Network Costs Bite As LocalBitcoins Introduces Deposit Fees
LocalBitcoins has announced it is introducing Bitcoin deposit fees next week in response to rising network fees.
LocalBitcoins has announced it is introducing Bitcoin deposit fees from June 21 due to rising Bitcoin network fees.
In an email to users on Tuesday, the P2P marketplace explained that the Blockchain space required to manage deposits outweighed withdrawals and that fees, therefore, needed to be levied on the process.
“In the Bitcoin network managing deposits uses up a lot of blockchain space while handling a withdrawal uses up much less space. This means that a large part of the old Bitcoin transaction fee was for covering costs related to deposits,” the email reads. “By introducing deposit fees customers who make many small deposits will pay a larger share of the overall transaction costs and customers who send out transactions will enjoy lower fees.”
LocalBitcoins is only the latest Bitcoin business to introduce increased rates as a result of network usage costs.
While withdrawal fees are decreasing, a similar move this week from exchange Kraken came as a result of user backlash over its previously proposed fixed-rate Bitcoin withdrawal fee of 0.025 BTC ($6.20).
LocalBitcoins’ new fee schedule will be dynamic, equal to “about 3x the amount of sending fees” - the reduced withdrawal fees.
“LocalBitcoins is committed to improving the situation,” the platform continued on the topic of future developments. “We'll invest resources towards developing various offchain technologies, transaction batching and other tools to make using Bitcoin cheaper for our customers.”