High withdraw fee rates by binance etc, Why?!

[epsi1on]

Hi,
trading websites like binance, do charge user for 0.0005 BTC (half of mili BTC or 0.5 mBTC) when user is going to withdraw.
Many other websites are likely charging users for same fee. What is the reason?
Sites like binance do pay users in groups, I mean they pay to 10 users in same transaction. this will also reduce fee payed by binance.
So why binance (or other sites) do charge user for $10 as fee when they do pay $1-2 as fee?
For example even if binance pay $1 as fee to the bitcoin network, then it will charge user for $10 (0.5mBTC).
I think binance do not likes that users withdraw their BTCs because maybe they do not have enough BTC in their wallets!

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[pooya87]

Because withdrawal fee is actually a service fee which you pay the exchange for their services not all of it is for the transaction itself.
Additionally exchanges want to discourage people from withdrawing their coins from their accounts so that they can keep their liquidity high specially if the exchange is doing something shady like selling coins they don't have and if everyone were to withdraw they would run out of coins to give them.

[LoyceV]

First: you should move (bottom-left) this topic to the Exchanges board.

Second: You're data is outdated. Current Binance withdrawal fees are 0.0002 BTC (and I've been told the SegWit amount on that page is outdated).
The reason for those high fees can be seen from the same page: Binance tries to trick gullible users into accepting their own made-up tokens instead of Bitcoin. There's only one Bitcoin, but Binance offers "BNB Smart Chain (BEP20)", "BNB Beacon Chain (BEP2)" and "Ethereum (ERC20)". As all altcoins, those are only created to make the creator rich. Don't accept substitutes! Even better if you don't use exchanges that promote fake Bitcoins for their own financial gain.
TL;DR: Don't use Binance.

[o_e_l_e_o]

Partly the two reasons outlined above (force you to keep your coins on the exchange, and trick newbies in to using a centralized scamcoin instead), and partly pure profiteering. Last time I looked at it, the number of batched outputs in each of Binance's withdrawals transactions meant that each output averages out as only around 45-50 vbytes. Here's a recent withdrawal transaction from Binance now they have moved over to segwit (it only took them 5 years!) - https://mempool.space/tx/0136bd7279781b272d78691ab41947dd3b50481427e79644257f41198570a8f8. 29 outputs, paying a total fee of 17,160 sats, meaning each output contributed ~592 sats to the transaction. (Ignoring that they overpaid by 17x and could have broadcast at 1 sat/vbyte). So if current withdrawal fees are 20,000, then that's 19,408 sats per withdrawal going in to Binance's pocket. They also have to consolidate deposits of course, which they do again in massive batched transactions with a much lower fee rate to minimize costs, but even knocking off another ~1,500 sats for that, then they are making a nice 18,000 sats in profit per withdrawal.

Multiply that by thousands of withdrawals a day, and it is tens of thousands of dollars in value that Binance users are losing every day for absolutely no reason.

[Pmalek]

The reason is simple: they make money when you withdraw coins from their exchange. Only a part of what they charge you is used to pay the mining fees for your transaction. Most of it is their profit. Just like any other business, they want their profit margin to be as big as possible. If people didn't complain and if they feared they would lose their customers, they would raise this amount even higher.

P2P trading and being able to set your own fees the way you want it will always help you save money.

[LoyceV]

They also have to consolidate deposits of course, which they do again in massive batched transactions with a much lower fee rate to minimize costs, but even knocking off another ~1,500 sats for that

This consolidation (10 minutes ago) also overpaid by a factor 12. I can only conclude Binance has totally different objectives than the average Bitcoin user.

@OP: for small withdrawals, withdrawing a low-fee altcoin and converting that to Bitcoin on an instant exchanger can often lead to lower total fees. It's worth doing the math.

[Pmalek]

@OP: for small withdrawals, withdrawing a low-fee altcoin and converting that to Bitcoin on an instant exchanger can often lead to lower total fees. It's worth doing the math.

Or you perform the whole trade on an instant exchange for smaller amounts without going through a CEX like Binance at all. I did an experiment a while ago checking what amounts I could have received on an instant exchange compared to a CEX. Instant Exchange VS a CEX: Who Wins?

What I don't like about these instant swaps platforms are the sudden freezing of funds and requesting KYC and the fact they have plenty of scam accusations to their names. It's a risk everyone needs to weigh up for themselves.

[Charles-Tim]

So why binance (or other sites) do charge user for $10 as fee when they do pay $1-2 as fee?

It can even be more, I remember when Binance withdrawal fee was still 0.0005 BTC when bitcoin was around $50000, Binance fee was over $20.

But Binance reduced withdrawal fee to 0.0002 BTC and bitcoin price dropped and the fee to be paid now is still less than $5. But this does not change the fact that Binance is not the only existing exchange, there are some that charge far more higher. You can check the lists of exchanges and the amount of bitcoin they charge as fee, also in USD:

https://withdrawalfees.com/coins/bitcoin

@OP: for small withdrawals, withdrawing a low-fee altcoin and converting that to Bitcoin on an instant exchanger can often lead to lower total fees. It's worth doing the math.

I have used instant exchange before, the only benefit is just that you can buy and convert bitcoin directly by using a noncustodial wallet address, unlike centralized exchanges that give users exchange address that the exchange have full control over. But that does not mean instant exchange can not freeze your coin too in the process of exchanging as you will first send the exchange the coin you want to exchange to bitcoin.

With $250 at the time bitcoin was around $7000, I make use of Changelley as this party on Coinomi, it can charge $7 or more. I noticed as the amiunt to exchange increased, the fee also increases.

Coinomi is not recommended because it is close source wallet, also instant exchanges can freeze your coins. I used it when I knew little about privacy and having full control over owns coin.

If you are withdrawimg large amount, it is better to make use of Binance directly. Binance just started BTC pair free exchange but not on many other exchange which may charge at least 0.1% as fee. The fee that would be deducted for that on other exchanges, especially for high amount of bitcoin would be higher and also converting it back to bitcoin on instant exchange also would be higher in fee. Withdrawing directly on Binance would be better than first sending it to instant exchange.

[LoyceV]

What I don't like about these instant swaps platforms are the sudden freezing of funds and requesting KYC and the fact they have plenty of scam accusations to their names. It's a risk everyone needs to weigh up for themselves.

It's not as if Binance doesn't scam users. See this topic. Very short version: shasan withdrew Doge from Binance to someone else's address. A year later, when Doge is worth much more, Binance sends the same Doge transaction again and takes everything in shasan's account to make up for their own stupidity.

[o_e_l_e_o]

This consolidation (10 minutes ago) also overpaid by a factor 12. I can only conclude Binance has totally different objectives than the average Bitcoin user.

It's easy to massively overpay the fee when it isn't your money that is paying for it. Binance have been ripping off their users daily since their foundation, but for some reason people turn a blind eye. As Charles-Tim says, at the height of it they were charging 50,000 sats per withdrawal when bitcoin was $60k. Imagine paying $30 just to be allowed to access your own money. If a fiat bank tried to do that there would be uproar.

It's not as if Binance doesn't scam users. See this topic. Very short version: shasan withdrew Doge from Binance to someone else's address. A year later, when Doge is worth much more, Binance sends the same Doge transaction again and takes everything in shasan's account to make up for their own stupidity.

Wow. Literal theft. Again, imagine if a fiat bank said "Well, we accidentally sent a million buck to someone you sent money to a year and a half ago, so we are going to take everything you own as compensation for our own mistake."

Centralized exchanges really are the worst of both worlds. All the downsides of complete centralization with none of the insurance or protections that fiat banks provide.

[alterra57]

Hi,
trading websites like binance, do charge user for 0.0005 BTC (half of mili BTC or 0.5 mBTC) when user is going to withdraw.
Many other websites are likely charging users for same fee. What is the reason?
Sites like binance do pay users in groups, I mean they pay to 10 users in same transaction. this will also reduce fee payed by binance.
So why binance (or other sites) do charge user for $10 as fee when they do pay $1-2 as fee?
For example even if binance pay $1 as fee to the bitcoin network, then it will charge user for $10 (0.5mBTC).
I think binance do not likes that users withdraw their BTCs because maybe they do not have enough BTC in their wallets!

High withdraw fees are to discourage users from withdrawing their coins.

[Bitcoin_Arena]

1. Which is the more obvious one; So that they can make abnormal profits from your transaction fees

2. So that they can discourage you from using Bitcoin network to withdraw and instead use their shitcoin network (Binance smart chain and Binance chain) but in actual sense right now at 1 sat per vbyte Bitcoin network is so check when you attempt to make a transfer.

[virasog]

Hi,
trading websites like binance, do charge user for 0.0005 BTC (half of mili BTC or 0.5 mBTC) when user is going to withdraw.
Many other websites are likely charging users for same fee. What is the reason?
Sites like binance do pay users in groups, I mean they pay to 10 users in same transaction. this will also reduce fee payed by binance.
So why binance (or other sites) do charge user for $10 as fee when they do pay $1-2 as fee?
For example even if binance pay $1 as fee to the bitcoin network, then it will charge user for $10 (0.5mBTC).
I think binance do not likes that users withdraw their BTCs because maybe they do not have enough BTC in their wallets!

The profit that Binance exchange is making is too much that even if they make zero withdrawal fee, it will have no impact on them. But these exchange motive is to make more and more money, whether it is from the trading fee or withdrawal fee.

Yeah, keeping the withdrawal fee a bit high also discourages traders to move the funds out of the exchange and exchanges do want more liquidity.

[stadus]

Withdrawal fees for them are like service fees as well, so if you feel that's huge, then why not try withdrawing altcoins? That's my technique, if I will trade with Binance, I usually trade by BTC to a certain altcoins, withdraw it to my local wallet and convert it to local currency.

[LoyceV]

Imagine paying $30 just to be allowed to access your own money. If a fiat bank tried to do that there would be uproar.

No there won't be any uproar! ING for instance started charging users (dependong on which subscription they have) if they withdraw money (or above a certain number of transactions per year). It's still low (€0.80), but they charge €6.00 per deposit already. Money is just an inconvenience for banks nowadays. And I bet those fees will only go up in the future.

Withdrawal fees for them are like service fees as well, so if you feel that's huge, then why not try withdrawing altcoins?

Or use a different exchange, Kraken for instance charges 0.00001 BTC (or free, if you use Bitcoin Lightning Network). Vote with your wallet

[o_e_l_e_o]

No there won't be any uproar! ING for instance started charging users (dependong on which subscription they have) if they withdraw money (or above a certain number of transactions per year). It's still low (€0.80), but they charge €6.00 per deposit already. Money is just an inconvenience for banks nowadays. And I bet those fees will only go up in the future.

So you have to pay every month for the OranjePakket account in the first place, you have to pay every month for the debit card, and then you have to pay to deposit money in to your account, and then pay again to withdraw money from your account. And in return for all that payment, they offer a cool 0% interest rate. And people actually use this? What a rip off.

Bitcoin fixes this.

Or use a different exchange

This, exactly. I don't want to swap my valuable bitcoin for some useless, centralized and insecure altcoin just because the exchange is ripping me off. Much better to find a more honest exchange.

[sheenshane]

Or use a different exchange

This, exactly. I don't want to swap my valuable bitcoin for some useless, centralized and insecure altcoin just because the exchange is ripping me off. Much better to find a more honest exchange.

There's nothing we can do if we're a trader, not a holder (we need an exchange platform to trade).  Just accept the fact that CEXs sometimes played a dirty way (not only Binance), because business is just a business for them.  Almost all crypto exchangers are the same as Binance exchange because this was the fact, it's a way they generate a profit, it's from the fees which one of their sources.

On this BEST Crypto Exchange Fee Comparison, it seems Binance really has a huge fee with a 3.5% withdrawal fee and I saw FTX exchange platform which is all are low fees and most of them are 0%.
Choosing the right exchange sometimes it's a very crucial part.

[epsi1on]

When i want to withdraw low amount of BTC like $10 or less, as some user suggested, First i exchange the BTC into others like LTC or Tether, then use sites like fixedfloat{dot}com and change Tether to BTC back again. fixedfloat fee is 0.5%~1% of market price, and there is no withdrawal fee, which is good for low amounts, like less $10.

[LoyceV]

and there is no withdrawal fee

That's not entirely correct: you also pay for the on-chain transaction fee. When on-chain fees are higher, switching to Bitcoin LN pays off.

[dkbit98]

When i want to withdraw low amount of BTC like $10 or less, as some user suggested, First i exchange the BTC into others like LTC or Tether, then use sites like fixedfloat{dot}com and change Tether to BTC back again. fixedfloat fee is 0.5%~1% of market price, and there is no withdrawal fee, which is good for low amounts, like less $10.

You can also switch to FTX exchange that doesn't charge any fees for withdrawing Bitcoin, instead of converting to shitcoins all the time and you will still pay fees for them, just less.
I can't confirm if this is true but it appears that Kraken and Coinbase exchange currently also has very low fees for Withdrawing BTC, but maybe it's adjusting according to mempool state.
Check this comparison table:
https://withdrawalfees.com/coins/bitcoin

PS
I would be very careful using any centralized exchanges, and it's better to switch to something like Bisq that can't freeze your account and confiscate your coins.