BitMEX Exchange Inflates BTC Transaction Fee

Kataryna Kovtun May 6, 2020

Researchers believe BitMEX is responsible for short-term growth in BTC transaction fees at around 13:00 UTC every day.

According to an anonymous Bitcoin developer 0xb10c, if the cryptocurrency derivatives exchange used more efficient technologies to transmit transactions, users would save about 1.7 BTC on commissions daily.

Why Does It Happen?

Each time a user sends a BTC transaction, a commission is charged from him, the size of which varies depending on the network load. If too many transactions are sent at the same time, miners will prefer those with a higher commission. Since BitMEX transmits thousands of transactions at the same time every day, this leads to an increase in fees in a certain period, says 0xb10c.

Most cryptocurrency wallets have built-in tools for assessing the size of fees for timely confirmation of the transaction. If the network processes too many transactions at the same time and the commission is too small, then transaction confirmation may take longer.

Due to a large number of concurrent BitMEX transactions, appraisers increase the size of the commission, and many users pay it. Although users prefer low fees, higher fees improve network security, 0xb10c added.

The Bitcoin developer community has long been trying to push large exchanges and wallet providers to implement scaling technologies. This could reduce fees and improve network performance. These include Segregated Witness or SegWit, an update to scale Bitcoin, which was activated in 2017.

In addition to SegWit, 0xb10c recommended BitMEX to use “packaging” — the technique of combining multiple transactions into one to save space. He also mentioned Taproot updates and Schnorr signatures, which will increase the privacy and scalability of Bitcoin, and developers estimate that they can be rolled out next year.

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