While cryptocurrency has already made people into billionaires, only about 8% of Americans are invested in it. One of the things that keeps savvy-but-busy investors out of the market is the cryptocurrency exchange fees. They work on a different model than you'll find on Wall Street, all by virtue of the medium itself.

Here is everything you need to know about fees when getting into crypto.

Exchange Fees Can Bite You

If you're looking to buy any amount of a cryptocurrency, you need to find a place or an owner to buy it from. When you're trying to find someone to buy it from, you need someone to facilitate it for you.

Markets are facilitated by exchanges. Exchanges are where most people get their first bit of cryptocurrency. This point of entry helps people who aren't doing the mining make investments.

When you want to trade fiat currency to crypto, the many online exchanges are the place to do it. If you already have crypto and want to sell it or trade for other crypto, exchanges can assure you a safe and simple transaction. Bitcoin Trading Fees Costs

However, they don't do all of this work for free without the hope of making any money. Every transaction will cost you money and so you need to be aware of the costs before you begin. Transactions fees have made some exchanges worth far more than the currency being traded on them.

Since every exchange will use a different transaction model, you need to take the time to learn about them. A little bit of research can go a long way in ensuring that you're taking on fees that you can afford, rather than losing money on every trade.

Try out the Binance Trading Bot if you want to let someone else do the work for you.

See If Fixed Fees Work For You

Fixed fee trading can be a good idea if you're not trading very often. Fixed fee trading is reliable, dependable, and easy to calculate before you make any major trading decisions.

Exchanges like Bittrex offers low exchange fees while using their system. Every time you make a trade, they'll take a cut of 0.25%. This set number is applied to everyone.

Whether you're buying or selling, this fixed rate will apply to you. If you end up buying 2 BTC, you're going to pay 0.0050 BTC as a fee. This makes it all the more important that you pay attention to where the market is when you buy, sell, or trade.

Bittrex offers an added benefit as they don't charge you for deposits and withdrawals, meaning that once you buy in, you can withdraw your money for free.

Binance is another marketplace with a fixed trade fee lower than Bittrex. With Binance, it's only 0.1%. They offer free deposits, which could be a major benefit depending on where you are in your investment cycle.

If you need to withdraw from Binance, you're going to get charge for that. Each fee will depend on which type of crypto you're withdrawing.

However, you can find ways to lower the cost of your trade fees. If you use their currency, BNB, while you're trading, you'll only pay half of the regular trade fees.

Get to Know Maker-Taker

There are other exchanges that use a different type of fee schedule, not necessarily familiar to people new to crypto. If you've never used Kraken or Bitfiinex as your marketplace solutions, you might not have experienced this yet.

In a maker-taker model, the maker is considered the person trying to sell crypto to buyers on the market. The taker is then the party with money or currency trying to buy that currency. In this model, both parties end up splitting the trading fee.

The maker, who is the seller, usually ends up in a better position with this kind of transaction.

If you have high volumes of trades, meaning you're spending a lot of time buying and selling on these markets, they will lower the fees you pay. This helps to get more traders to invest more of their time and money into the exchanges. When an exchange becomes the preferred medium for a high-volume trader, exchanges rejoice at the money they can make.

Don't get too excited if you're a total novice. Often you need to reach a trading volume of around $100,000 per month if you want to see any kind of significant discount.

Lookout For Network Fees

Beyond the costs of doing business on exchanges, you'll also face the challenge of paying network fees. These fees are what it costs for you to engage in cryptocurrencies in general. These fees go directly back to the people who are doing the mining of crypto.

Blockchains require all transactions to occur on the on the blockchain, verified and recorded by the network. The miners of this blockchain take care of that work, but they expect to be paid. When deposits and withdrawals are free of charge, expect to pay network fees to repay the people doing the coding.

Every blockchain has its own system for calculating transaction fees. If you buy crypto from an exchange, you'll enter your key in order to withdraw it into your wallet. Once you've withdrawn, you've created a line of code defining you as the owner.

This code gets sent back to the network of that currency. While your transaction won't be recorded by hand by a single individual, it's going to be bundled with others, creating a block of data. Once that block has been filled, a miner will then verify it.

The reward for doing this work of bundling and verifying transactions is then paid out to miners as a small percentage. Their computing power is accounted for by a small fee paid to them from each transaction.

Understanding Price Determinants

Every transaction fee is set by the miner on their own. The people sending the transaction will have the option to accept or decline that price, creating a free market that libertarians love with crypto.

If a miner sets out of reach transaction fees, they know that no one would want to pay that. The miner won't be working on verifying any blocks because someone with more favorable prices would get them.

Miners want to keep things profitable, so there's a minimum amount of transactions that they'll verify. Doing the work to verify one tiny amount of a low-value cryptocurrency might not be worthwhile, so miners will hold out for a bigger fish. They'll set higher rates to avoid having to do all of this work for little reward.

Since miners are always looking for the highest transaction fees they can get, this can cause problems for consumers. Networks of miners could join together and agree to set prices that are unreasonably high. Without regulation, miners can centralize and create a lack of competition, which can ensure profitability but leave out low-level investors.

Learn How to Set and Manage Fees

If you're working with a tool to create a wallet, some will allow you to set fees that you're willing to pay for transactions. If those fees reach beyond your thresholds, you can halt them.

Most wallets will have a threshold to ensure transactions come in within the period that you set. Some will want to limit the work they do, so will only allow you to use them when transactions are above a predetermined price.

The lower the fees that you're comfortable paying for, the longer it will take for your transaction to get processed and verified. Low fee transactions have a low priority to the average miner. They're financially motivated like anyone else, so you need to assume that they're going to take the best paying work first.

Also, a blockchain can only handle so many transactions per second. As more people jump on board, there's more work for miners to do. Your transaction fees end up actually becoming something to negotiate as they can determine the amount you make while trading.

Consider Wallet Fees Carefully

Some wallets might end up charging you just for the privilege of using their tool Wallets are a great place to safely store your cryptocurrency, but the software to use them isn't free. You'll have to pay small fees to developers to use them.

Fees might be one-time or they might be on a schedule. Read the fine print and check out your wallet's settings to ensure that you're not getting gouged.

Don't Let Cryptocurrency Exchange Fees Scare You

If cryptocurrency exchange fees are the only thing keeping you from investing in crypto, it's time to let those fears go. There are so many great benefits from investing in this exciting new type of currency that there's no good reason to sit on the sidelines.

If you want to learn more about how to buy this currency in the first place, check out our latest guide.