These cryptocurrency exchanges have slashed bitcoin withdrawal fees

Posted: 2 March 2018 3:16 pm

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.

Hong Kong-based exchange Binance announced on Twitter that it was cutting bitcoin withdrawal fees by 50%.

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.

United States’ digital exchange Kraken also brought down its bitcoin withdrawal fees, matching Binance’s.

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”.

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.

Lightning Network

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.

You can learn all about different exchanges, understand exactly how to buy and sell cryptocurrencies, calculate your taxes, discover digital wallets to hold assets and explore a list of all the alternative coins on the market.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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