San Francisco-based cryptocurrency exchange Coinbase has revealed it managed to help its clients save 75.2% in transaction fees by batching transactions on the Bitcoin network.
According to a blog post the cryptocurrency exchange posted, since rolling out Bitcoin transaction batching on March 12 for both Coinbase Consumer and Coinbase Pro, it has greatly reduced the amount paid in transaction fees for customer withdrawals and has passed those savings on to its customers.
Transaction batching works by packaging various transaction requests into a single transaction, instead of creating a new transaction for every single request. Batching transactions reduces the cost of moving the funds on the flagship cryptocurrency’s network.
The costs are reduced both because the fees paid to move the funds are contained to a single transaction with multiple outputs, and because reducing the number of transactions being broadcast onto the Bitcoin blockchain better uses the available block space – of little over 1 MB per block – and reduces competition, reducing transaction fees for every bitcoiners.
Coinbase pointed out that it has been batching all of its customers’ withdrawals since March 12, and added:
Over this time period, we have realized a 75.2% reduction in transaction fees saved, and passed 100% of those savings on directly to the customer.
The cryptocurrency exchange added that batching transactions also helped reduce fee volatility, as during high activity periods transaction fees don’t surge as much. The exchange also saw the amount of transactions it was generating per day drop by 95%.
Coinbase batches transactions per day based on the amount of requests it receives from customers, and revealed this is now happening “at least once per minute.” Its conservative estimate, it added, suggests its move to batch transactions “contributed to a 10–15% reduction in the number of confirmed transactions per day on the entire network.”
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