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A customer was to send me $5 worth of BTC via Coinbase, and I've received exactly that amount, but the customer has complained of sending more in "fees", as they've put it. They've also provided me with what appeared to be a transaction confirmation stating that they've sent 0.0006 BTC (about $16) to an address that is not mine.

Upon exploring the transaction I've found out that the transaction fee was $3, but its overall value was about $3000, and I was just one of about 15 "Outputs" under it, with me getting the requested $5, and the others getting the bulk of the transaction's value.

So my question is, if Coinbase somehow groups several transactions into one for some reason, why its users have to pay triple when sending small amounts? Are there reliable exchanges taking less fees for micropayments like in my case?

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They've also provided me with what appeared to be a transaction confirmation stating that they've sent 0.0006 BTC (about $16) to an address that is not mine.

In a normal transaction, created using a normal self-custodial wallet, That could easily be change being returned to the sender.

It is the sender who creates the transaction and determines what amounts go where. This is not under the control of the recipient.

if Coinbase somehow groups several transactions into one for some reason

It is normal for businesses that provide custodial accounts to batch their customer's transactions as it saves the provider money in Bitcoin transaction fees.

why its users have to pay triple when sending small amounts?

They probably don't, but they probably need to familiarise themselves with the terms and conditions of their agreement with their account provider. Any issue must be taken up with the business that provides the service they are using.

It is the sender who decides the fees. The recipient has no control over fees.


Coinbase

Note that Bitcoin was invented so that one party could pay a second party without any need for a trusted third party. Using a business like Coinbase as a trusted third party goes directly against what Bitcoin's inventor wanted to achieve. Bitcoin's inventor intended that we use our own self-custodial (i.e. non-custodial) wallets to look after our own cash ourselves and to make payments.

A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. [...] What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.

- Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System, 2008.


small amounts

Also note that second layer solutions like the Lightning Network (LN) were created to facilitate micropayments with very low fees and also without any need for a trusted third party.

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  • Thank you for the answer. A couple of follow-up questions: isn't it the sender who is supposed to pay the network fee rather than the provider? And where the additional ~$8 expense could come from?
    – lefevre
    Oct 20, 2023 at 16:29
  • Yeah, thanks for nothing dude.
    – lefevre
    Oct 21, 2023 at 19:22

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