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Author Topic: clarify bitcoin fees  (Read 85 times)
Sracedofwoman
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September 12, 2018, 03:05:51 AM
 #1

Can someone clarify bitcoin fees to me?

When do I transaction fees?

If I buy $20 dollars of bitcoin a week on coinbase how does that affect how the fees are going to work in the future?

Would it be better to save $20 a week and buy in chunks of 100-200? Or does it not make a difference?

When are the fees applied? When I try to take my money into my own wallet outside of coinbase?

Is there anyway to avoid the fees?

I'm just trying to figure all of this stuff out before going any further. Like everyone says I'm only buying bitcoin with money I can afford to completely loose and I'm comfortable doing about $20-30 a week. But would like to know if its actually going to cost me more in the long run instead of buying in larger amounts.

Thank you guys for the help.

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pooya87
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September 12, 2018, 03:25:29 AM
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based on your complicated comment, there are a couple of fees that you should not confuse:
1. the fee that an exchange charges you for buying/selling bitcoin.
2. the fee the exchange charges you for withdrawing your coins.
3. the fee that you need to pay when making a transactions on bitcoin blockchain.

the first two are fixed and depend on the platform you use. #1 is always a percentage of the volume. for example if you buy $20 worth of bitcoin you'd pay $0.04 fee assuming it is 0.2% and if you buy $1000 worth of bitcoin you would pay $2. so in this case it doesn't matter if you buy 50x $20 or 1x $1000 you will pay the same fee.

the withdrawal fee #2 is usually a fixed amount again based on the platform. some charge more and some less. in this case as long as you don't withdraw those $20 purchases you will be fine. otherwise you would have to pay 50x the fixed withdrawal fee that the exchange is asking of you.
* remember that keeping coins on exchanges, even coinbase, is a risky thing.

the third (#3) fee is the network fee and it has nothing to do with the exchanges and how much you buy,... it is all about the size of your transaction in bytes. so lets say you buy $20 worth of bitcoin every week and withdraw them to your bitcoin wallet (coinbase is not a bitcoin wallet, it is only an account you have, a bitcoin wallet is when you control the private keys) now you have 1 transaction in your wallet. then next week you do the same and next ... lets say you do this 50 times. now you have 50 transactions in your wallet worth $1000 (ignoring exchange fees and price fluctuations) to spend 50 transaction outputs depending on the address type you were using you will end up paying a huge fee because your transaction will now contain 50 inputs and the size can be ~7500 bytes. so you will have to pay that much more fee. for instance with 1 satoshi/byte fee you will end up paying 0.00007500BTC.
but when you only have 1 transaction output to spend your transaction size would be 226 bytes so you have to pay 0.00000226BTC with 1 s/b fee.
now if you use SegWit addresses then your fees will be 0.00005080BTC and 0.00000180BTC for 50 and 1 UTXO respectively.
check this tool out for more information: https://coinb.in/#fees the sliders on the left side represent the number of transactions you have and want to spend and each row represents a different type of address you were using. the sliders on the left represent the new outputs you are creating (the address(es) you are sending bitcoin to) and it usually is 2 (1 for receiver and 1 for your change).

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September 12, 2018, 03:32:55 AM
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Yep, the bitcoin transaction fee applies when you shift bitcoin from 1 wallet to another. This depends on the current demand on the network and how quickly you want the transaction to be confirmed (though many exchanges make you pay a higher rate without giving you an option to lower it).

The fee doesn't depend on the amount of bitcoin. Buying in chunks in Coinbase won't affect the transaction fee when you want to withdraw, since bitcoin isn't actually moved when you make a purchase on an exchange. Your main concern would be coinbase's initial buying fee, if you are paying a % fee with each purchase there would be no difference there either.

Due to the demand these days, transactions with no fees don't usually make it into a block.

edit: just to be clear, the bitcoin transaction fee is different to the fees you pay Coinbase when buying BTC.

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September 12, 2018, 03:42:18 AM
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Better option: Transfer fiat to Coinbase via ach. Wait about a week. Then move fiat to Coinbase pro - instant. Use limit buy orders on Coinbase pro. All free. No fees.

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September 12, 2018, 03:47:53 AM
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Don’t use Coinbase, it’s stupid. Use Gemini or whatever exchange that enables you to trade fiat/btc/etc with higher limits.

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September 12, 2018, 04:06:26 AM
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Yep, the bitcoin transaction fee applies when you shift bitcoin from 1 wallet to another. This depends on the current demand on the network and how quickly you want the transaction to be confirmed (though many exchanges make you pay a higher rate without giving you an option to lower it).

The fee doesn't depend on the amount of bitcoin. Buying in chunks in Coinbase won't affect the transaction fee when you want to withdraw, since bitcoin isn't actually moved when you make a purchase on an exchange. Your main concern would be coinbase's initial buying fee, if you are paying a % fee with each purchase there would be no difference there either.

Due to the demand these days, transactions with no fees don't usually make it into a block.

edit: just to be clear, the bitcoin transaction fee is different to the fees you pay Coinbase when buying BTC.


Is coinbase not a good way to buy bitcoin? Honestly the only reason I started using coinbase was because way back when I used a faucet the money went staright into a coinbase account I made. Seemed so easy and made the process simple. However I have not kept up with everything and never actually had a wallet of my own that isnt on coinbase.

ObsidianCharlie
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September 12, 2018, 04:23:56 AM
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Yep, the bitcoin transaction fee applies when you shift bitcoin from 1 wallet to another. This depends on the current demand on the network and how quickly you want the transaction to be confirmed (though many exchanges make you pay a higher rate without giving you an option to lower it).

The fee doesn't depend on the amount of bitcoin. Buying in chunks in Coinbase won't affect the transaction fee when you want to withdraw, since bitcoin isn't actually moved when you make a purchase on an exchange. Your main concern would be coinbase's initial buying fee, if you are paying a % fee with each purchase there would be no difference there either.

Due to the demand these days, transactions with no fees don't usually make it into a block.

edit: just to be clear, the bitcoin transaction fee is different to the fees you pay Coinbase when buying BTC.


Is coinbase not a good way to buy bitcoin? Honestly the only reason I started using coinbase was because way back when I used a faucet the money went staright into a coinbase account I made. Seemed so easy and made the process simple. However I have not kept up with everything and never actually had a wallet of my own that isnt on coinbase.


Sorry but I wouldn't know for sure, haven't used it because we have different services here in Australia.

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September 12, 2018, 08:52:47 AM
 #8

If I buy $20 dollars of bitcoin a week on coinbase how does that affect how the fees are going to work in the future?

Would it be better to save $20 a week and buy in chunks of 100-200? Or does it not make a difference?

With Coinbase and most exchanges, it doesn't matter in terms of commissions. They charge a % commission on buys and sells. But they also charge a flat fee for BTC withdrawals, so if you buy $20 and withdraw it each week, the fees will add up.

Is there anyway to avoid the fees?

Yes, you can avoid all fees -- trading commissions, deposit fees, withdrawal fees -- by using Coinbase Pro (GDAX).

Here's the process: ACH transfer USD to Coinbase (free), transfer to GDAX (free), place limit orders and wait for them to be filled (free), withdraw BTC to your wallet (free).

If you just use the basic Coinbase interface, they charge really high commissions, and they also charge BTC withdrawal fees. I highly recommend using their actual exchange -- https://pro.coinbase.com/

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