What are Blockchain transaction fees?
These are a small amount of cryptocurrency that is required to be paid to the network in order for a transaction to be processed and confirmed. These fees are necessary to prevent spam and ensure that the network is able to process transactions in a timely manner.
One example of how transaction fees are used is on the Bitcoin network. When a user wants to send a transaction, they must include a fee in order for it to be processed by miners. Miners are responsible for verifying transactions and adding them to the blockchain, and they prioritize transactions with higher fees. This ensures that the most valuable transactions are processed first, as those with higher fees are likely to be more important or time-sensitive.
Transaction fees are also important on proof-of-stake (PoS) blockchains, which use a different mechanism for achieving consensus. On a PoS blockchain, validators are responsible for verifying transactions and adding them to the blockchain. These validators are often incentivized with transaction fees, as they receive a portion of the fees as a reward for their work. This provides an income for validators and helps to ensure that they are able to continue providing their services to the network.
Transaction fees are similar to the fees that we pay banks or payment processors like PayPal for their services. When we make a payment through a bank or online payment processor, we are usually charged a small fee for the service. This fee goes to the bank or payment processor as a way to compensate them for their work in processing the transaction. Similarly, transaction fees on a blockchain go to the network or the validators as a way to compensate them for their work in verifying and adding transactions to the blockchain.
This is why we pre-populate every new Angel Protocol account with a small amount of JUNO – to pay transaction fees, and we provide enough for a couple of hundred transactions.
Does Angel Protocol benefit from blockchain transaction fees?
Angel Protocol does not charge transaction fees itself. The only fees are those charged by the network to process the transaction. However, Angel Protocol does act as a ‘validator’ on a number of Proof of Stake networks, and this provides an income each month that goes straight to support charities on the Angel Protocol marketplace – both existing and new charities – and help Angel Protocol continue its work.
You can find out more about how much we get and how those funds are distributed on the main website. Take a look here for an example.
To sum up.
Transaction fees are a necessary part of any blockchain network, as they help to prevent spam and ensure that the network is able to process transactions in a timely manner. They also provide an income for validators on PoS blockchains and are similar to the fees that we pay banks and payment processors for their services.
Without transaction fees, it would be difficult to maintain the security and integrity of the network, as there would be no incentive for miners or validators to continue providing their services.