𝗛𝗼𝘄 𝘁𝗼 𝗦𝗮𝘃𝗲 𝘁𝗵𝗲 𝗠𝗼𝘀𝘁 𝗶𝗻 𝗢𝗻-𝗖𝗵𝗮𝗶𝗻 𝗙𝗲𝗲𝘀

In case you haven’t noticed, #Bitcoin’s on-chain transactions require higher fees than in the past.

This is partially due to inscriptions taking up more block space than actual transactions, but it’s also due to Bitcoin’s rising popularity, as we approach the next bull run.

Eventually, the miners will 𝘳𝘦𝘨𝘶𝘭𝘢𝘳𝘭𝘺 receive more sats from transaction fees than from the block subsidy, so while these fees can seem expensive in the short-term, 𝘁𝗵𝗲𝘆’𝗿𝗲 𝗯𝗲𝘁𝘁𝗲𝗿 𝗳𝗼𝗿 𝗕𝗶𝘁𝗰𝗼𝗶𝗻 𝗶𝗻 𝘁𝗵𝗲 𝗹𝗼𝗻𝗴-𝘁𝗲𝗿𝗺.

In the meantime, here’s how you can save the most sats in this high-fee environment👇

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First, it’s important to understand why Bitcoin’s fee market is integral for transaction processing. Users bid for limited block space, offering fees so miners can prioritize some transactions over others. 𝗧𝗵𝗶𝘀 𝘀𝘆𝘀𝘁𝗲𝗺 𝗲𝗻𝘀𝘂𝗿𝗲𝘀 𝗮 𝗳𝗮𝗶𝗿 𝗮𝗻𝗱 𝘀𝗲𝗰𝘂𝗿𝗲 𝘁𝗿𝗮𝗻𝘀𝗮𝗰𝘁𝗶𝗼𝗻𝗮𝗹 𝗲𝗻𝘃𝗶𝗿𝗼𝗻𝗺𝗲𝗻𝘁.

Transaction fees are denominated in 𝘴𝘢𝘵𝘴 𝘱𝘦𝘳 𝘷𝘣𝘺𝘵𝘦. This measurement refers to the rate of satoshis (the smallest bitcoin unit) per byte of data that the transaction will store in the blockchain, minus the signature data, if your wallet is using the SegWit upgrade. 𝗛𝗶𝗴𝗵𝗲𝗿 𝗳𝗲𝗲 𝗿𝗮𝘁𝗲𝘀 𝗹𝗲𝗮𝗱 𝘁𝗼 𝗾𝘂𝗶𝗰𝗸𝗲𝗿 𝗰𝗼𝗻𝗳𝗶𝗿𝗺𝗮𝘁𝗶𝗼𝗻𝘀.

To reduce on-chain fees, smart strategies are essential:

𝟭. 𝗕𝗮𝘁𝗰𝗵 𝗧𝗿𝗮𝗻𝘀𝗮𝗰𝘁𝗶𝗼𝗻𝘀: If you’re paying multiple people, you can combine them into one transaction. This lowers the total data size, thus reducing your total fees.

𝟮. 𝗨𝘀𝗲 𝗙𝗲𝘄𝗲𝗿 𝗨𝗧𝗫𝗢𝘀: When transaction fees drop, take that opportunity to send your bitcoin to yourself to consolidate your UTXOs. This will leave a smaller on-chain footprint when you need to make a transaction after fees rise again.

𝟯. 𝗧𝗶𝗺𝗲 𝗬𝗼𝘂𝗿 𝗧𝗿𝗮𝗻𝘀𝗮𝗰𝘁𝗶𝗼𝗻𝘀: Fees can fluctuate based on network activity. Transacting during off-peak times — such as on weekends and during the night for western nations — often results in lower fees.

And, of course, if you can use the Lightning Network and other second layer solutions, instead of the blockchain, that’s one of the best ways to save on fees, and relieve some of the burden on Bitcoin’s base layer. Opening new Lightning channels now may be expensive, but they will allow for many low cost and fast transactions in the future.

Adopting practices like these can lead to significant savings, especially for frequent users. Efficient Bitcoin usage is not just about understanding the market, but also about 𝗮𝗰𝘁𝗶𝘃𝗲𝗹𝘆 𝗲𝗻𝗴𝗮𝗴𝗶𝗻𝗴 𝘄𝗶𝘁𝗵 𝗶𝘁 𝘁𝗼 𝗼𝗽𝘁𝗶𝗺𝗶𝘇𝗲 𝘁𝗿𝗮𝗻𝘀𝗮𝗰𝘁𝗶𝗼𝗻 𝗰𝗼𝘀𝘁𝘀.

Bitcoin's fee market offers a transparent and competitive platform for transactions. Understanding and strategically navigating this system, especially with the new and changing dynamics of things like inscriptions, can effectively minimize your on-chain fees.

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Can you think of other strategies for paying low on-chain fees?

Share it in the 𝗖𝗼𝗺𝗺𝗲𝗻𝘁𝘀⬇️ so others can save on fees, too!

Give this a 𝗟𝗶𝗸𝗲🤙 and a 𝗦𝗵𝗮𝗿𝗲🔄, so more people can learn these strategies.

And 𝗕𝗼𝗼𝗸𝗺𝗮𝗿𝗸🔖 this for later, because the value of each transaction fee will trend upward forever (Laura).