A cryptocurrency enthusiast paid a thousand times more to send 4 bitcoins than was necessary. What does this mean?
The long bearish trend has its upside for Bitcoin users – due to low activity, the average commission on the main cryptocurrency’s network reaches only a couple of tens of cents. However, the day before, a strange transfer was spotted on the blockchain: some digital asset user transferred the equivalent of $63,000 into BTC, while paying about $200 in commission, which is almost a thousand times the required value. Was this a mistake or a forced move? We tell you more about the situation.
As a reminder, the network of Bitcoin, Etherium and many other cryptocurrencies operates the concept of a mempool, that is, a common queue of transactions to be confirmed and added to the block. Transactions from there are retrieved by miners who are primarily interested in their own earnings. As such, the transactions with the highest fees paid are the first to be confirmed, and the network itself is auction-based.
In the last day, the average transaction fee in Bitcoin network was 87 cents, and in the last weeks the indicator was on the average level of 1 dollar and once exceeded the mark of 2 dollars.
Bitcoin’s average transaction fee graph
Usually, wallets and other interfaces for interacting with an address in the blockchain automatically determine the right fee for slow, normal and fast cryptocurrency transfers. However, this amount can also be specified manually – and this is where many users mistakenly enter inflated figures and lose money.
How much does it cost to transfer bitcoins?
In the transaction that entered Bitcoin block 760,077, the user paid 0.0136 BTC or $220 to move 3.8 BTC, which is the equivalent of $63,000. This payment is a thousand times higher than the average bitcoin transaction fee – at the aforementioned block it was 20 cents.
User transaction details
Further investigation revealed that the same cryptocurrency wallet had carried out another transaction forty minutes earlier, for which an exorbitant fee was also paid. That time its owner transferred 4.28 BTC or $83 thousand for 0.056 BTC or $109.
More information about the transaction
Details of the transaction were posted on Twitter by a user nicknamed Bitcoin QnA. He also gave an interview to Cointelegraph journalists a little later, in which he listed the possible reasons for what happened. Here is the relevant rejoinder from the expert.
1. using a wallet with terrible commission estimates;
2. the user made a typo when manually entering the amount of commission; 3. the transaction belongs to the exchange that handles the urgent payment. They often overpay, but usually not that much!
The crypto-enthusiast also does not rule out that the error was made due to the inexperience of the transaction originator. Perhaps he is not fully aware of how payouts to miners for processing transfers work. If this is indeed the case, the newcomer has quite large sums: after all, those who work with crypto for the first time usually do not transfer it in tens of thousands of dollars.
Average commission in Bitcoin network
Recall that transaction fees in the Bitcoin blockchain can vary from cents to hundreds of dollars, depending on the level of congestion in the membrane. The most important parameter is also not the cost, but the size of the transaction. It is the unit of transfer size, which is measured in bytes, that the user pays the rate. Generally speaking, the more addresses a transaction involves, the higher the total cost of the transfer will be. We have written in more detail about the principles of commission formation in a separate detailed article.
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However, it’s not just individual users who are losing money in crypto right now, but also technology giants. For example, according to a recent report from Tesla for the third quarter of this year, its unrealised losses from direct investments in Bitcoin are as high as $170 million. At the same time, the electric car maker has only made $64 million in profits from two rounds of BTC sales in the last two years of its ownership of the coin. Accordingly, the negatives from the current situation outweigh previous gains.
The amount of BTC on Tesla’s balance sheet and the price of Bitcoin
To recap, Tesla announced a $1.5 billion investment in the major cryptocurrency back at the beginning of last year. Around the same time, its CEO, Elon Musk, began actively promoting the crypto on Twitter. Since then, Tesla has sold BTC twice, with the last time the company divested 75 percent of its own cryptocurrency savings.
However, the losses from investing in digital assets have not affected the performance of the company’s key operations. Compared to the same period last year, its profits are up 169 per cent. Today, the total value of bitcoins on Tesla’s balance sheet reaches the $218 million mark.
We believe that this user deliberately paid excessive transaction fees: after all, having tens of thousands of dollars in crypto usually implies that its owner understands the basics of blockchain. In theory, this could have been an error in manually entering commission levels, but there was more than one such transaction.
In any case, it is recommended that users use the commission levels offered by the wallets, in the absence of an acute need. Alternatively, as a precautionary method, you can look into blockchain explorers like Etherscan beforehand and check the average commission manually.
For even more interesting news, check out our Millionaire Crypto Chat. There we will discuss other important developments related to the blockchain and decentralisation industry.
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