aspect of transaction costs involves legal protection and enforcement costs. If either party fails to perform the agreement, the supervision fee can protect both parties. Examples include attorney fees and insurance premiums.

2、 Does cryptocurrency have transaction costs?

Although there is no central bank or government for cryptocurrency, I still need to pay transaction costs to transfer these currencies. Blockchains such as Bitcoin have built-in "network fees" that are paid to Bitcoin miners. Because Bitcoin is a decentralized network, these encryption fees encourage more people to use their computing power to verify Bitcoin transactions. The higher the hash value of Bitcoin blockchain, the stronger the ability to resist hacker attacks.

Many other blockchains, such as Ethereum (ETH), charge a transaction fee called "gasoline fee", which is similar to the network fee of Bitcoin. These natural gas fees are paid to the node operators who confirm the transaction on the Ethereum blockchain. Individuals must also pay transaction fees when using centralized cryptocurrency exchanges (CEXs). Like stock brokerage websites, cex provides a centralized center for buying and selling digital assets. Each CEX has a different fee structure, but most of them charge commissions and withdrawal and deposit fees.

conclusion

Transaction costs can directly affect all aspects of the economy, including consumer habits, business development and investment activities. However, due to innovations in Internet, automation and blockchain technology, transaction costs have declined in many fields. Lower transaction costs may bring new opportunities to the global economy. Although cryptocurrencies are not free, they provide an affordable alternative to centralized payment services for more people.