In the past week, three of the most popular cryptocurrency exchanges have cut bitcoin withdrawal fees by up to half. While the average price of sending bitcoin has been falling for weeks, these savings had yet to be passed on to exchange customers. Now Binance, Bitfinex, and Kraken have all reduced their fees amidst a backdrop of increased Segwit adoption and transaction batching.
Also read: BTC Transaction Volume Reaches Two-Year Low
Bitcoin Withdrawals: Now with 50% Off
Bitcoin is pretty cheap to send right now – cheaper than ethereum in some instances. It’s currently around 10 satoshis per byte to send BTC, which works out at approximately 30 cents for a typical transaction. Many bitcoin users only send cryptocurrency when withdrawing it from an exchange, however, to a wallet they control or to another exchange. And with cryptocurrency exchanges setting their own fees, the recent cost savings haven’t filtered through to users. Up until last week, it still cost around $10 to withdraw BTC from an exchange such as Kucoin or Binance. While the former has yet to lower its fees, Binance has.
It now costs 0.0005 BTC, or around $5.70 at current prices, to make a BTC withdrawal from Binance. Bitfinex, meanwhile, has slashed a third off its fees, which now stand at 0.0004 BTC, with the exchange citing Segwit as the reason behind the saving. Finally, Kraken has dropped its fees to 0.0005 BTC and has cut bitcoin cash withdrawals to 0.0001. As a consequence, it costs around $5.70 to withdraw BTC and 13 cents to withdraw BCH.
Exchanges Are Batching Hard
There are two reasons being attributed to the reduction in exchange fees and subsequent savings for their users: Segwit and transaction batching. After Coinbase and GDAX began rolling out Segwit support on February 23, adoption leapt from under 20% of total transactions to over 30%, and it has held steady around that threshold ever since. On February 28, a bitcoin block was mined containing a record 65% Segwit transactions.
Due to the high number of bitcoin transactions exchanges send, often simultaneously, batching has the potential to provide even greater cost reductions than Segwit. It’s difficult to determine the percentage of transactions that are batched going by available blockchain data. It can be deduced, however, that their adoption is on the rise. Coinmetrics points out that around $10 billion of BTC a day is currently being sent, the same amount as November of last year. The difference is that back then it took 300,000 transactions per day to reach that figure, versus 180,000 now. At 60% of November’s transaction volume, it’s likely that batching is playing an increased role.
While the news from Bitfinex, Kraken, and Binance is to be welcomed, the onus is now on other exchanges to follow suit. Bittrex, for example, currently charges 0.001 BTC ($11.50) for withdrawals, and Coinbase has yet to lower its fees, although a workaround allows customers to transfer their crypto to GDAX for free and withdraw from there without charge. Other exchanges such as Kucoin have also yet to lower their fees. Nevertheless, significant progress has been made since the start of the year which augurs well for on-chain bitcoin usage.
Do you think fees of around $5 are fair, or should exchanges make it even cheaper to withdraw BTC? Let us know in the comments section below.
Images courtesy of Shutterstock, and Segwit.party.
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Author: Kai Sedgwick