How can coinbase still keep internal transactions free?

[bitcoinuser12345]

So coinbase has recently announced that they can no longer do free transactions as they are experiencing rapid growth and has introduced a fee for sending bitcoin since the miner fees have gotten higher. Some the fee can be as high as $3.00 worth of btc (as of this day June 27th 2017)

But how can they still do free transactions between bitcoin addresses on coinbase? Is it cheaper to send btc within the same wallet or something? Or does coinbase not actually send bitcoin but simply adjust balances internally within their website?

[mobnepal]

But how can they still do free transactions between bitcoin addresses on coinbase? Is it cheaper to send btc within the same wallet or something? Or does coinbase not actually send bitcoin but simply adjust balances internally within their website?

All those internal transactions they have are just off chain transactions and not a true transfer of bitcoin from one address to another. Those transactions are not recorded in bitcoin ledger so they can offer these free transactions till they want to.

[TryNinja]

Or does coinbase not actually send bitcoin but simply adjust balances internally within their website?

^ This.

They are not sending Bitcoin from a address to another. They are simply just changing your balance info on their database to a lower or higher amount when you transfer money. They actually only send Bitcoin through the "real" blockchain when you want to withdraw to another wallet outside their system.

[B4RF]

And thats the reason why you cant receive btc in the same address as you send on coinbase.

You dont actually own any addresses, its all in the black box 

[sweetdesirez]

Or does coinbase not actually send bitcoin but simply adjust balances internally within their website?

^ This.

They are not sending Bitcoin from a address to another. They are simply just changing your balance info on their database to a lower or higher amount when you transfer money. They actually only send Bitcoin through the "real" blockchain when you want to withdraw to another wallet outside their system.

Does that mean they have full control over my money with them and if they want they can change my balance? This is alarming as there should be a mechanism so that they cannot change my balance. You may say they will only do it when instructed by me (by transferring btc to another wallet) but it leaves the accounts prone to human error.

[lite]

Or does coinbase not actually send bitcoin but simply adjust balances internally within their website?

^ This.

They are not sending Bitcoin from a address to another. They are simply just changing your balance info on their database to a lower or higher amount when you transfer money. They actually only send Bitcoin through the "real" blockchain when you want to withdraw to another wallet outside their system.

Does that mean they have full control over my money with them and if they want they can change my balance? This is alarming as there should be a mechanism so that they cannot change my balance. You may say they will only do it when instructed by me (by transferring btc to another wallet) but it leaves the accounts prone to human error.

Yes, that's true. that's why you should never keep your bitcoins on exchanges/web wallets. only send your coins to exchanges whenever you want to sell for USD.

So coinbase has recently announced that they can no longer do free transactions as they are experiencing rapid growth and has introduced a fee for sending bitcoin since the miner fees have gotten higher. Some the fee can be as high as $3.00 worth of btc (as of this day June 27th 2017)

But how can they still do free transactions between bitcoin addresses on coinbase? Is it cheaper to send btc within the same wallet or something? Or does coinbase not actually send bitcoin but simply adjust balances internally within their website?

AFAIK, you should enter email address of receiver not bitcoin address to be it considered as internal/free transaction. and you're right they just adjust balances.

[shield132]

Or does coinbase not actually send bitcoin but simply adjust balances internally within their website?

^ This.

They are not sending Bitcoin from a address to another. They are simply just changing your balance info on their database to a lower or higher amount when you transfer money. They actually only send Bitcoin through the "real" blockchain when you want to withdraw to another wallet outside their system.

Does that mean they have full control over my money with them and if they want they can change my balance? This is alarming as there should be a mechanism so that they cannot change my balance. You may say they will only do it when instructed by me (by transferring btc to another wallet) but it leaves the accounts prone to human error.

Didn't you know that they have full access on your money? Every online wallet has that access and also if they want, they can change your balance (but in reality no company does that if account isn't blocked for serious reasons). It was mentioned, they are just changing your balance, imagine xapo offers such service also, free send between xapo users. When sending bitcoin, it doesn't matters if wallets are same or not as you asked, you always have to pay fees as others do.

[john2231]

Or does coinbase not actually send bitcoin but simply adjust balances internally within their website?

^ This.

They are not sending Bitcoin from a address to another. They are simply just changing your balance info on their database to a lower or higher amount when you transfer money. They actually only send Bitcoin through the "real" blockchain when you want to withdraw to another wallet outside their system.

Does that mean they have full control over my money with them and if they want they can change my balance? This is alarming as there should be a mechanism so that they cannot change my balance. You may say they will only do it when instructed by me (by transferring btc to another wallet) but it leaves the accounts prone to human error.

Anytime your account can be freeze or closed by coinbase that is why its not a good to use coinbase if you want to hold your bitcoin for a long time .
It is good only for temporary use..
Much better to find a wallet which is you can backup your bitcoin wallet address and get a private key so that you have fully control with your bitcoin address and you can install your private key anytime to other wallet..