When sending cryptocurrency from one wallet or exchange to another, transaction fees are incurred. The two most popular cryptocurrencies, Bitcoin (BTC) and Ethereum (ETH), have different fee structures and models. Determining which one is cheaper to send depends on several factors.
How BTC transaction fees work
Bitcoin transaction fees are based on the size of the transaction data (in bytes), not the value being sent. Fees are paid to BTC miners for processing and validating transactions. The average BTC transaction fee is currently around $1.50.
BTC fees tend to increase when network congestion is high due to limited block space. The 1MB block size limits around 2,500 transactions per block. When demand exceeds capacity, a bidding war starts for the limited space. The higher the fee a user pays, the quicker their transaction will be processed.
Some factors that influence BTC transaction fees include:
- Network congestion – High when demand for transactions exceeds network capacity
- Transaction size – More inputs/outputs means more data
- Fee rate – The fee rate (satoshis per byte) specified
BTC transaction fees are unpredictable and fluctuate based on network conditions. Paying higher fees does not guarantee faster confirmation times either, as it depends on miner policies.
How ETH transaction fees work
Ethereum transaction fees are based on gas, a unit used to measure the computational resources required to execute operations on the Ethereum network. Each transaction requires a certain amount of gas to complete, and gas prices are denoted in gwei.
Gas fees are paid to ETH miners for executing transactions and smart contracts. The average ETH transaction fee is currently around $1.00.
ETH gas fees tend to spike when the network is congested due to high demand. The 15 million gas limit per block allows only a certain amount of transactions. When demand exceeds capacity, gas prices increase as users bid up prices to get prioritized by miners.
Some factors that influence ETH gas fees include:
- Network congestion – High when transaction volume nears the gas limit
- Computation complexity – More complex smart contracts require more gas
- Gas price – The gas price (in gwei) specified
Like BTC fees, ETH gas fees are dynamic and unpredictable. Setting higher gas prices does not necessarily mean faster confirmation as it depends on miner policies.
Sending BTC
When sending BTC, the wallet or exchange will calculate the optimal transaction fee based on network conditions. However, the user can usually customize the fee rate.
For example, on a crypto exchange you may see the following fee options when withdrawing BTC to an external wallet:
- Slow – ~$0.50 (May take 30+ mins to confirm)
- Standard – ~$1.00 (May take 10-30 mins)
- Fast – ~$1.50+ (Usually confirms in under 10 mins)
During periods of high congestion, sending with a “slow” fee rate can mean hours or even days of waiting for the transaction to confirm.
Sending ETH
With Ethereum, the gas price is customizable when making transactions. The wallet or exchange will suggest optimal gas prices based on network conditions.
For example, on a crypto exchange you may see the following gas price suggestions when withdrawing ETH:
- Slow – 20 gwei (May take 30+ mins to confirm)
- Standard – 50 gwei (May take 10-30 mins)
- Fast – 100+ gwei (Usually confirms in under 10 mins)
If the network is congested, “slow” gas prices could delay transactions for hours or days before confirmation.
BTC vs ETH: Which is cheaper to send?
In general, Ethereum transactions tend to be cheaper than Bitcoin transactions. However, this can vary depending on network conditions.
Here are some examples of average fees for sending $200 worth of BTC vs ETH:
| Network | Fee Type | Fee Amount |
|---|---|---|
| Bitcoin | Slow | $0.50 |
| Bitcoin | Standard | $1.00 |
| Bitcoin | Fast | $1.50 |
| Ethereum | Slow | $0.50 |
| Ethereum | Standard | $0.75 |
| Ethereum | Fast | $1.00 |
Based on average fees, ETH comes out 25-50 cents cheaper than BTC for standard and fast transactions. Slow ETH transactions have the same $0.50 cost as BTC.
However, these numbers will fluctuate depending on congestion levels on each network. Sometimes BTC fees can dip below ETH fees, but Ethereum tends to maintain a lower baseline cost.
Pros and cons of BTC transactions
Some of the key advantages of Bitcoin transactions include:
- Reliability – The longest running blockchain with high hash rates keeps transactions immutable.
- Predictability – Fees don’t fluctuate as drastically as ETH gas fees during market volatility.
- Avg fee under $2 – Generally less than ETH aside from congested periods.
- More block space – BTC’s 2.5 transactions per second exceeds ETH’s 1.5 currently.
Some potential disadvantages include:
- Volatile fees – BTC fees become extremely high during high demand.
- Unpredictable delays – Transaction delays spike drastically during congestion.
- Limited capacity – 1MB block size limits transactions per second.
Pros and cons of ETH transactions
Some of the key advantages of Ethereum transactions:
- Lower base fees – Avg fees under $1 are lower than BTC aside from congestion.
- Fast transactions – 15 second block times vs 10 minutes for Bitcoin.
- More use cases – Supports more transaction types like smart contracts.
- Moving to PoS – Will reduce fees and energy usage compared to Bitcoin’s PoW.
Some potential disadvantages:
- Volatile gas prices – ETH gas fees spike drastically during high demand.
- Unpredictable delays – Transactions can be delayed with network congestion.
- Scalability issues – Like BTC, ETH has faced challenges scaling.
Tips for minimizing fees
Here are some tips that may help reduce fees for both BTC and ETH transactions:
- Use lower fee rates during off-peak hours – Weekends and nights tend to have less congestion.
- Batch smaller outputs into one transaction – This consolidates inputs using less total data.
- Use SegWit addresses for BTC – SegWit encoding shrinks transaction size.
- Adjust gas limit for ETH – Setting a lower gas limit reduces fees but risks delays.
Exchanges will also usually cover withdrawal fees so transferring crypto to an exchange before cashing out avoids network fees. However, additional exchange withdrawal fees will apply.
Other considerations
While transaction fees are important, there are some other considerations when comparing BTC and ETH:
- Transaction speed – ETH is faster with 15 second block times vs 10 mins for BTC.
- Acceptance – More merchants accept BTC directly compared to ETH.
- Supply – BTC has a fixed supply of 21 million compared to no cap for ETH.
- Monetary policy – ETH still has some inflation whereas BTC is deflationary.
These other variables may impact your choice beyond just fees. The usefulness of each blockchain and liquidity are also important.
Conclusion
In summary, Ethereum currently offers cheaper base transaction fees compared to Bitcoin. However, fees fluctuate dynamically for both based on congestion.
ETH gas fees tend to have lower averages overall aside from periods of network overload. But BTC enjoys advantages like greater predictability and stability.
For large transfers, BTC’s percentage-based fees may be lower. But for small everyday transactions, ETH is normally the cheaper option.
The cheapest option also depends on customized fee rates for each network during periods of high vs low congestion. There is no clear winner, and advantages and disadvantages should be weighed up according to your preferences.
