Several companies and service providers in the bitcoin world have been forced to rethink their business model quite a bit. To be more specific, these enterprises are changing the way on-chain transaction fees are handled. Whereas these costs were previously paid by the company in question, that is no longer necessarily the case. The following companies recently announced customers will be responsible for paying on-chain transaction fees.
It is not entirely surprising to see bitcoin exchanges pass the burden of transaction fees on to their customers. In fact, the vast majority of bitcoin exchanges has maintained this business model for several years now. Coinbase was one of the few companies who still paid these costs out of their own pocket, but that is no longer the case.
As of march 21st, all Coinbase users are responsible for paying bitcoin transaction fees for every on-chain funds transfer. Any transfer taking place between Coinbase wallets will remain free of charge, as those transactions do not occur on-chain. So far, no one has responded negatively to this change, although it continues to highlight the mounting transaction fees need to be addressed sooner rather than later.
Once the Coinbase announcement was made, it did not take long for BitPay to issue a similar statement. Considering how BitPay is the largest bitcoin payment processor in the world, it was only a matter of time until they addressed the mounting bitcoin transaction fees. A fee will be added to every BitPay invoice moving forward, yet merchant fees will not be affected by this change.
To be more specific, anyone who receives money through BitPay’s invoice service will still receive the same amounts. Payers, on the other hand, will be asked to include a miner fee for every transaction. In doing so, BitPay aims to maintain their zero-confirmation payment completion strategy, even as the on-chain transaction fees continue to increase. This change comes on the heels of BitPay raising the minimum invoice amount from US$0.04 to US$1.
It seems evident no bitcoin service provider can escape the mounting transaction fees these days. Coinjar, a well-known bitcoin -peer-to-peer lending service provider, announced they will change the fee structure as well. Earlier today, Coinjar issued a statement as to how they will charge a TX fee from April 3, 2017, onward.
As relaying transactions becomes more expensive, covering costs becomes nearly unfeasible for any bitcoin service provider. Costs have been mounting for all three of these companies, and they have all reached a point where maintaining the current business model makes no economic sense. In the case of CoinJar, the company will charge a 0.0005 BTC fee per transaction moving forward.
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