Learn about why bitcoin transaction fees are high and how to get the best fees for your transactions!
If you have been using bitcoin to send transactions lately, you could notice a rise in transaction costs. In this article we would like to give you a clear picture about what’s going on and how you can make the best decisions for yourself. To start with, let’s look at the most common questions.
Why are transaction fees increasing?
When you click “send” in your wallet, you submit your transaction to the bitcoin network. The recipient now has to wait until a “miner” verifies and bundles the transaction together with other transactions into a block.
Now imagine that there is only a certain amount of transactions that fit into one block. If you want to ensure that your transaction is in the next block, you have to pay a high enough fee to bid out some of the other senders because miners are incentivized to pick transactions with higher fees. In the recent months, due to the growing popularity of bitcoin, a lot of people want to send transactions. Therefore there is more competition for transactions to get picked up by miners. Remember, wallets never receive transaction fees, only the miners do.
What can I do if my transaction is “stuck” / not getting confirmed?
First, check on the Block Explorer the status of your transaction to understand if it’s unconfirmed, or simply hasn’t reached the necessary amount of confirmations to be valid by your recipient. For example, some services may require you to wait for 6 or more confirmations before considering the transaction settled.
If you are certain that your transaction remains unconfirmed, you can do two things:
a) You can wait longer, until there is less congestion in the network, and miners begin picking up transactions with lower fees.
b) Use a transaction accelerator service such as pushtx.btc.com. Here you can “top-up” your transaction fee to be competitive. This can speed up your transaction substantially, with a probability of getting it confirmed within 1 – 4 hours.
How can I get my transaction through with lower fees?
There is no magic trick to pay very low fees and still get your transaction confirmed right away, because the prices are based on supply and demand. However, you can save on fees with these tips:
- Choose a Segwit enabled wallet: If you use a wallet — such as the BTC.com wallet — that has Segwit implemented, you can expect lower transaction fees. This technical implementation allows for a reduced transaction size, lowering the amount of fee necessary to stay competitive compared to other transactions of the same size.
- Choose the right time: Look at websites such as jochen-hoenicke.de/queue/#24h where you can see how many transactions are waiting to be picked up by miners. Try to find a time when there are few unconfirmed transactions, so you have better chances to be chosen.
- Choose a low priority fee: If you are not in a rush to get your transaction through, choose the “Low priority fee” setting in your wallet. The BTC.com wallet dynamically estimates the best transaction fee and let’s you pick from “Optimal” (for faster confirmation times) and “Low Priority” (for slower confirmation times).
- Alternative currencies: You can also consider other cryptocurrencies for settling your payments, such as Bitcoin Cash (BCH). Bitcoin Cash, which is a fork of Bitcoin, has an increased block size allowing for greater capacity of transactions, thereby greatly reducing transaction fees. At the time of writing this article, the transaction fee for a Bitcoin Cash transaction can be more than 100-times cheaper than for a bitcoin one.