These days it can cost a small fortune to send a bitcoin transaction. There are complaints everywhere on high bitcoin fees and stories of people paying $20 to send $20 to a friend.
With the current elevated adoption and investment interest comes allot of confusion surrounding bitcoin fees and how they work.
Here's a few tips on how to avoid paying high bitcoin fees.
One of the biggest issues with high fees originates from the source wallet. Ask yourself these three questions.[error title="Three source wallet questions" icon="exclamation-circle"]1. Where is the wallet physically located?
2. How are the fees calculated?
3. How much did you designate as the fee?
If you answer "I don't know" to one or more of those three questions, you are likely paying high fees simply because there is a lack of options or knowledge regarding the transaction fees.
Let's start with the first question. Where is that wallet physically located?
If you don't know, then you are likely using an online service like Coinbase or Gatehub as a wallet. In which case you have no clue where the wallet s physically located and you also do not have the private key. Which also means you don't really have any bitcoin in that wallet until you send them elsewhere to a wallet where you do have the private key(s).
Coinbase currently (12/15/2017) defaults to 0.0008, or 8000 satoshi's for a transaction send regardless of the amount. That's over $14 dollars at the current rate of $17,600.
How to remedy this?
That's where the 3rd question comes in, if you don't know how much you designated you went with the default or sent the transaction while sleepwalking. Check and see if you wallet provider allows you to change that fee and lower it, the minimum (if you want to see the funds move within this decade) is 0.0001 which is about $1.76, far more reasonable and very inexpensive.
More importantly, move the entire wallets contents to a local wallet, software or hardware, or a service provider where you can change the fee and where you own the private key such as Blockchain.info. However it is recommended to NEVER STORE BITCOINS ONLINE so get a Ledger wallet or download Electrum or one of the many other hardware and software wallet solution on the market to gain full control of your funds.
In those cases you can specify you fee yourself when you send the transaction.
Finally, if you answered "I don't know" to the 2nd question of how your fees are calculated, then you are also either just going with the default or recommendation by the software or your sending from a wallet online that requires a large single transaction fee. You also might not be providing the correct fee per recommendation or even grouping transaction together and paying too much per transaction without properly calculating the bytes and satoshi's per byte.
Here is a great HOWTO on calculating fees that goes in depth on this very topic.
This is especially true for those sending groups of transactions and just sending a static fee per transaction, grouping transactions and calculating the correct fees can save allot in transaction fees.
In addition to where you're sending bitcoin from, where you're sending bitcoin too also can cost you. for example if you use services that charge a fee for deposits like Localbitcoins or Bitpay, sending from a wallet that requires high fees ends charge you twice.
For example, the Bitpay Visa card, a popular Visa card that loads bitcon value to a Visa card by convert the value to cash and loading the cash through the Greendot network, charges a loading fee of about $4.
Under that scenario sending $20 from Coinbase to load your Bitpay Visa card would cost you $40 total and you'll end up with approximately $20 on your card from the load.
Not exactly ideal. Instead make sure you send from your own wallet where you can control the fee to send to deposit fee destinations to reduce fees.
Other Tips and Trucks
If you don't need the coin sent immediately, send it with the lowest fee and at least 0.0001 then use ConfirmTX.com to speed it up if required. They will allow you to push a transaction in a few hours so long as there is a 0.0001 fee on the transaction.
There are others like ViaBTC, however they only push 100 transactions an hour so if you don't get in the hour within a few seconds, forget about it. They reserve the rest for paying clients and most other services also require a fee, however many are only around $5. That plus the actual low fee of $1+ still ends up less than half of what Coinbase would charge.
Use an Exchange or Pool
If you need bitcoin sent quickly, use an Exchange. For example Poloniex and many others still only require a 0.0001 fee because they group the transactions that everyone is sending and calculate the proper fees which does two things. It reduces the fees over sending a generic fee with each transaction and give the transaction a higher priority due to the large size over smaller transactions by themselves.
Use a Paper Wallet
If your paying someone in person, use a paper wallet. You can simply hand it to them and they can upload it themselves. No fees (for you), no math, no pushes, and no waiting.
You can always also convert bitcoin into litecoin, Dash, of another asset with less expensive fees prior to sending, then send the value through that blockchain if the destination party can accept another form of virtual currency. This is especially useful for smaller amounts just make sure the trade or conversion doesn't have fees that negate the savings.
The miners rallied among themselves to require higher fees right about the same time the price started to rise. Fast forward 18 thousand dollars and we're now paying fees that were meant for a $1000 bitcoin, not $20,000 dollar bitcoin. There's been some relief but very little. When fees were only 0.0001 for transaction the miners didn't complain then, now that it's around 0.0008 for the same transaction but the price is 20 times what it was, it's terrible lopsided along side the fact that minders are earning 20 time more than they were.
Hopefully we'll see the return of 0.0001 eventually but of course ... I would hold your breath.
[accordion] [item title="Author and Credits"] Article by dinbits
Image Credits: Banner Image by dinbits.com staff