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CZ FAQ 7: Why Binance Has The Most Competitive Fees in The Market

2022-04-21

This article is a part of the “CZ’s FAQs” series. Opinions expressed here are personal opinions and do not represent Binance’s official position. It is not financial advice. 

Trading fees. Every online exchange calculates it differently. Binance, for instance, takes a user-focused approach. On the other hand, users also approach trading fees differently. For day traders, every little bit of profit is important. Meanwhile, some users just want a transparent trading experience with zero hidden fees.

Regardless of your level of crypto knowledge, being aware of these fees is important. Below, you’ll find my personal thoughts on trading fees, how it impacts trading, and what exchanges can do to improve the experience for users. 

My View on Trading Fees

First and foremost, users should be transacting crypto at its actual cost. High fees are cumbersome and take away from the crypto experience. There should be minimal interference if someone wants to buy Bitcoin and convert it into a different asset.

Let’s be clear. I’m not an avid trader. In fact, I prefer to buy and HODL. However, just like traditional markets, the crypto world is a popular avenue for regular investing and trading. Traders shouldn’t have to worry about trading fees eating into their returns.

At Binance, our philosophy is simple. The user is always the first priority. This is why we provide some of the most competitive exchange fees in the industry. When you open or close a position on Binance spot trading, we charge a flat 0.1% fee. Those who hold BNB also get an additional 25% discount. 

There’s a lot to unpack with trading fees. I understand that this can be quite intimidating, especially for newer users. To help break it down, my team has created a helpful infographic of the fees you might incur if you bought Bitcoin on April 13, 2022.

What Is Spread and How Does it Impact Trading?

Users should understand the distinction between spread and trading fees, two crucial components of any crypto trade. 

  • Trading fee is a small percentage of each transaction that goes to the exchange. 

  • Market spread is the difference between an asset’s buy and sell price. 

The ideal user experience minimizes both of these sums as much as possible. For instance, you might notice a slight loss after buying Bitcoin at the market price. This loss can vary significantly across different exchanges.

So why does this happen? The answer — the exchange you’re using does not have enough liquidity. A high market spread occurs when the underlying asset is not actively traded and has low volume. 

In some cases, an exchange may advertise zero fees. But in reality, their exchange has lower liquidity and a higher market spread than the competition. So even if you don’t pay trading fees, the final cost of your trade will be higher.

Accessibility to the Ecosystem

Higher trading fees don’t just mean lower profits for users. It’s another barrier of entry to the larger crypto and blockchain ecosystem. Newcomers will only be discouraged by high fees. 

At its core, Binance is an inclusive platform. We design every product and service offering with accessibility in mind. A user on our platform should never feel restricted by slow transactions or high trading fees. 

If keeping fees competitive means a few extra crypto users, that’s all the motivation we need at Binance. Affordable fees equate to more users. More users lead to higher adoption. 

How Can Exchanges Do Better?

Trading fees play a crucial role in the crypto and blockchain ecosystem. 

I believe crypto exchanges can always find ways to improve their fee structures. With new exchanges popping up every day, the demand for better fees is higher than ever. 

Ultimately, crypto was designed for the user. The profit-over-user mindset of many exchanges goes entirely against this purpose. 

Sure, specific platforms may net high-profit margins in the short term. However, users will always be drawn to the platform that best adheres to their preferences. This is why Binance has and will continue to have the lowest fees in the market.

Disclaimer: Cryptocurrency investment is subject to high market risk. Binance is not responsible for any of your trading losses. The opinions and statements made in this and other articles should not be considered financial advice or an investment recommendation.