Reminder: prepare your wallet before the next bull run

[Tytanowy Janusz]

There is nothing new in this topic. Everything was well described before on bitcointalk. It's just a reminder:

Average transaction Fee on BTC just pass 10$. Further price and volatility grow will only push this higher and higher. During 2017 bubble average transaction fee passed 50$.


https://ycharts.com/indicators/bitcoin_average_transaction_fee

I guess after BTC breaking 50k$ transaction fee will reach 100-500$. I think its the last time to optimize your BTC wallet.

How to minimize transaction fees?

With the current spike in fees, many would be interested in ways to reduce the fees. To reduce the fees one or both of the variable involve has to be reduced.
The standard feerate is determined by the level of activity in the network, so;
• timing your transactions can result in significantly lower fees. During a FOMO period, lots of investors are looking to get in and more traders are active, this is probably not a good time to transact, if it's not time sensitive, when the resulting activity cools, the feerate would also reduce, leading to lower transaction fees.

Reducing the transaction size would also reduce the fees incurred, this can be done through a couple of ways:
• Reducing the number of inputs: the higher the number of inputs involved in a transaction, the higher the size, so to reduce the size, less inputs should be spent.
If I receive 0.4BTC and spend that in a single transaction, the size would be smaller than a 0.2BTC transaction comprising two separate inputs (0.1,0.1BTC).

• Batching receptients : add multiple receiving addresses to a single transaction saves more cost than sending them in separate transactions.

• Consolidateling inputs and outputs: when an entire input involved in a transaction is not spent, this creates the need for a change address to receive the unspent coins. Spending the exact amount of an input would eliminate the need for a change address hence reducing the amount of outputs and also the transaction size.

Note that, inputs weigh more in a transaction and reducing them should be prioritized when looking to reduce fees.

•Using a Segwit address:  for a detailed explanation on how segwit functions, check out this thread - https://bitcointalk.org/index.php?topic=5198733.msg52985661#msg52985661
Higher transaction fees and lower size means a transaction is likely to get picked by a miner and confirmed much faster. If you're not in a particular hurry, you can select a minimal fee and wait for it to get confirmed. If a fee is too low a transaction can remain pending till it is dropped from the mempool (this takes ~ 72hours). If this happens the transaction is cancelled and the inputs are returned to the wallet.

If you have a wallet that have a lot of inputs (many small deposits - f.e. signature campaing payouts) than I suggest you to transfer everything to new wallet with Segwit address. That way you will lower number of inputs to 1 for your next transaction that will be issued from this wallet. As you are not in hurry you can set small fee (50 sat/byte is small now). That way at a cost of 2$ you will limit your transaction fee from 500$ to 100$ in case BTC is just starting new bull run as strong as 2017 was (just my dump guess according this 100$ and 500$).

You can also wrap your BTC on other fast chain but ... its not what true bitcoin maximalist do

Oh.. BTW... Withdraw your funds from exchanges/casinos and other third party wallets during bull runs. Bull runs makes exit scams more tempting. In some cases exit-scam is a must if scam service implemented fractional reserve system before and now is running out of bitcoin that are worth more and more - https://bitcointalk.org/index.php?topic=5094088.msg49096584#msg49096584

[witcher_sense]

If you have a wallet that have a lot of inputs (many small deposits) than I suggest you to transfer everything to new wallet with Segwit address. That way you will lower number of inputs to 1. As you are not in hurry you can set small fee (50 sat/byte is small now). That way at a cost of 2$ you will limit your transaction fee from 500$ to 100$ (just my dump guess according this 100$ and 500$) in a case BTC is just starting new bull run as strong as 2017 was.

From my point of view, you shouldn't consolidate the small UTXOs you have in your wallet for two reasons.  Firstly, this approach is weakening your privacy. For example, if one of the UTXOs is a KYCed withdrawal from a centralized exchange, by combining it with the other UTXOs (CoinJoined UTXOs and mixed ones) you will reveal not only your identity but also help surveillance companies to deanonymize other participants of mixed transactions. Secondly, small amounts will be worth more if bitcoin price continues to grow. It will allow you to spend them entirely, without the need for additional changes. Otherwise, everyone spying on you will be able to find out how many bitcoin you have.

[Tytanowy Janusz]

Otherwise, everyone spying on you will be able to find out how many bitcoin you have.

I'm not saying that you should put all your BTC in one wallet. This is, for sure, not the best idea. I'm saying about consolidating small inputs in hot wallet.

As an complete amateur in this field I'm doing it like that:

I'm using few wallets:
1 - cold main wallet. Not in use for months. Most likely not in use till $100k-$ 1 mln worth BTC. Mixed anonymous BTC.
2 - semi cold wallet. Big transfer from and to exchanges. Storing profit waiting for good price to dump.
3 - mobile wallet for fast deposit/withdrawals.
4 - mobile wallet for small deposits (f.e. signature campaign payouts)

Currently, my nr. 4 wallet stores ~400$ worth BTC and transaction fee for next block transfer is equal to 14$. At BTC worth 50 000$ it will be around 1600$. I can't imagine paying 500$ to transfer it. No matter if I'll consolidate it or not total amount is visible in explorer as Total Received, Total Sent and Final Balance. No matter if I'll consolidate it or not all deposits and withdrawals are visible in explorer (trackable). Am I wrong?

[batang_bitcoin]

Thanks for the reminder. As you mentioned funds in exchanges, there could be unexpected maintenance coming from them. It's always a surprise that nobody knows when they will happen to do especially when the market is growing up crazily. Also, this website is helpful to check the status of the mempool and tx fees.
https://jochen-hoenicke.de/queue/#0,24h

[Nhebu]

Thank you for sharing this stuff. I thought bull run is good but there are also things that bull run can make as upset. If ever there is a bull run season coming from this year, I think I shall put my funds from certain exchanges to my wallet. I remembered how etherdelta hacked incident before when bull run was covered the market. There are also exchanges turned down due to exit scams and hacking events.

[witcher_sense]

No matter if I'll consolidate it or not all deposits and withdrawals are visible in explorer (trackable). Am I wrong?

I see what you mean. Signature payments are normally made to a specific address, which means that address is being reused many times. In this case, you can safely consolidate all the utxos since you already revealed that the address is yours. Just make sure you are not using it for other purposes such as withdrawing from exchanges. Please note, you don't necessarily have to spend all the utxos (weekly payouts) at once, you can spend them separately, one by one. It will not increase a transaction fee and additionally may decrease the number of change addresses. By the way, I like your approach and especially the fact that you use different types of wallets for different purposes. I don't believe you are a complete amateur in cryptocurrency.

[davis196]

Thanks for the reminder,but I don't send and receive that many BTC transactions,so I don't care about the fees.
Your warning about the possibility of crypto exchanges and crypto casinos to turn into exit scams is kinda obsolete.This is 2020,not 2017 or 2013.
Maybe some small and shady crypto exchanges and casinos will turn into exit scams,but who the hell uses small and shady exchanges and casinos nowadays?
All the big and solid crypto businesses will stay strong during the bull run and will never exit scam their users.

[Upgrade00]

Please note, you don't necessarily have to spend all the utxos (weekly payouts) at once, you can spend them separately, one by one. It will not increase a transaction fee and additionally may decrease the number of change addresses.

If I understand correctly; You're suggesting someone who is trying to consolidate weekly payments for a service sends the funds to their cold (or semi cold) wallet as received, i.e weekly? This is not consolidating at all as all transactions would appear as different inputs in the storage address, so if eventually the user wants to send out of that wallet, they would be dealing with multiple UTXOs which would increase the fee.
Consolidating literally means to bulk up or merge into one and aims at reducing fees, in this case multiple inputs are grouped into one. It is best done during times when the network is relatively free and fees at at the lowest to counter the effect of the transaction size on the fee and in preparation for a time when the network gets clogged.
To avoid change address, the user can use up all the UTXOs in the address at once, or if they do not want to do this, they can use a wallet software that allows users select the specific inputs that go into a transaction.

<...>

An exit scam is not the only risk faced when using centralized exchanges. As a rule do not use custodial wallets to store your funds as the keys do not belong to you.

[pixie85]

High transaction fee in 2018 was due to lack of consensus on Segwit and Roger Ver and his BCH minions trying to spam the BTC network while launching a defamatory campaign and calling BCH the new king.

They were trying to make people sell BTC and buy BCH just to be able to send money to exchanges cheaper and faster and it work as you could see the BCH price reached ATH on that month.

I don't think it's ever going to happen again unless someone spends a lot of time and money to spam the network again.

[bobyhodob]

unfortunately the current bull run is still not visible because it is seen from the current condition of bitcoin prices which are still cheap and there is no movement in price increases will make us even more doubtful about the bull run, but if a bull run actually occurs this year then I have prepared some bitcoins in your wallet.

[joniboini]

I think its the last time to optimize your BTC wallet.

What do you mean? You can always make a 1 sats/vbyte transaction even if Bitcoin is priced at 1 million USD. You should count the fee on sats and not USD, since it will always change. Based on the history of Bitcoin's fee, the weekend is really good for consolidating your inputs and I doubt it will change that much if we break a new high.

[Tytanowy Janusz]

What do you mean? You can always make a 1 sats/vbyte transaction even if Bitcoin is priced at 1 million USD. You should count the fee on sats and not USD, since it will always change. Based on the history of Bitcoin's fee, the weekend is really good for consolidating your inputs and I doubt it will change that much if we break a new high.

Yes I can set 1 sat/byte but how long it will take to deliver such transaction? It can be stuck for weeks if not months. My first bitcoin transfer was stuck for 2 weeks (during 2017 bubble from cantor to my wallet - my first bitcoin purchase). It was extreme case ... i do agree (pixie85 mention it) but number of bitcoin users increased significantly from 2017 (tripled). High BTC fees at the top of bubble might be the case (in sat/vbyte) even without Roger Ver attack.

And it's not related to price (which you have rightly noticed) but to the volatility and emotions on market that push people to deposit to exchange. 1 sat/vbyte will be possible at 1 mln $ btc price but if BTC will go to 5 mln $ and than dump to 1 mln $ and stabilize there for a month.

https://jochen-hoenicke.de/queue/#0,24h

great tool. Thanks

[fauzan123]

There are many steps that must occur to be able to raise bitcoin, with the current technical position, the lowest price movement is at 12k, but if you look at the fee itself, it is still normal at $ 5- $ 10.

This is actually an individual decision and nothing is different, it's just that if you calculate it based on the dollar calculation it will be different, but in terms of bitcoin calculations, I think it will stay between 0.001 btc

[Tytanowy Janusz]

I've listened to advices and did a transfer with very low fee (5 sats/vbyte) to consolidate my inputs. It was stuck for 8 days but eventually went through. Well Its great to know that almost every weekend fees drops significant and its best time to transfer founds but I can't imagine waiting 8 days at the top of next bubble seeing how price drops from 100k $ to 30k$. I still advice to consolidate inputs because with 5 vsat/byte its only few cents and it saves you few $ (15 in my case) trying to do instant transfer during high fee days (200+ sat/vbyte).

Also, this website is helpful to check the status of the mempool and tx fees.
https://jochen-hoenicke.de/queue/#0,24h

Once again ... great tool. Thanks. On my daily use now.

[GreatArkansas]

If anyone got some confusion on Consolidating inputs and outputs.
Here is a brief explanation and how consolidating small inputs may help our transaction cheaper for transaction fees:
Fees are low, use this opportunity to Consolidate your small inputs! by LoyceV.
I hope this may help, I already tried this and I really advise everyone to do this if you guys want a cheaper transaction fees.

[Karartma1]

Otherwise, everyone spying on you will be able to find out how many bitcoin you have.

As an complete amateur in this field I'm doing it like that:

I'm using few wallets:
1 - cold main wallet. Not in use for months. Most likely not in use till $100k-$ 1 mln worth BTC. Mixed anonymous BTC.
2 - semi cold wallet. Big transfer from and to exchanges. Storing profit waiting for good price to dump.
3 - mobile wallet for fast deposit/withdrawals.
4 - mobile wallet for small deposits (f.e. signature campaign payouts)

That's a fairly good setup. As for storing all your coins in one wallet, I don't see it as a bad thing as long as you are an experienced user who knows how to make the best of coin control features. Under strict coin control, you can store everything in a single wallet but of course having a multi-level set up is better for security reasons. Single wallet management is much harder.

[tbct_mt2]

https://jochen-hoenicke.de/queue/#1,8h

Prepare your consolidated inputs for next price actions of bitcoin. 2 or 3 satoshis/ byte can be used to consolidate your inputs. Do this now as your preparation for next run of bitcoin. With 3 satoshi you can get super quick confirmation but for 2 satoshi you will have to wait about 1 hour or more.

[acquafredda]

Less than 11k transaction in the mempool, spend this Sunday to consolidate your smaller inputs and make sure you have your new UTXOs on bech32 native-segwit addresses. I did my transaction for 7sats per byte; do it until it lasts.
https://mempool.space/

[mirakal]

Nice suggestion though, however I still have some doubt that the bull run will come this year, yes, there was a small run but I don't think bitcoin will hit a new ATH this year. I'm hoping I'm wrong here because I'll benefit with that, but I just can't be too convince now as I think I've seen this before already.

About my wallet, been using a segwit wallet address in my electrum wallet, so I'm just doing great and I could minimize the fee.

[tyz]

Your post is interesting, and you're right, if you want to sell at the current bullrun, you should prepare yourself in time. Not only is it important to minimize the fees, but also to choose the right exchange if you want to sell larger quantities.
However, what is not properly considered and what is actually sad: Since the last bull run almost 3 years ago (end of 2017) there has been no progress regarding fees. Bitcoin transactions are still as slow and as expensive as they were then.