In the face of rising Bitcoin network transaction fees, the premier over-the-counter exchange Localbitcoins is enacting several changes to their fee structure. The company aims to cover the higher fees by spreading the cost fairly among customers.
New Fee Structure
Localbitcoins has introduced a new fee structure which will affect all customers. Citing the rising Bitcoin network fees, the company announced on Tuesday the details of their new fees:
In order divide the costs of handling Bitcoin transactions in a fair manner we are introducing deposit fees for incoming transactions. At the same time we will lower Bitcoin sending fees for all customers. The new fee system will be put into effect around 19th-21st June.
The Finland-based company with bitcoin sellers and buyers in almost every country further explained that “you can save further on the sending fee by timing your transaction to when the network is quiet.”
However, the new “deposit fees will be larger than the new sending fees,” they disclosed, adding that “generally we expect it to be about 3x the amount of sending fees per transaction.”
Improving Existing System
The existing fee structure at Localbitcoins has the drawback of overcharging fees to users withdrawing bitcoins, but none to those depositing them.
Sellers will now be covering two Bitcoin network fees; one for the cost of sending the coins into escrow and the second from escrow to the buyer. With the new fee system, “we want to spread these costs more fairly between our customers” the company wrote.
Over the years, Localbitcoins found that a large part of each Bitcoin transaction fee was used to cover the costs related to deposits, not withdrawals. The company clarified:
This means that customers who make many small deposits to their Localbitcoins wallet causes the sending transaction fees to rise, and these costs were paid by customers who were sending bitcoins.
The new deposit fee will ensure that the customers who make lots of small network transactions that cause larger network fees “will pay a larger share of the overall transaction costs.” Meanwhile, the customers who merely withdraw their coins “will enjoy lower fees.”
Also announced on Tuesday was an automatic fee adjustment feature on every transaction “based on how congested the Bitcoin network is.” Traffic on the Bitcoin network will be constantly monitored and fees adjusted to ensure the overall fees paid are smaller, Localbitcoins claims.
What do you think about Localbitcoins’ new fee structure? Let us know in the comments section below.
Images courtesy of Shutterstock and Localbitcoins
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Localbitcoins Introduces New Fee Structure