These cryptocurrency exchanges have slashed bitcoin withdrawal fees
Binance, Bitfinex, Kraken and Nanex all reduced fees, while Coinbase has not announced any cost changes.
Bitcoin transaction fees fell to a 10-month low last month and following the implementation of a new protocol, not only only has the speed of digital currency transfers improved, the costs associated have also decreased.
A number of popular cryptocurrency exchanges have trimmed their fees for bitcoin withdrawals in response to the recent adoption of the Segregated Witness (SegWit) protocol. Blockchain congestion has also lessened.
SegWit, which was officially introduced in July 2017, allows for transactions to be split into two segments; transactional data and signature data, thus reducing the amount of data being verified on the blockchain.
— binance (@binance_2017) March 1, 2018
Bitfinex decided to decrease bitcoin withdrawal fees by 25%, owing to SegWit adoption. However, soon after the initial announcement on Twitter, the exchange, which is also based in Hong Kong, lowered the fees further.
We are excited to announce an additional 33.3% decrease in BTC withdrawal fees.
BTC withdrawal fees are now only 0.0004 BTC on Bitfinex. #SegWit
— Bitfinex (@bitfinex) March 2, 2018
United States’ digital exchange Kraken also brought down its bitcoin withdrawal fees, matching Binance’s.
Effective immediately, withdrawal fees on Bitcoin (XBT) are reduced to 0.0005, and withdrawal fees on Bitcoin Cash (BCH) are reduced to 0.0001.
— Kraken Exchange (@krakenfx) March 1, 2018
US-based Nanex reduced bitcoin withdrawal fees by a staggering 75%. The company said that bitcoin network fees have “dropped significantly as of late” and the exchange passed on savings to avoid “being plain greedy”.
We have reduced our $BTC withdrawal fee by 75% to 0.00025 BTC. We have also reduced the minimum withdrawal to 0.001 BTC.
We may take a look at reducing $ETH fees, but due to how ETH works we need to give it some time and gather more data first.
— Nanex (@nanex_co) March 1, 2018
Coinbase announced support for SegWit last month and has been rolling out the update to its millions of users. However, the San Francisco-based exchange has not altered its fee structure for bitcoin withdrawals.
Why are fees so low?
The median transaction fee for bitcoin trades fell from an all-time high of $34 in late December to a 10-month low of $0.45 in February. The last time transaction fees for bitcoin trades were this low was in April 2017.
Fees shot up in December last year when millions of new cryptocurrency traders flooded the markets globally. Virtual exchanges were bursting at the digital seams, struggling to cope with rapidly increasing user numbers.
Cryptocurrency analysts suggest that there may be numerous reasons for the decline in transaction fees. However, the most obvious appears to be a significant decline in the total number of bitcoin transactions.
If prices continue to rise, transactional volume increases and the market can recover from price corrections and losses, bitcoin fees could shoot up again. SegWit and other transaction batching methods may assist in keeping costs down over the short-term, however, developers are working on second-layer scaling solutions.
The most notable of these solutions is the Lightning Network.
The Lightning Network is a decentralized system which utilizes smart contracts in the blockchain to enable instant payments across a large group. This network is capable of millions to billions of transactions per second. This speed and scalability is possible because the Lightning Network doesn’t create on-blockchain transactions for individual payments. However, the smart contracts can be enforced on-blockchain.
In January, cryptocurrency platform Stellar Lumens (XLM) released its 2018 Roadmap, revealing plans to incorporate the high-volume micropayments enterprise in order to enhance scalability and improve security.
On January 20 Reddit user btc_throwaway1337 submitted a post outlining the details of their latest online purchase, a AR300M VPN Router, which he/she acquired using the Lightning Network’s mainnet blockchain.
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