I bought some BTC on Coinbase like I've done fairly often in the past but when trying to transfer it to my private wallet the network fee is £16. I've never seen the fee this high before so I'm a little lost. Is this something that is likely to come down over time or do I just have to accept paying £16 to transfer to my private wallet?
In general I never keep BTC on the exchange as I prefer to keep it on my own wallet.
There appears to be a couple possible reasons for the increased fees. First understand Bitcoin block generation is every ten minutes. That’s relatively slow compared to some other blockchains.
So imagine an increase in demand for transactions to be included in a block, were to occur. There are but so many transactions which can fit into a block. So if I want my transaction to go quicker I will offer more money to the miners to have it put into the block before others… a result of supply and demand. When the demand increases and the supply can’t (fixed amount of blocks) then prices rise.
So why is the demand increasing? With the price of Bitcoin on the rise everyone wants a piece of the rock! With the likelihood of a Bitcoin ETF everyone believes price of Bitcoin will soar in the near future especially since institutional buying will be possible.
Lastly demand for including ordinals (those dang NFTs in the Bitcoin block) are increasing.
So the pools and miners are overloaded with transactions such as financial transactions like buying and selling Bitcoin and non-financial transactions like Ordinals). Being the capitalist that they are, they look to include the high fee transactions in the block first. That’s just good business sense.
Unfortunately higher fees are acting as a deterrent to placing transactions for the little guy but not so much for the wealthy…not very Satoshi like in my opinion…but supply and demand is part of the world we live in…for now!
Whether the fees will decrease in the near future is impossible to determine given the current demand and reasons for the transactions.
