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When I click on "Send" from my bitcoin address which I know is off-chain in Coinbase to another Coinbase address which I also know is off-chain. So technically the transaction will not touch the blockchain, just update their off-chain books locally.

I know it's off-chain, because I deposited money using my credit card, and I scanned all addresses under Tools > Addresses on a blockchain explorer for a few days and there's nothing in there. They're keeping it off-chain until I actually want to spend it. Granted, but if I spend it to another Coinbase off-chain address, they should be able to find out that this is an address they own and they don't need to utilize the blockchain at all and could do it all off-chain as they own both addresses.

If that's the case, why is coinbase still charging me network fees? Sounds like mickey mouse fees to me for updating a record in their database without touching the blockchain.

Are they assuming that I don't know it's a fully off-chain transaction, and think they can charge me regardless? Or does their wizard have a glitch ?

  • How do you know if is off-chain? If you are sending to a bitcoin address and a transaction is generated, it is necessarily on-chain. – Adam Millerchip Dec 13 '17 at 3:22
  • @AdamMillerchip I know it's off-chain, because I deposited money using my credit card, and I scanned all addresses under Tools > Addresses on a blockchain explorer for a few days and there's nothing in there. They're keeping it off-chain until I actually want to spend it. Granted, but if I spend it to another Coinbase off-chain address, they should be able to find out it doesn't need to utilize the blockchain at all and can do it all off-chain as it owns both addresses. I updated my question. – Wadih M. Dec 13 '17 at 3:24
  • @AdamMillerchip Not fully, this applies to Coinbase to "any wallet". But for Coinbase to Coinbase transactions and knowing that Coinbase has an off-chain ledger system (they mention it themselves), that should give improved possibilities for Coinbase to Coinbase transactions. – Wadih M. Dec 13 '17 at 3:27
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    Does Coinbase pay miner or network fees when sending digital currency? it is stated clearly here "Any transactions sent between Coinbase customers by email address take place off-chain (not on the blockchain) at no cost". Maybe Coinbase have a system that charges network fee as long as "addresses" are used. – Chak Dec 13 '17 at 5:18
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Does Coinbase pay miner or network fees when sending digital currency? is stated clearly here "Any transactions sent between Coinbase customers by email address take place off-chain (not on the blockchain) at no cost".
Maybe Coinbase have a system that charges network fee as long as "addresses" are used.

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