View: The big Bitcoin businesses should use this period of low fees wisely

[Samarkand]

Many Bitcoin exchanges have been overwhelmed with the resent surge in user registrations
and support requests. Besides, it is incredibly hard to find talented developers, because the
cryptocurrency scene is still in its infancy and there are simply not enough experienced
developers available.

However, this can´t be an excuse for technical incompetence on the part of the exchanges like the
following example from a few weeks ago:

https://twitter.com/LaurentMT/status/943624312304611329

Managing the fragmentation of their utxo set will become a critical factor for BTC services.

For example, this entity (https://oxt.me/entity/tiid/483238635) is a wallet controlled by Coinbase.
To date, it owns around 203 BTC split in 1,464,545 utxos !
With BTC at $15.8k, it means $3.2M with an average utxo value of 2.2$. #DustInTheChain

But there's worse for Coinbase (and their users who pay the tx fees). On several periods during
in the last months, this wallet has sent txs with fees >= transfered value.

...

I suggest that we all urge exchanges / other big Bitcoin businesses to implement the following measures:
1. Start to batch user transactions
2. Prevent UTXO fragmentation from happening in the future by optimizing their processes
3. Use this period of low fees (only 34k transactions in the mempool) to consolidate inputs that can´t
be spend economically during periods of high fees
4. Adopt SegWit instead of listing more and more obscure tokens/altcoins
5. Allow people to withdraw to the new bech32 address format
6. Stop exploiting your market power and stop making the users pay unnessarily high fees

This seems like such a no-brainer to me. It would not only help the overall health
of the Bitcoin network, but also save them millions of $ in transaction fees in the long-term.
It would also save money for every single user in the case of businesses like Coinbase
that externalize the transaction costs onto the end user.

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[alyssa85]

It's good advice. Coinbase in particular is pretty poor at managing it's wallets - they don't even batch transactions. They must have been bleeding money in December when the mempool was full.

People who have lots of inputs in their wallets might want to consolidate their coins too. That way, when fees rise again (and they will), they won't be sending too many bytes.

[TheQuin]

All good suggestions.

4. Adopt SegWit instead of listing more and more obscure tokens/altcoins
5. Allow people to withdraw to the new bech32 address format

I think a lot of services either use Core or have developed their own software derived from Core and have been prevented from adopting these measures by the long delay in Segwit wallet support.
Fortunately, the end of the long wait now seems to be in sight.

https://github.com/bitcoin/bitcoin/issues/11449

laanwj commented 5 days ago
The 0.16 branch was split off, and 0.16.0rc1 has just been tagged.

6. Stop exploiting your market power and stop making the users pay unnessarily high fees

Services really need to allow customers to manually select fees but ultimately we need to vote with our feet and stop using services that overcharge us.