Any cryptocurrency that is not Bitcoin is an altcoin. “Alternative coin” is what the name “altcoin” means. In the beginning, Bitcoin was the only cryptocurrency; but, as time went on, different cryptocurrencies appeared, each with special benefits and features. In order to provide a substitute for Bitcoin, altcoins were developed. They can be used for a variety of things, including payments, investments, and as a form of value storage.
Ethereum (ETH), Ripple (XRP), Litecoin (LTC), Bitcoin Cash (BCH), and many other altcoins are among the most well-known ones. Each alternative cryptocurrency has a distinct use case and market value, and market supply and demand determine how much they are worth.
The demand for trading cryptocurrencies on exchanges that support a variety of altcoins is rising along with the popularity of cryptocurrencies. The fees associated with trading on these exchanges, however, can quickly pile up and reduce your profits. This article will discuss cryptocurrency exchange fees, how they operate, and some suggestions for reducing them.
Understanding Altcoin Exchange Fees
Users can trade cryptocurrencies on sites available online called altcoin exchanges. These exchanges provide a range of services, such as purchasing and selling alternative cryptocurrencies, storing digital assets, and exchanging one cryptocurrency for another. However, these exchanges charge fees for their services, much like other financial organizations, which has a big impact on how profitable trading altcoins can be. The costs that exchange charge for carrying out deals on their platforms are known as altcoin exchange fees. These fees can be set up in a variety of ways and vary from exchange to exchange.
Making-Taking-Fee Model
The maker-taker type of fee structure is the most popular. In this arrangement, makers are individuals who place limit orders that appear in the order book and give liquidity to the exchange. Takers, on the other hand, are those who place market orders that are instantly filled and take liquidity away from the exchange.
As takers are using the liquidity that makers supply, the exchange charges a larger price for takers than for manufacturers. The creator fee is often around 0.1% or less, while the taker fee typically ranges from 0.1% to 0.5%.
Fixed-Price Model
The flat fee model is an additional cost structure that some altcoin exchanges employ. In this arrangement, whether a trade is a market order or a limit order, the exchange charges a set fee for every transaction made on their platform. The flat cost for each trade can be anywhere between a few cents and several dollars.
Model for Percentage Fees
A proportion of the overall trade value is what the percentage fee model charges. For each trade that is conducted on an exchange's platform, a fee of, say, 1% of the trade value may be assessed. Since the fees can quickly accumulate, this charge structure may be unfavorable for traders making large deals.
How to Minimize Altcoin Exchange Fees
Researching the many feed-related elements and contrasting the fee schedules of multiple exchanges are crucial steps in order to reduce fees.
- Choose the Appropriate Exchange
Choosing the right exchange is one of the best strategies to reduce cryptocurrency exchange fees. Some exchanges charge larger fees than others, while others give discounts to traders who trade frequently. Before selecting an exchange, do your homework and evaluate the costs of several ones.
- Employ limit orders
You can choose the price at which you want to buy or sell an alternative coin using limit orders. You become a maker on the exchange by using limit orders, which results in you paying a lesser charge than takers. You can avoid paying the spread, which is the distinction between the ask and bid prices, by using limit orders.
- Employ Exchange Tokens
A few alternative currency exchanges provide their own tokens that can be used to pay trading commissions. You can frequently reduce the costs levied by the exchange by using these tokens. Check the terms and conditions before utilizing these tokens, though, as certain exchanges have limitations.
- Bigger Volume Trading
Numerous alternative currency exchanges provide volume-based trading charge savings. The cost each trade decreases as you trade more. To reduce your fees if you are a high-volume trader, search for exchanges that provide volume-based discounts.
- Pay attention to network fees
When sending or receiving alternative cryptocurrencies, you'll additionally have to pay network costs in addition to exchange fees. These costs may be high, particularly when the network is congested. Consider utilizing a cryptocurrency with lower transaction fees or delaying transaction execution until network congestion has cleared up to reduce network fees.
- Exchanging Altcoin for Cash
In addition to decentralized exchanges like Binance and KuCoin, there are services that let users swap their alternative currencies for cash. A platform like Dart Africa, among others, enables users to rapidly change their alternative currencies to fiat without needing to keep their coins on the website-based platform. Users can instantly withdraw their fiat to their nearby bank after depositing only the amount they need to exchange at that moment.
Dart Africa permits the trading of alternative coins like ETH, and there are plans in place to expand the pool of alternative coins that are accessible to users. Users on Dart Africa have complete control over their portfolio and there are no third parties interfering, hidden fees, or delayed transactions (fiats are deposited after two block confirmations). At the time being, only users in Ghana and Nigeria are covered.
- Check out Dart Africa
- Make a profile or sign in
- Choose the coin that you want to exchange for cash.
- Trade the quantity of coin you want to exchange for cash by copying the given address.
- Once it has been verified, you can send the money to your neighborhood bank.
Anyone wishing to invest in cryptocurrencies must first comprehend altcoin exchange fees. Even though fees may appear insignificant, they quickly pile up, especially for regular trades. Investors may maximize their overall earnings and get the most out of their cryptocurrency investments by reducing costs. Also, traders can employ limit orders, limit their trading frequency, and benefit from any discounts or special offers the exchange may be running. In the end, diligent study and wise trading techniques can assist investors in minimizing exchange fees and maximizing their altcoin investments.
