NFTs and high commissions: beware of losing up to thousands of dollars

Ethereum commissions , a technology that supports most NFTs , mean that users have to pay thousands of dollars to carry out a transaction with cryptocurrencies.

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The NFT (non-fungible token) boom has hit the media. With sales and purchases of millions of millions of dollars, this type of digital art has caught the attention of investors, who dream of this type of transaction.

However, the little that is talked about are the absurd amounts of commissions that have to be paid for it and much is due to the technology of Ethereum, cryptocurrency and blockchain that supports the largest number of NFTs

The ether gas

Ethereum works with smart contracts, many of which are used to mint images, videos or other files to the block chain, which incorporates them into the same cryptocurrency technology Any file, upon entering the blockchain, becomes an NFT.

The problem with this network is its commissions, also called “gas”. Gas fees are necessary costs used to approve transactions within the network and vary according to supply and demand. Simply put, the user pays for the computing power required for the operation.

There are several aspects that interfere with gas , such as the demand for the commission itself, the demand for computational energy to process the smart contracts, the number of transactions at the moment or the size of the smart contract that you want to execute.

The problem is that Ethereum performs between 15 and 45 transactions per second, creating chaos at specific times of the day.

Most fees are paid to Ethereum miners, who use a technology called proof of work (PoW ) to seal blocks on the chain. These miners are what maintain computer farms that inflict huge energy costs on the environment .

Although the exchange of Ethereum coins on markets usually has low commissions, sending money between accounts using this technology is not convenient: for sending 100 dollars between wallets, you can be charged commissions of between 20 and 50 dollars for the transaction.

Commissions and NFTs

A large part of the NFTs are in the Ethereum network, so they have to face these commissions.

Many of these drawings have been sold for millions of dollars. For example, digital artist Beeple sold an NFT with selfies over a year old for $69 million . For that sky-high amount of money, thousands of dollars worth of gas “are not harmful.”

But they are for small collections.

An example. A collection of Peruvian NFTs called Llamageddon recently went on sale. The cost of minting one of these tokens was 0.035 ethereum (about $100), but the gas to do so is $5,500.

More affordable options for individually minting NFTs are OpenSea and Rarible However, the enthusiast who wants to enter this world will be able to see how he loses hundreds of dollars in accepting or denying trades in the middle of his initiative. Therefore, he always tries:

Research the market where you will buy/sell an NFT

Investigate the hours of less congestion in the blockchain network with which you will work

Due to the high fees, more and more users are migrating their NFT platforms to other blockchains like BNB, Solana, Fantom or Polygon.

At the moment, the developer group of the Ethereum system is working on a new way to collect gas: a part is burned (disposed of) and another goes to the miners as a tip. Its adoption is still small, but it is growing in number. Ethereum 2.0 also promises that it will be able to handle up to 100,000 transactions per second, improving the entire ecosystem. Will it be possible? It will be a matter of waiting.