What are Bitcoin Fees
Bitcoin Transactions are not free, every single bitcoin transfer must include a fee. Here are some facts about Bitcoin Fees:
- Fees are necessary – Every Bitcoin Transaction is charged a fee. There is no standard price. Instead the fees are like a tip, the more you pay the faster the transaction is approved.
- Higher Fees mean faster transactions – Bitcoin transactions are not instant. Simply said, the more fees you pay, the faster the transaction is processed.
- Fees are paid by the Sender – The receiver does not have to pay any fees.
A generous tip (currently around $1 USD) will allow the transaction to be almost instantaneous (10 min) whilst modest tip ($0.05) incur a 10 hour wait time. In fact, if no tips are included in a bitcoin transaction the transaction time may be infinite! Bitcoin transactions could be considered almost like a ‘tip’.
Do large transactions mean large fees:
In short: No. A common misconception is that the more bitcoins are transferred, the greater the fees that are needed. This however is not true, the amount of bitcoin fees that should be included depends on the amount of information relayed by the network.This means accounts with lots of small inputs would need more fees to transfer money out.
Cloud Mining generate tonnes of transaction fees
One major downside of cloud mining is that the mined bitcoins will cost a LOT of transaction fees. This is because a lot of cloud miners (eg. genesis-mining) will give daily payouts. This means that you wallet will be filled with a lot of small transactions. Whilst this might seem like not a bit deal, when you try to send money out of the wallet the fee for the transaction might be up to 20% of the transferred amount!
This is because bitcoin transaction fees are based on the number of inputs the wallet has. Because there are daily cloud mining payouts, the number of inputs in the wallet will be extremely high.