Each exchange has a different way of charging transaction fee. For example, Binance has applied a more user-focused approach. On the other hand, each user also has access to different transaction fee. It is very important for those who indulges in day trading. But many users just want a transparent trading experience with no fee incurred.
It is essential to have good knowledge of these fees to start your investment journey. Here’s the view of Changpeng Zhao, the founder of Binance, on transaction fee, how they affect trading, and what exchanges can do to improve the user experience.
Changpeng Zhao’s view on transaction fee
First of all, the user should be traded at practical cost. High fees cause many obstacles and make it difficult to trading. If a trader wants to buy Bitcoins and exchange them for other asset classes, the barrier to crypto adoption should be minimal.
Changpeng Zhao admits he’s not a lively trader, preferring to buy and keep them. However, like many other traditional markets, the cryptocurrency world is a popular investment and trading channel. Traders should not worry about transaction fee that eats up their profits. To To deliver the most user-focused experience, Binance offer the most competitive transaction fee in the crypto industry. With spot trading, Binance only charges 0.1% of the total transaction value. BNB holders also get a 25% discount.
What is spread and how does it affect trading?
It is essential to differentiate between spread and trading fees.
- The trading fee is the small percentage of the fee of each transaction on the exchange.
- The spread fee is the difference between the purchase price and the selling price of an asset.
These two fees should be minimal to optimize traders’ profit. Each exchange has its own liquidity so it charges transaction fees in different ways. The higher liquidity, the smaller spread value. If the asset has a low volume of trading, and traders do not trade actively, spread is very high.
In many cases, exchanges can advertise free trading. But in effect, their liquidity is lower and market price spread is higher than competitors. Therefore, the final cost of your transaction will still be higher.
How can exchanges improve?
Higher transaction fee can be a barrier for newbies to access to the cryptocurrency and blockchain ecosystems. Binance is a user-focused platform with effort to optimize customer support processes. Users of Binance will not feel limited by slow transactions or large trading fees. Binance’s principle is to keep transaction fee low but can attract new users. If there are more and more users, the higher the application of cryptocurrencies.
Changpeng Zhao believes that cryptocurrency exchanges can do better to transaction fee. The demand for low trading fees is greater than ever due to the growing number of new exchanges.
After all, cryptocurrencies are designed for users. The mindset of prioritizing profit over users of exchanges is no longer suitable. It is possible that many platforms will earn high profit margins in a short time. But users will always be attracted to platforms that meet their needs. That’s why Binance transaction fee is always lowest in the market.
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