As of this writing, the average bitcoin transaction fee is over $30, according to this chart. However, I just bought $20 worth of bitcoin from an ATM, and they charged me a fee of around $2.00.

My understanding of the fee for a transaction is that it is a function of market forces, the number of bytes in the transaction, and the time you are willing to wait for your transaction to be added to the blockchain. Overall however, I had the impression that at a given time these fees are relatively constant per transaction. So I would expect that the owners of the ATM would have to spend something around $30 in fees to give me my $18.00.

I asked a similar question about coinbase. In that case the explanation was that coinbase wasn't actually transferring any bitcoin on the blockchain. However, this ATM printed me a new wallet, which I assume means a new bitcoin address was created and bitcoin was transferred to it on the blockchain.

What don't I understand?

  • How long did it take before the transaction was confirmed?
    – Monstrum
    Dec 22 '17 at 16:25
  • Maybe they want to gain trustworthiness and provide maximum value to their customers. Also GDAX(they are Coinbase dedicated exchange) doesn't charge network fee at all, I see it as as strategy to create pleased customers. No one really know what they are up to.
    – Chak
    Dec 22 '17 at 16:36
  • What exchange rate did they give you? If the Market rate at the time was $15,000 USD : 1BTC, but this ATM charged $16,500 USD : 1BTC, then they charged you a premium in the exchange rate, not the "fees".
    – abelenky
    Dec 22 '17 at 17:16
  • @Monstrum it looks like it took about 3 hours to be included on the block chain. The fees are indeed more than the bitcoin transacted. Dec 27 '17 at 19:45
  • @abelenky The order of magnitude you have there is about what they charged me in the exchange rate. However, the fees that the ATM owners paid the miners - when converted to USD using the exchange rate that google reports - were still more than the amount I put into the ATM. Dec 27 '17 at 19:48

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