As we saw in Step 15, the person who intends to send a cryptocurrency from their wallet to another person’s wallet must pay a cost known as the network transfer fee. A fee must also be paid when transferring cryptocurrency between a wallet and an exchange wallet. But what exactly is this fee, and where does it go?

Network fee or transaction fee in cryptocurrency transfers
Whenever we perform a transaction on the blockchain of a cryptocurrency, we must pay a fee. This cost is paid for the computational work required to validate and record the transaction on the blockchain, and it goes to the miners. In fact, the total amount of fees being paid worldwide at any given moment by senders of a cryptocurrency is distributed among the miners of that cryptocurrency—those who provide their computing power to validate and record transactions.

For example, at the time of writing this step, the transfer fee on the BNB Beacon Chain blockchain is equal to 0.000075 Binance Coin, or 0.000075 BNB. At the same time, the price of BNB is approximately 245 USD. Therefore, the network fee in dollars is calculated as follows:

0.000075 × 245 = 0.018375

This is roughly 0.02 USD, or 2 cents. By comparison, a simple bank card-to-card transfer may cost more than that. As mentioned in Step 3, blockchain is a revolutionary technology and a major threat to traditional banking.

Another example: at the time of writing, the Bitcoin network transfer fee is approximately 0.0001 BTC. With the price of Bitcoin around 16,800 USD, the network fee is calculated as:

0.0001 × 16,800 = 1.68

That is roughly 1.7 USD. Yes, Bitcoin network fees are significantly higher than BNB network fees. This is why in Step 15 we used BNB for the wallet-to-wallet transfer exercise—to avoid imposing a high network fee on your friend.

Network fees change constantly and are not fixed

When a large number of transaction confirmation requests flow toward miners and accumulate in the confirmation queue, demand increases. At that point:

  • The network fee rises.
  • Miners prioritize transactions that pay higher fees.

An important point is that miners themselves cannot arbitrarily increase fees. Fee adjustments based on network congestion were programmed into the blockchain software from the very beginning.

In the crypto world, there is no centrally imposed price control.

In many wallets, the sender can voluntarily set a higher network fee to encourage miners to prioritize their transaction. This is usually done when speed is critical or when the sender realizes that network traffic is unusually high. In all cases, it is the sender who pays the transfer fee.

If you want to send Bitcoin, you must have some BTC in your wallet to pay the fee. If you want to send Binance Coin, you must have some BNB available to cover the fee.

If you are interested in learning more about Bitcoin network fees and transaction congestion, you can explore the mempool using the following resources:

https://blockchair.com/bitcoin
https://www.blockchain.com/explorer/assets/btc

So far, we have learned what a network fee is and that it is paid to miners—not to wallet providers.

Cryptocurrency transfer networks
Every blockchain transaction is validated and distributed across a network of interconnected computers. The Bitcoin blockchain is maintained by Bitcoin miners. As shown earlier, transaction fees on the Bitcoin blockchain are inherently higher than on blockchains such as Binance.

In 2017, a group of developers introduced an innovative solution called the Lightning Network to reduce fees and increase transaction speed. Lightning enables fast, low-cost microtransactions for cryptocurrencies such as Bitcoin and Litecoin. Wallets must explicitly support Lightning in order to use it.

Networks like Lightning that are built on top of a base blockchain to improve scalability are called Layer 2 (L2) networks. They are not blockchains on their own but operate as secondary layers connected to the main blockchain. Lightning is therefore a Layer 2 solution for Bitcoin.

Polygon (Matic) is also a Layer 2 solution, but for Ethereum. Polygon has its own native token, MATIC. Understanding Ethereum’s scalability challenges and how Polygon addresses them is a valuable learning exercise.

On the Binance blockchain, BNB uses a network called BEP2, which offers fast transfers and very low fees. Currently, BNB wallet addresses on the BEP2 network begin with “bnb1,” as shown in Step 15.

Binance has also developed another blockchain that supports smart contracts, similar to Ethereum. This blockchain is called Binance Smart Chain (BSC), and its transfer network is known as BEP20. Transfers on BEP20 are fast and typically more expensive than BEP2, but still cheaper than Bitcoin and Ethereum. BNB addresses on BEP20 usually begin with “0x,” such as:

0x7ae246255386cd1b50a4550696d957cb4907d8c2

Other common blockchain networks include:

  • Ethereum: ERC20
  • Tron: TRC20
  • Solana: SPL
  • Avalanche: C-Chain
  • EOS: EOS
  • KuCoin Chain: KCC

Important notes about transfer networks

You cannot send a BNB token stored on the BEP2 network to a wallet address on a different network such as BEP20 or ERC20. If the networks do not match, the funds will be permanently lost. While many wallets now prevent such mistakes, you must always remain vigilant.

Network fees are paid using the native coin of the host blockchain

For example, Uniswap (UNI) is a token built on the Ethereum blockchain. If you want to transfer UNI using the ERC20 network, the network fee must be paid in ETH—not UNI.

Similarly, if you hold ATLAS tokens on the Solana blockchain, you must have SOL in your wallet to pay transaction fees. Solana fees are extremely low—often less than 0.0001 SOL—meaning that even 1 SOL can cover thousands of transactions.

In summary, you must always hold a small amount of the native coin of any blockchain you intend to use for transfers or swaps.

In some blockchains such as Ethereum, network fees are also referred to as gas fees.

A question for you
Assume you have 10 ETH on the ERC20 network and want to send the maximum possible amount to a friend, without adding more ETH to your wallet. How much ETH can you send, and why? What about sending Bitcoin?

Please send me your answer.

Tokens on multiple blockchains
Every cryptocurrency is either a coin or a token. Coins are native to their blockchains, such as BTC on Bitcoin and ETH on Ethereum. Tokens, however, are created on existing blockchains.

Projects often make their tokens available on multiple blockchains to reduce fees and attract users from different ecosystems. This is done using smart contracts that lock tokens on one blockchain and represent them on another.

For example, Wrapped Bitcoin (WBTC) is a token created on Ethereum that represents Bitcoin. Its transfer network on Ethereum is ERC20.

You can verify which blockchains support a given token by checking its page on CoinMarketCap under the “Contracts” section.

The availability of tokens on multiple blockchains gives users flexibility to choose lower-cost networks for transfers, holding (HODL), and swaps.

However, be cautious with wormhole-style tokens and cross-chain bridges. Research them carefully, and feel free to ask questions if anything is unclear.

Worth Noting

Network fees are a key factor in real-world crypto usability. High fees push innovation toward Layer 2 solutions, alternative blockchains, and cross-chain ecosystems. Understanding fee mechanics is critical for cost optimization, especially for active traders and DeFi users.

How AI Helps

AI-driven analytics tools help users estimate optimal transaction fees, detect network congestion, and choose the most cost-efficient blockchain and network. Advanced AI models are also used in blockchain monitoring to predict congestion spikes and reduce failed or delayed transactions.

FAQ

What is a network fee in cryptocurrency?

A network fee is the cost paid to miners or validators to process and confirm a transaction on a blockchain.

Who pays the network fee?

The sender of the transaction always pays the network fee.

Why do Bitcoin fees cost more than BNB fees?

Bitcoin has limited throughput and higher congestion, leading to higher transaction fees.

What happens if I choose the wrong network?

If the network does not match the destination address, funds may be permanently lost.

Why do I need ETH to send ERC20 tokens?

Because ETH is the native coin of Ethereum and is required to pay network (gas) fees.

What are Layer 2 networks?

Layer 2 networks are scalability solutions built on top of blockchains to reduce fees and increase transaction speed.