Transaction Cost

Definition ∞ Transaction cost refers to the fees incurred when initiating and processing a transaction on a blockchain network. These costs typically compensate validators or miners for their computational effort and network resources used to verify and add transactions to the distributed ledger. The amount can vary based on network congestion, transaction complexity, and the specific blockchain protocol. It represents the economic expense of conducting an operation on a decentralized system.
Context ∞ News frequently highlights transaction costs as a major factor influencing the usability and scalability of various blockchain networks, especially during periods of high network activity. Reports often compare gas fees on different chains or discuss layer-2 scaling solutions designed to reduce these expenses. Understanding transaction costs is crucial for users and developers alike, as it directly impacts the economic viability of decentralized applications and the overall user experience.