How to Avoid Paying Exorbitant Bitcoin (BTC) Transaction Fees During a Bull Market
As the crypto winter of 2018 is gradually coming to an end, the Bitcoin Network is about to get annoyingly congested once again, and the only way to get transactions confirmed in a timely way may be to pay high transaction fees or make use of the Lightning Network which is slowly gaining mainstream adoption.
Lightning Network Not There Just Yet
Despite all the hype and fanfare, the number of transactions carried out through regular bitcoin wallets still greatly outnumber those done on the Bitcoin Lightning Network.
At current, the average size of a Lightning channel is roughly $137, with a total of nearly 39,000 (channels) and a network capacity of about $5.5 million.
Bitcoin miners, on the other hand, have processed a whopping 26,000 transactions between blocks 570,170 and 570,179 and a total of about 153,400 BTC ($765,400) were transacted over this period, asides the 125 new BTC minted or the 15 BTC fees charged by bitcoin miners.
Reportedly, the current rate of transaction fees is roughly $1.15 or 0.00022991 BTC per 1000 bytes processed, and some bitcoin transactions can be as small as 0.2KB, especially if they have just one input.
Bitcoin Traders Not Helping Matters
As stated earlier, the Bitcoin Network often gets annoyingly congested when the markets are experiencing a strong bullish trend.
During this time, bitcoin traders scamper to get their deposits confirmed on their favorite crypto exchanges, and they don't mind paying outrageous transaction fees to get their transactions completed on time.
Against that backdrop, there are currently more than 75,000 unconfirmed transactions, and their chances of getting confirmed keep decreasing as higher fees are getting attached to newer transactions.
Space on the Bitcoin Blockchain is quite limited and valuable, and this excellent feature of Bitcoin has led to the creation of altcoins such as bitcoin cash (BCH) by those who believe it is better to have a larger block size.
Replace-By-Fee Works Perfectly
During Bitcoin Network congestions, a highly functional way of getting your transactions confirmed on time is to use the “replace-by-fee” (RBF) feature.
Created by Peter Todd, an Applied Cryptography, and blockchain technology expert, RBF hastens the transaction confirmation time by creating a new transaction from the unconfirmed transaction, but it embeds a higher fee to increase the likelihood of it being confirmed by miners.
It's worth noting that the RBF functionality only works for outgoing transactions. If your incoming bitcoin payment is taking too long to get even one confirmation out of the regular 3 to 6, RBF cannot help you.
If the incoming transaction remains unconfirmed for 72 hours, the transaction will be rolled back, and the funds returned to the originating wallet.
Altcoins Are Good Too
Another way of beating the Bitcoin Network congestion is to use alternative cryptos such as litecoin (LTC), Nano (NANO) and others since transaction fees on these networks are usually very insignificant.
With the Bitcoin Lightning Network steadily gaining traction in the cryptospace, it's only a matter of time before this layer two scaling solution gets integrated into a vast array of exchanges and even bitcoin wallets.
When this happens, bitcoin could move from being just a store of value to a cost-efficient and superfast payment method.