Quite a few Bitcoin companies are passing transaction fees along to their users. This has been quite notable among cryptocurrency exchanges as of late. Xapo, a wallet and debit card provider, is now doing the same. In the next few days, all users will pay the mining fee themselves when moving funds off the Xapo platform. This is slowly becoming the norm for any business dealing with Bitcoin.
Xapo is not the first – nor the last – bitcoin company to pass withdrawal fees along to the user. Multiple exchanges have done the exact same in recent months. Coinbase was among the first platforms to do so. Xapo is now doing the same, as it no longer makes sense financially to pay these fees themselves. Transaction costs are increasing on the network, and users will bear the responsibility for paying them.
Xapo Makes A Difficult Business Decision
It is worth noting none of these fees will go to Xapo directly, though. Customers are not paying the company directly to move funds out. However, they are paying a fee to entrust a company with their money and moving it out at a later date. In a way, this is only to be expected. All of the fees will be paid to Bitcoin miners directly. With feet on the rise, this can become quite a costly manner in the coming months.
Xapo claims the fee will be calculated in a dynamic manner. It will be based on current Bitcoin network conditions. Users will pay this fee at the end of their transaction. It is expected more companies will take a similar approach to withdrawals in the future. Any transaction taking place between different Xapo accounts will still be without additional fee, though. It is possible the company uses off-chain transactions to settle these balances.
Additionally, Xapo users can choose what type of a fee they are willing to pay. Either a standard or high priority fee can be selected for every withdrawal.The latter option will be a lot more expensive, as is to be expected. Mounting Bitcoin transaction fees are a big worry for the network overall. Giving users some form of control over the fees is a smart decision by the company, though. These are troubling times for Bitcoin, that much is evident.