Bitcoin Forum

Xapo and Coinbase are web wallets which allow transferring bitcoins free of charge. Maybe, there are a few other wallets that do the same and pay the transaction fees for their users. But what would happen if Bitcoin price rises manyfold and the fees rise proportionately in fiat terms? Will these wallets raise the transfer amounts above which the network transaction fees will still be paid by themselves or will they just begin charging their clients the fees in full?

To mods, if this thread doesn't belong here, please move it to its home board.

Yes, you can be asked to pay fees at any moment:



https://support.coinbase.com/customer/portal/articles/815435

Ask them. Do you seriously expect us to know what some services would do in the future if the tx fee go higher?

Those web wallets will get mining fee from users, But not fully i think. Because they don't send bitcoins from your address, they always come 2 or more transactions at a time and reduce their mining fee.

So in future they have some scheme like send bitcoins within 20 minutes or some different time frame and come more transactions. They ill collect mining fee if you want to send instantly.

They may fix percentage of mining fee according to the wait time like,

send bitcoins
within 24 hours  = Mining fee free
within 10 hours  = 10% mining fee
within 5 hours   =  50% mining fee
Instantly  = 100% mining fee

This is completely my guess, they may even continue free mining fee, if they have more profit from other services

For transafering small amount to external address they still charge fees and the size they think are small enough and users has to pay fee can be easily modified by them in future if price of bitcoin rises so high. As well as they may charge fees for all withdraw to external address trasnactions, i don't see any benefits to them with paying transaction fees by themselves for users.

I'm not talking about tx fees going higher. I'm asking only about the case where the Bitcoin price rises a lot. The transaction fees would obviously stay the same in Bitcoin terms, but would rise in fiat terms. See the difference?


But if the payment chain doesn't involve fiat, they should keep the transactions free regardless of Bitcoin price, right? My point is that the users of other wallets such as the Blockchain wallet or desktop vanilla wallet may not be quite happy paying grand fees and may want to start using the web wallets which won't ask them to pay the fees.

You do not have to ask, you only look at what Circle did... They offered the same deal in the beginning to draw in the crowds and once

they have done that and they got enough users they f$%^ed us over and turned business model. These companies are in this game to

make money, not to support Bitcoin. Those free tx's are being paid for by other extra features offered by these sites. Nothing in life is

FREE.  ;)

xapo is using bank stratgys and i am supprised why they are not getting bandded by public because mtgox also hit that mistake i am sure most pf the prople hate less control over their wallets

Transactions without fees are the honey trap of services like Coinbase. They want to suck in as many people as possible to become the biggest exchange/wallet provider. Once they have reached their goal they will start to charge fees.

People should know that storing Bitcoin at centralized entities such as Coinbase, that are eager to please the governmental surveillance freaks is against the original idea of Bitcoin. Bitcoin was not born with the promise to make transactions as cheap as possible. Bitcoin's promise is individual financial independence through decentralization.

It's sad to see that so many people seem to forget about the original idea of Bitcoin and just fall for the old banker tricks. If you use Bitcoin via Coinbase, you can directly use Paypal - there is no difference in terms of restricting the use of your funds.

ya.ya.yo!

And will people continue to use Coinbase after they start charging fees? Also, what would happen if Bitcoin surges in price a dozen times and the transactional fees grow proportionately in terms of fiat thanks to that? Methinks, wallets like Coinbase would attract even more clientèle, especially in the case the transactional fees should grow to a burdensome percentage in respect to amounts typically transferred.


That might well be the case, and horrible if it is. But this alone won't make people stay away from these wallets.

If you are in US it is worth getting a Coinbase account just for the Shift card.

The wallets do not look at the fiat prices as they know how to manage paying the transaction fee. They deal in bitcoins and not in fiat and hence, even if 0.0001 BTC is worth $1, it doesn't matter. Coinbase and Xapo don't give a user the wallet and withhold the private keys thus using their own funds when a user spends their coins. They also handle multiple transactions at a time to manage the fee and their own exchange too and the money we receive is saved in terms of their fiat price and not blockchain rates. They delay sending small transactions due to the fee being more than the amount.

wallets with no transaction fees is simply an danger indication i am not saying that they will run away but i want to say they just lost you privacy think and they are also using banks stratgys to transact money

Even though public know xapo and coinbase are using same banking system to send fee less transactions between two accounts people will keep on using it being greedy. But i think the main objective of bitcoin is to remain anonymous when doing transaction and with such wallets privacy will be wide open to public.

Unfortunately Bitcoin transactions in the future couldn't stay totaly anonimous. If we want use services like Xapo and Coinbase, so some added value to the Bitcoin, we should give up a part of our privacy. These services have to obey some regulations if they want to keep their business legitimate so there is a price to be paid. Price is privacy.

That's what I think myself. In such circumstances, even more people will start to use these free of charge wallets. Who would want to pay 10% of the transacted amount as transaction fees to transfer some $10 in bitcoins? Right now $10 equals ~0.016 BTC, and there should be a lot of such transactions as well as transactions with amounts less than that, while the usual network fee of 10k satoshi equals only ~0.6% of that amount.

If they had only this service like the wallet service and paying the fees then this could be a little harder for them but since they have other sources to generate money like the exchange they are able to cover these fees, but everything is relative it doesn't mean they will change this one day.

Exactly. Why would you deposit your bitcoins into some online shady bank for bitcoins? They try to look like normal everyday businesses but the harsh reality is, if you knew that a certain bank literally opened 5 years ago and is figuring it out as they go would you really trust your money with them? Now imagine you didn't have to trust anyone with your money (aka: what bitcoins are all about). Why the hell would you ever give them your money!?

the transaction fee is a small proportion of what they're making on the spread or in fees when you're buying or selling from them.

if that's enough to entice you then maybe you should do some basic math and figure out whether it's worth it just for that. often it's still the cheapest option so it's a little bonus from them that might draw in more people.

Your analogy is evidently far from being correct. 5 years in Bitcoin is more like 50 years in the fiat world. Bitcoin itself is only some 7 years old. I'm more interested about what will happen to the Blockchain wallet if fees skyrocket. Will people transact less with bigger amounts, and the pains with the block size increase go away on their own? I'd like to hear the opinion of Coinbase and Xapo opponents on this.

Never used either.What else are you compromising for the few satoshi's saved as transaction fees ? Your anonymity I tell you.It is ethically wrong in the bitcoin world to do that.Against the correct use of bitcoins I'd say.

No one knows.The rise in the price of bitcoins would hike the value of coins in your wallets as well so exchanges giving free transactions shouldn't be a problem.Blockchain.info does charge for tx,use that as an alternative.

Methinks, people stick to web wallets primarily thanks to the ease of use, and not because they despise or just neglect the Bitcoin ethics, if there is any. Setting up and then keeping up a desktop wallet is not an easy task for the majority of ordinary Bitcoin users, who often have to ask someone to reinstall their Windows after it gets massively infested by all kinds of worms, trojans, and other malware.

That could very well be the case especially if bitcoin value to fiat rises in the tens of thousands fiat. Most people would definitely turn in droves to coinbase and such that will pay for their transaction fees. That way,they really could save some amount.

But this is when assuming that these 'free' exchanges do stay free, which I highly doubt. It's still a business after all. As long as they got their user base, they'll start charging especially if bitcoin fiat value rises really high. Or maybe selective fees, or a certain percent of the fees. One thing for sure is they won't lose out in any way.

That's the reason why I started this thread.

Some people here claim that the wallets that pay themselves for transactions instead of their clients are all-round Bitcoin businesses (which is hardly the case but still). Therefore, it would be irrelevant for them how high Bitcoin might shoot in this regard. Though this doesn't mean that they won't start charging mining fees one day, of course. But, on the other hand, if their payment of transaction fees and reimbursement of these expenses doesn't really involve fiat, there is no reason to start collecting fees other than to get more profits. Since there are quite a few web wallets in the Bitcoin world, the wallet that won't do that will get the prize. Then why others should undermine their business unless they first collude with regard to charging fees from their clients?

I really doubt that this kind of service though I used this web wallets before when I started in bitcoin world. But time goes I changed my bitcoin wallet and I already thought that why they do this kind of service for free without charge, though its business and we know that business will run from the fee they get from their services or from their customers but this companies are different, seems like it smells   :'(

Smells fishy? They might be earning in a lot of other ways to cover their expenses connected with paying miner fees. Coinbase as well as Xapo also issue Bitcoin payment cards, and I'm inclined to think that their fees are not small. But even before setting out with payment cards, both wallets had been heavily engaged in exchange operations. On this account, attracting new clients by offering free of charge transactions might have paid off really well in the long run.

How is coinbase able to maintain fee-free transactions between coinbase wallets(second post of the thread)?

I think they are not using Bitcoin addresses for internal transfers. If you send money to your Coinbase wallet, you will soon see that the money gets moved from your address, where you have sent it, to some other address. In this fashion, when you transfer funds to someone else who is also using a Coinbase wallet wallet, the money doesn't get transferred anywhere. I mean transfers that result in transactions seen on the blockchain.