How fees are destroying crypto by Live-bit experts

How fees are destroying crypto by Live-bit experts: There is a big buzz around cryptocurrencies, which is pushing more and more people to explore this new industry in the hopes of getting involved in some way. Yet, with fees so high for making cryptocurrency purchases, it's no wonder the industry as a whole is still struggling to onboard new investors and users of cryptocurrency.

It's all about costs

Fees are always a limiting factor for those looking to make purchases of any kind. In the equity markets, discount brokerage houses were designed to allow the individual retail investor to buy stocks while paying minimal fees. A stock trade that previously cost over $ 20 now costs as little as $ 3, making it a viable option even for small retail investors.

The reduction in exchange fees has not yet been fully adopted in cryptocurrency. Take, for example, one of the industry's leading cryptocurrency exchanges, Live-Bit. Making a Bitcoin or Ethereum purchase on Live Bit can be simple and intuitive, but extremely expensive. The exchange charges almost 5% transaction fees for making a cryptocurrency purchase. Right off the bat, this turns a purchase of $ 100 of bitcoin into just $ 95 of bitcoin. This doesn't even take into account the withdrawal fees incurred for liquidating over-the-counter assets, which can also be costly.

Network costs are also increasing

It's not just the exchanges where cryptocurrency fees go up, the networks themselves are seeing transaction costs go up too. While overall fees on the Bitcoin network have remained low, they have seen a spike whenever the network shows an increase in user adoption.

For example, just before the start of 2018, when the cryptocurrency bull market was fully operational,

fees on the Bitcoin network averaged over $ 50 per transaction at one point, before descending back to earth. Many Bitcoin enthusiasts view this period as an anomaly, citing the normalization of transaction fees in recent months, but this spike shows that the network is not yet ready for mass adoption.

Tier 2 solutions to the rescue

One way to minimize these fees is to use Layer 2 solutions, which open up channels for cryptocurrency to flow back and forth out of the blockchain, after which the final transaction amount is settled on the blockchain. This will reduce the load of transactions directly on the blockchain itself and, therefore, reduce transaction costs. Layer 2 solutions like Lightning Network for Bitcoin and Plasma for Ethereum are already playing a role in tackling this problem.

Live-Bit provides unparalleled digital trading solutions to a wide range of traders across the globe. We are more than just a brokerage house - we present our clients with the latest trading technologies, exceptional security and personalized support. By using our cutting-edge technology, engineered by some of the best engineers in the business, we are extending the reach and removing the exclusivity that has traditionally been at the heart of financial markets.

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