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Miner Fee Meaning

Sep 28, 2023 | Updated Sep 28, 2023
A miner fee is the fee that a blockchain charges to process and confirm transactions on the network.

What Is Miner Fee?

When you transfer cryptocurrency to other parties, it takes computational power to execute and validate the transaction on the network. To account for this power consumption, each transaction incurs a small fee that goes to the miner who validated the transaction. This transaction cost is known as the miner or mining fee. 

A miner is a contributor to a proof-of-work blockchain responsible for processing transactions, creating new blocks, and including them in the blockchain using specialized hardware. As compensation for their service and computational resources, they are rewarded with miner fees. Miner fees were originally designed to discourage fraudulent activities that may disrupt part of the Bitcoin network’s operations. They also prevent the network from clogging up or overloading as miners compete to process transactions first to receive the fees as part of their reward.

In the Ethereum network, miner fees are known as “gas fees”.

What Characterizes Miner Fees?

In most blockchains, miner fees are constantly fluctuating. The blockchain’s state at the time of a transaction will determine the exact amount a user will pay for their transaction to be processed. Hence, if the network is congested, users will pay higher fees than usual. In addition, the amount varies based on the network due to their distinct ways of calculating miner fees. For instance, transferring tokens like TRON and EOS attracts negligible miner fees.

The amount of miner fees determines the priority of a transaction. A transaction that pays a sufficient amount of miner fees will be confirmed in a shorter period than one that pays less. Transactions with lower or no miner fees may take days to be validated. In some instances, they may be rejected and the funds get credited to the user’s wallet.

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