LocalBitcoins has announced it is enacting several changes to their fee structure. Exchange 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.
This new fee structure will affect all customers. Citing the rising Bitcoin network fees, the company announced on Tuesday the details of their new fees:
«In order divide the costs of handling Bitcoin transactions in a fair manner we are introducing deposit fees for incoming transactions. At the same time we will lower Bitcoin sending fees for all customers. The new fee system will be put into effect around 19th-21st June.»
The Finland-based company with bitcoin sellers and buyers in almost every country further explained that “you can save further on the sending fee by timing your transaction to when the network is quiet.”
However, the new “deposit fees will be larger than the new sending fees,” they disclosed, adding that “generally we expect it to be about 3x the amount of sending fees per transaction.”
Improving existing system
The existing fee structure at Localbitcoins has the drawback of overcharging fees to users withdrawing bitcoins, but none to those depositing them.
Sellers will now be covering two Bitcoin network fees; one for the cost of sending the coins into escrow and the second from escrow to the buyer. With the new fee system, “we want to spread these costs more fairly between our customers” the company wrote.
Over the years, Localbitcoins found that a large part of each Bitcoin transaction fee was used to cover the costs related to deposits, not withdrawals. The company clarified:
«This means that customers who make many small deposits to their Localbitcoins wallet causes the sending transaction fees to rise, and these costs were paid by customers who were sending bitcoins.»
The new deposit fee will ensure that the customers who make lots of small network transactions that cause larger network fees “will pay a larger share of the overall transaction costs.” Meanwhile, the customers who merely withdraw their coins “will enjoy lower fees.”
Also announced on Tuesday was an automatic fee adjustment feature on every transaction “based on how congested the Bitcoin network is.” Traffic on the Bitcoin network will be constantly monitored and fees adjusted to ensure the overall fees paid are smaller, Localbitcoins claims.
The platform continued on the topic of future developments:
“LocalBitcoins is committed to improving the situation. We’ll invest resources towards developing various offchain technologies, transaction batching and other tools to make using Bitcoin cheaper for our customers.”