One of the great virtues of the Bitcoin Blockchain is its decentralized operation. That includes, of course, the commissions we must pay to transact with BTC. Which can be defined by us before sending the money. However, a recent study of 0xb10c, the pseudonym for a respected Blockchain engineer. It seems to indicate that BitMEX makes Bitcoin transactions more expensive.
How does the Bitcoin Blockchain work?
When in our day to day we need to make a transfer using Fiat money, our bank charges us a commission to carry out the operation. Normally, we don’t even realize the size of this commission, which is automatically charged from our bank account. Without us having any power to decide how much money we want to pay for the service provided by the bank.
In the case of Bitcoin the situation is similar, but with a big difference. Well, just like with traditional Fiat money there are banks that serve as intermediaries in transactions. In the Bitcoin Blockchain there are miners, who maintain the BTC platform with their computing power. Allowing our operations to run.
In exchange for this work, the miners receive two rewards. On the one hand, for every block mined on the Blockchain, miners receive a certain amount of Bitcoin in return. Which is halved every four years, after each Halving.
Furthermore, users pay a commission to miners for their work. Being the user who performs the transaction who defines the amount of the commission. The higher the commission, the faster your operation will execute.
How does BitMEX influence this?
However, although each user can define how much money they want to pay miners for their work. The truth is that most of the large wallets have an algorithm through which they recommend the user the ideal amount of commission that they should pay, so that their transaction runs quickly.
It is calculated from the average number of transactions in execution and commissions recently paid on the Bitcoin Blockchain. Therefore, when one of the largest exchanges in the world, BitMEX, decides to execute withdrawals of funds from its users daily at the same time. This places significant pressure on the wallet algorithm. That begins to recommend higher commissions to its users.
Thus, according to 0x10bc research, every day at 13:00 UTC, BitMEX performs an average of 2,209 transactions in the Bitcoin chain, with a total of 3.16 MB and a total commission payment of 0.95 BTC. Which leads to an increase in commissions paid by users between 1:00 p.m. and 9:00 p.m. Generating an additional cost of 1.96 BTC for the crypto community, every day, due to BitMEX payments.
For its part, BitMEX explains that it makes all the payments at the same time, to allow each of them to be verified manually. Guaranteeing a high quality in the exchange service, and generating greater trust in its users. Even if this means that as a whole, crypto users pay more for transactions.
what do in this situation?
Although this may be annoying for some users. BitMEX’s actions do not prevent Bitcoins owners from deciding the commission they want to pay for their transactions. Being to pay the fee recommended by the wallet, ultimately, a personal decision.
A much more deleterious effect of BitMEX transaction execution is the increase in the average execution time of operations on the Bitcoin Blockchain. Thus, from 13:00 hours UTC, and for several hours, the transaction execution time reaches its daily peak.
In this situation, the recommendation of 0xb10c is clear: reduce the size of the operations carried out on the Bitcoin Blockchain. Not in terms of the amount of money sent, but rather the bytes used in each one.
Therefore, it recommends the use of SegWit, as well as BitMEX’s adoption of Schnorr and Taproot. Well, until the weight of the exchange’s transactions is reduced, other users will continue to have more expensive and slower Bitcoin transactions.