1

I have all my coins on exchanges. I'd like to keep some in cold storage. I know I can create one at walletgenerator.net. But I'm scared because I think there might be a better way or it may not be worth it at all. If I'm going to lose 20% sending it there and 20% sending it somewhere else it's not worth it. What fees could I expect sending .1 BTC from an exchange to that wallet and the fee sending off there? I hear about segwit and lightning all the time, but have no idea how that works.

I don't think the wallet from walletgenerator.net is segwit or lighting, so is there a better wallet to use? Is it even worth it, or am I better off with LTC? Can you recommend an exerciser I can do with a small amount to quell my stress? Trading advice is everywhere, but finding reliable answers to wallet and security questions is near impossible.

  • 1
    As a side-note: do not use an online resource to generate a 'cold wallet'. A true cold wallet must be generated on a computer that never connects to the internet, thus keeping your keys offline, and more secure against attackers. There are good resources online about how to securely store coins, it is worth doing the research :) – chytrik Jan 13 '18 at 22:31
4

Fees are not based on the value that is being transferred but rather the size of the transaction in bytes. The fee is to pay the cost of storing the data that makes up the transaction itself, not for the amount that is being transacted. Thus giving the fee as a percentage of a value will be completely inaccurate and giving a fee estimate for the cost of spending a given value will also be completely inaccurate.

When you are sending from an exchange, the exchange will usually pay the fee for you or they will tell you how much the fee will be when you send.

When you use a desktop wallet, the wallet will also tell you how much you are paying in fees. You can choose to also set your fee manually. Keep in mind that setting the fee to something very low can result in your transaction taking a long time to confirm.

To reduce fees when spending, you will want to use Segwit. Segwit effectively reduces the size of your transaction when you spend from segwit outputs. Segwit is completely backwards compatible (except for the new address format) and you can send to and receive from non-segwit addresses when you use segwit.

To use segwit, you must use a wallet that is capable of creating segwit outputs and addresses. There are two types of addresses, bech32 (begin with bc1) and p2sh nested (begin with 3) addresses. Bech32 addresses are new and not all wallets support sending to them, so it is better for you to use the p2sh nested addresses.

I recommend that you use Electrum. However Electrum does not support creating a new wallet with p2sh nested addresses. You can still use Electrum to do so by following these instructions: https://www.reddit.com/r/Bitcoin/comments/7mvw0m/psa_contrary_to_popular_belief_you_can_create/.

You should not use a paper wallet (like the ones created by walletgenerator.net) unless you aren't planning on moving your Bitcoin for a very long time. Paper wallets are, in general, more difficult to use and easy to get lost or damaged thus resulting in coin loss.


Lightning is unrelated to this.

  • I have a Tezor and a Ledger Nano. Should I send it there? Are those addresses Segwit? Lighting doesn't have to do with fees? – Philip Rego Jan 12 '18 at 19:22
  • You should use one of those two devices. You can use both with Electrum. They will allow you to create P2SH nested segwit addresses. Lightning does have to do with fees, but is unrelated to your situation. – Andrew Chow Jan 12 '18 at 19:27
  • @AndrewChow to the top! Great comment again! Cheers – Hollossy Jan 12 '18 at 22:28
1

As stated, the exchange and wallet should both tell you the fee. Right now, the fee is around $10 in Fiat.

Strongly recommend using a paper wallet with multiple copies to store BTC long term! Take those coins off the exchange!!

Always generate keys offline, preferably on a LiveCD. Lots of easy tutorials!

Lightning and segwit are solutions to the issue of Bitcoin scaling. At first, when there were relatively few transactions per minute, any old laptop could run a Bitcoin node. However, as more and more users jump on the network, and the number of transactions per minute increases, regular computers are having problems keeping up with the load. That's what is slowing things down and causing these high fees.

To solve this issue, Segwit takes a lot of data off the main block chain, and outsources it to a secondary chain, Lightning. This allows the main chain to process large numbers of much smaller transactions, with only a tiny reference back to the Lightning chain present on the main chain. Segwit is active, Lightning is still in development. Once Lightning is active, fees should drop and speed should be restored.

(As an aside, this is what caused the Bitcoin cash fork. Bitcoin cash decided to increase the allowable amount of data per block instead, a move which allows it to scale very well, but makes it depend upon large servers instead of everyday laptops.)

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.