How Much Are Bitcoin Fees Right Now
Created in 2008, Bitcoin was the first cryptocurrency and is still the most well-known of all the cryptocurrencies in circulation. It’s also the most widely traded cryptocurrency by overall trade volume.
As you would expect with any financial transaction, Bitcoin is subject to fees, which we will look at in this article.
On the other hand, the cryptocurrency ecosystem is not the same as the fiat banking system, and it's crucial to discern the differences. There are many pros and cons to any approach of transfer.
Understanding Bitcoin Fees
The first area of confusion regarding Bitcoin fees is the difference between Bitcoin ATM exchange fees and the typical Bitcoin transaction fees to send Bitcoin (BTC) from one wallet to another. This is known as the Bitcoin mining fee or the Bitcoin network fee.
When you exchange fiat for crypto, you will pay a hefty exchange fee. In contrast, when you send Bitcoin or cryptocurrency from one wallet to another, you will only pay a smaller network fee.
Bitcoin ATM operators charge fees that are fixed in nature. These run anywhere between 5% - 15%. There are very practical reasons for these fees, which we will explore below. They are industry standard and related to Bitcoin ATM operators, and all crypto businesses.
Bitcoin Mining Fees
Bitcoin mining fees have been vastly reduced in recent years mainly due to innovations such as SegWit and inherent design features. There are many moving parts within this equation, but the Bitcoin blockchain has been designed to reduce mining fees over time.
At the time of this writing, it costs about $10 to send $10,000 worth of BTC from an Exodus multi-currency crypto wallet at a ‘normal’ confirmation speed. That’s less than 0.1%, though you get a better ratio for more significant amounts. A $1,000 transaction might still cost you around $5. You can also increase the charge for a quicker transaction. A ‘high‘ confirmation speed costs $20 to send $10,000 of BTC through the Exodus wallet right now.
As a consumer, you might only be concerned with the overall transfer fee instead of the mining fee, which is the more technical specification. It’s also included in the general Bitcoin transfer fee anyway. But we’re going to explain both costs in this article for the sake of clarity. The more you know, the better, especially in the world of investing.
Current Bitcoin ATM Transaction Fees
If you go to a Bitcoin ATM and wish to buy or sell BTC, you will pay anywhere between 5% - 12%. It varies quite a lot depending on your jurisdiction, the total transaction amount, and the company you are dealing with.
The reasons for these fees are that crypto ATM operators have to maintain a dedicated compliance officer, draft a series of internal KYC policies, train internal staff in matters of compliance, and adhere to a series of robust KYC requirements. These are significant regulatory burdens that make it challenging to run a crypto business, and that’s not even going into the standard costs of running a company.
Where possible, use Bitcoin ATMs from reputable and established companies with clearly advertised fees. Some companies might state a low price and then add on the mining fee or even inflate the cost of Bitcoin. A 2% exchange fee with a 5% premium on BTC is a losing proposition by a considerable margin.
Why Are Bitcoin Fees So High?
The cryptocurrency industry is not as well established compared to the traditional banking sector and is underregulated. There is nothing stopping regulators from drafting new laws which put crypto businesses out of business. We saw this in 2018 in Europe with the launch of AML5. European Bitcoin ATM operators were unable to comply with the increasing level of KYC compliance, and there were mass closures.
Increased regulatory burdens have forced Bitcoin ATM operators to increase fees. Otherwise, anybody could offer you cryptocurrency for sale at a lower cost. But it could just as easily be a scam. In other words, the Bitcoin fees make a lot of sense when you understand the broader ecosystem, which has a history of criminal activity that has harmed customers.
Without KYC, there would be even more hacks and scams in the cryptocurrency industry. The regulation is helping to end this, though the cost of increased regulation will consistently be increased fees to keep up to date with paperwork and record-keeping requirements.
What You Will Pay at Bitcoin ATMs
If you went to a Bitcoin ATM to purchase $500 of BTC, you might be charged a 10% fee of $50. You may also pay less than this, with better operators charging a constant rate in the 7% - 8% region. This tends to be the standard practice. This cost is to cover the ATM operator for business expenses. The network fee will typically only be $3 - $6, though this can vary.
There are nearly 30,000 Bitcoin ATMs globally, and most of these are concentrated in the USA.
While you might hear that the Bitcoin ATM fee is needed to attend to the network fee, this is false when talking about BTC, where the network fees have stabilized mainly and are far lower than they used to be. The situation is a little different for coins such as Ethereum, which runs on a completely different ecosystem.
At the same time, it should be kept in mind that network disruptions could occur even within the Bitcoin blockchain. This would push up fees and slow down speeds due to network congestion. Bitcoin ATM operators will need to charge more to offset this potential risk.
What You Will Pay At An Online Exchange
You can purchase Bitcoin directly on most exchanges with a credit card for a fee of about 4%. This is a little more cost-effective than using a Bitcoin ATM, but it does have some drawbacks. The first is that you don’t get the convenience and ease of using the ATM itself. These ATMs are usually located in easily accessible locations and allow you to exchange cash for crypto instantaneously.
Online exchanges require you to get verified, which can take time. They have a history of getting overloaded with customers and being unable to confirm them in time. Many users have reported wait times of longer than four weeks to get a response from certain customer service representatives. However, at Bitcoin ATMs, you can be verified within minutes, saving tons of time.
Exchanges also have a history of getting hacked, and losers have lost their funds, though it is nowhere near as risky as it once was. At the same time, many exchanges have confusing and ineffective KYC procedures in place.
You can trade cryptocurrency for as low as 0.25% on exchanges such as Binance and Kraken, but only for advanced users. It comes with added risks, and you can lose your capital making trades in a market of crypto bots and high-frequency trading.
The Bitcoin Mining Transaction Fee
Bitcoin fees are charged across the network and apply to all transactions. Any time Bitcoins or even fractions of Bitcoins are part of a transaction between two parties; a fee is attached. The purpose of the Bitcoin fee is to generate a form of payment that goes to sustain the network. In other words, the Bitcoin fee is much like a user fee covering the cost of using the network to transfer Bitcoins from one crypto wallet to another.
Bitcoin fees are very different from traditional banking fees. Whereas financial institutions typically set their banking fees related to the value of a transaction, cryptocurrency fee rates are determined in a very different manner. The average Bitcoin fee is what would be called a fee-per-byte basis. So, the larger the transferred file is, the larger the transaction fee. This is why Bitcoin fees are far easier to calculate than banking fees.
The reason it is called a ‘mining’ fee is that people buy costly hardware units known as ‘mining rigs.’ These ASIC miners are used to confirm transactions and ‘mine’ new Bitcoins. It’s highly convoluted, but these guys are responsible for the entire Bitcoin ecosystem.
Bitcoin miners receive a transaction fee for carrying out these operations measured in a small unit of Bitcoin known as a Satoshi. A Satoshi is equal to one hundred millionth Bitcoin, the measurement is named after Bitcoin’s founder Satoshi Nakamoto.
The final amount of a Bitcoin fee is based on the formula of sat/byte or Satoshi per byte. The actual cost fluctuates along with the price of Bitcoins, but for easy figuring, at the current rates, a Bitcoin fee is going to run in the neighborhood of $3 to $6 per transaction. Although that doesn’t sound like much of a fee, the amount does deter the practice of making frequent, small transactions with Bitcoin.
Comparing Bitcoin Fees To Traditional Bank Fees
While there is an initial cost to purchase Bitcoin, you will benefit in the long term from the ease with which you can move the crypto asset around. Bitcoin can also double as an investment (potentially going up) used for regular transactions. You can tie your cryptocurrency to a fiat debit card as a two-in-one. Meaning your investment can rise, but you can make a fiat purchase in the meantime.
You may also want to consider fees associated with traditional banking institutions. An international wire transfer, which takes about two business days to arrive, costs $30. An international Bitcoin payment will cost about $0.30 and arrive at its destination in about 30 minutes. There is no red tape to send Bitcoin across borders, and you don’t need permission.
Are There Advantages To Using Bitcoin ATMs?
There are several advantages to using a Bitcoin ATM for purchasing and selling Bitcoin, even with a slightly larger-than-average fee. They include the following:
#1 - Security
Bitcoin ATMs have come a long way and are now fully compliant with all rules and regulations. AML and KYC regulations have mandated stricter measures for identity verification, and the result is that you can buy or sell Bitcoin without worrying about losing your funds. Bitcoin ATMs provide this functionality, and it is more familiar than using an online exchange. You can also exchange directly for cash which is a nice touch.
Other steps might be required at a Bitcoin ATM. For example, to access your digital wallet, a biometric scanner will check your fingerprints to approve your transaction. The scanner will also verify the QR code issued for the transaction before moving further in the process. Although a user’s personal information is kept private, the user’s identity is verified before completing a transaction.
#2 - Convenience & Ease
People are familiar with using ATMs, it's a short step to build ATMs designed to purchase and sell Bitcoin. Coupled with many innovations concerning the interface and identity verification process, it's easy to use.
You don’t have to worry about potential complexities. When you do it once, you will do it again and with the best technology. It’s also a great way to avoid banks and queues. You can buy crypto at a local ATM with physical cash for added convenience and safety.
Bitcoin ATMs are also located at malls, airports, and locations that are easily accessible or have high traffic. Meaning you can make transactions when in transit or doing regular business.
#3 - Created For Customers
Many banking transactions of almost any sort include a delay or waiting period for the activity to process. Even with online cryptocurrency activity, a customer may have to wait a week or so after contacting a customer service department representative before they can be of any help for your exchange transaction. The only way to reach the service is by filling out a request ticket, submitting it, and waiting for someone to respond. Which, naturally, takes time.
When using a Bitcoin ATM, you can have almost instant access to customer service. If the customer encounters an issue, this rapid response makes using a Bitcoin ATM faster in the long run. This ease of access to customer service drastically reduces the delay in completing transactions. Also, with customer service availability, Bitcoin ATMs are an attractive way for beginners to start working with cryptocurrency.
#4 - Mode Of Operation
There is a big difference between a traditional bank automated teller machine (ATM) and a Bitcoin ATM. The ATM at your local bank permits you to deposit or withdraw physical cash, checks, or money orders.
You can use the money from your bank account to pay bills or make transfers from one account to another, provided they are all linked to the bank debit card you use to access them at the ATM.
A Bitcoin ATM connects you directly to either a cryptocurrency exchange or a Bitcoin wallet, where it can generate blockchain-based transactions. These transactions send the cryptocurrency to the customer’s digital wallet using a QR code.
#5 - Multi-currency Options
Many Bitcoin ATMs offer other cryptocurrencies. The most common cryptocurrencies offered include Bitcoin, Litecoin, Bitcoin Cash, Ripple, and Ethereum. When you go to a traditional ATM, you can only take one specific fiat currency.
This limitation does not apply to Bitcoin ATMs because you are not taking anything out. It is being transferred to another account (unless you sell instead of buying).
This is another advantage of such ATMs. You can buy or sell your cryptocurrency instead of withdrawing it. Such Bitcoin ATMs are known as Two Way ATMs or as bi-directional ATMs.
How Long Does A Bitcoin Transaction Take?
Blockchain traffic determines how long a transaction at a Bitcoin ATM will take. For example, if the Bitcoin network is overloaded, approval for your transaction to either buy or sell cryptocurrency will take longer.
Typically, miners receive one confirmation of your transaction within about ten minutes. Completing the transaction requires three to six miner confirmations, adding to the wait time, which is the responsibility of the network.
It will usually take between 30 - 60 minutes for your BTC to show up in your wallet. The Bitcoin ATM operator does not control the blockchain network, and it's time to verify transactions.
But this applies not only to Bitcoin ATM operators. It will take 30 - 60 minutes on average to send Bitcoin over the network from one wallet to another, though you may adjust the fee on your end to cut down on the total wait time.
Bitcoin fees are a way of life in the cryptocurrency world and are needed for the industry's continued growth. They are much like the fees we pay at a traditional bank, but you get far more benefits when crypto-assets than fiat currency.
Considering the many benefits of digital assets, going to a Bitcoin ATM to purchase or sell cryptocurrency is an attractive alternative to existing cash formats.
The ease of buying Bitcoin through a Bitcoin ATM makes it an attractive alternative that is also easy for beginners to embrace. The added safety and security of the Bitcoin ATM system is another advantage worth considering.
Visit your nearest Crypto Dispensers ATM or retail location here.