Tuesday, April 26, 2016

Improvements to how we calculate transaction fees

Earlier today we improved on how transaction fees are calculated, fees for outgoing Bitcoin transaction are now paid once every hour based on the average fee per transaction instead of directly after every transaction.

Last year we changed how fees on outgoing Bitcoin transactions were calculated from a fixed fee model to a dynamic model based on how congested the Bitcoin Blockchain is. This helps to ensure that every outgoing Bitcoin transaction from LocalBitcoins gets confirmed within the first three blocks of the transaction being sent regardless of how many transactions are waiting to be confirmed.

After this change we noticed that the transaction fee can change within a large margin from transaction to transaction. Now to help make the transaction fee more predictable we're collecting all Bitcoin transaction fees paid during the past hour and averaging them out over all sent transactions during the same hour. This will help to keep the transaction fee consistent and more predictable when you send Bitcoins to other wallets.

For example; During the past hour you've made two outgoing transactions from LocalBitcoins. In total LocalBitcoins users made 100 outgoing transactions for a total transaction fee cost of 0.005 BTC during the same hour. For your two transactions, you would pay 0.00010 BTC (0.00005 + 0.00005) as a transaction fee.

The transaction fees for your outgoing Bitcoin transactions will be paid from your LocalBitcoins wallet once every 6 hours, in case your wallet is empty the fee will be taken from your next Bitcoin purchase or incoming Bitcoin transaction.

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