2017. Nov. 13. 15:40
If only they were our fees! We would love nothing more than to make withdrawals completely free as they were before and still are most of the time.
We never made money off our users withdrawing coins and do not intend to ever profit off withdrawals.
We felt it was important to explain that the fee is not a withdrawal fee: it is a mining fee required by the Bitcoin network (specifically the bitcoin miners) to confirm transactions.
In order for your withdrawal (a bitcoin transaction) to get confirmed (read: ‘finalised’) by the network, a miner has to find a block and put your transaction in it, so it becomes part of the blockchain. Whatever mining fee you paid to send the transaction is given to the miner as a reward for validating that your transaction is legitimate and helping to secure the bitcoin network.
There is a new block found by miners every 10 minutes on average under normal circumstances, but because it is up to chance, it could also take hours to find a block.
One block can hold roughly 2,000 transactions.
If there are more unconfirmed transactions than fit in a block, the miners need to prioritise which of them they will include. Miners typically give priority to transactions with a higher fee to maximise their profits.
With tens of thousands of unconfirmed transactions, people who want a quick confirmation pay more and more to get ahead of the queue. In other words, people are bidding to get a better chance of their bitcoins arriving to their destination as soon as possible.
Like many wallets out there, we rely on https://bitcoinfees.21.co/ to estimate the minimum fee required to get your transaction confirmed quickly. The fee estimates are automatically pulled every few minutes. This means that the fee options change along with the state of the bitcoin network in realtime.
When there are many unconfirmed transactions, all paying high fees, it will cost you more money to get a confirmation since you are competing with them.
When the network isn’t overloaded and there are only a few thousand unconfirmed transactions, free withdrawals are possible.
Under normal circumstances, you can choose the free withdrawal option. Sometimes the free withdrawal option is enough to get confirmed on the first block found, in which case we do not even let you add a mining fee and waste your money unnecessarily.
However, if the fee estimates suggest that not adding an extra mining fee would result in the transaction being confirmed in a long time (currently 40 blocks, or ~7 hours on average), free withdrawals are no longer possible.
This is because of how bitcoin uses “change addresses”.
To understand what this means, imagine that you are paying for a loaf of bread with a $100 note. You give the money to the cashier and they return $98 to you (the change). Until you get your change back, you are out of $100 temporarily. In the real world, this happens very quickly. In the case of bitcoin, the change is returned when the transaction confirms.
Analogies aside, your withdrawal of 0.001 BTC could lock 5 BTC of our funds until the transaction is confirmed. You can probably see that even a few slow withdrawals are guaranteed to cause the full balance in our hot wallet to be locked pending confirmations. And we need to be able to process hundreds of bitcoin transactions every day. We need our change money back.
The bottom line is: allowing slow transactions would prevent us from fulfilling withdrawal requests by our users.
When the number of unconfirmed transactions rises suddenly and unexpectedly, it does result in withdrawal problems on many sites. For example, just yesterday users of Localbitcoins couldn’t get their withdrawals processed for hours as a result.
We pay part of the mining fee to provide the best experience possible for our users, therefore your BitBargain withdrawal may be cheaper than using your own bitcoin wallet. Don’t store your coins in our wallet though, it’s only for temporary use.
This blog entry is being written on the 13th of November 2017. Yesterday we have seen a group of miners suddenly remove their mining power from bitcoin temporarily.
This has caused blocks to be rarely found, instead of the usual 10 minutes they took over 30 minutes on average, sometimes over an hour. Transactions just kept piling up between blocks.
With only a few rare blocks found to include and confirm the pending transactions, the waiting queue just kept growing, the fee competition was strong. The cost of a quick confirmation rose to over £13 worth of BTC!
The miners have since switched back to mining bitcoins and the backlog of over 170,000 unconfirmed tranactions is being cleared with every block found. If this continues, free withdrawals should be available in a day again.
Before making a purchase, we strongly recommend visiting your BitBargain wallet first to see what the fee options are in the dropdown. If the fees are high, if the free withdrawal estimates a long confirmation time, you may not be able to make a free withdrawal. If that is a problem, please hold off with the purchase until the situation gets better.