In a move that will save as much as 50% on transaction fees, US-based crypto exchange Coinbase has announced the rollout of Bitcoin transaction batching on its platform.
“Historically, every time a Coinbase customer sent bitcoin, we broadcasted a single on-chain transaction. Starting today, we will be bundling multiple sends into a single transaction,” said product manager Eli Haims in a March 12th post on the company’s official blog.
He went on to explain how transaction batching will boost Bitcoin’s usability and scalability by lowering network fees and increasing transaction throughput.
Bundling single-on chain transactions will help maximize the space in each block broadcasted to the chain. Haims said that the new transaction batching system will “reduce the load on the Bitcoin network by more than 50%.”
Batching will help reduce the block space consumed by different transactions. Lower block space occupied in the chain will result in lower transaction fees as well.
According to Haims, the update will not require any action on the part of customers, who will automatically benefit from lower transaction fees.
There will be a slight delay in transactions being broadcasting to the network since single on-chain send requests will not be broadcasted right away, but Haims stressed that this will not have an impact on the time it takes for transactions to be confirmed.
CEO laments lag in implementing transaction batching
Transaction batching on Coinbase is something that many people – including CEO Brian Armstrong – feel is long overdue. The exchange first began talking about implementing transaction batching in March of 2018.
In June, more than a year later, Armstrong tweeted that it was “embarrassing” how long it was taking Coinbase to roll out the new process.
Batched transactions should be coming out in a few months. Embarrassing how long it has taken, turns out there is a lot of stuff to build in a growing company 🙂
— Brian Armstrong (@brian_armstrong) June 6, 2019
Last week, on the heels of Coinbase’s announcement, Armstrong praised the exchange for “finally” rolling out Bitcoin transaction batching.
Excited to finally have batching of Bitcoin transactions live! https://t.co/NhnvmfuwZt
Coinbase generates a lot of on-chain Bitcoin transactions, and I'm glad we're making them more efficient now.
— Brian Armstrong (@brian_armstrong) March 12, 2020
The right move at the right time
The decision to roll out transaction batching comes at a pivotal time. In just the four days since Coinbase’s announcement, transaction fees have nearly doubled as large-scale liquidations of Bitcoin holdings due to coronavirus fears have resulted in an increased number of daily transactions. At the time of writing, the median Bitcoin transaction fee is ~$0.66, according to BitInfoCharts.
If the price of Bitcoin continues to slide, the number of transactions is likely to increase as concerned investors exit the market.
Of course, with the upcoming halving just a couple of months away, it is believed that Bitcoin will not only recover but that prices will continue to climb. If that happens, we can expect an increase in transactions there as well as both newcomers and returning investors enter back into the market.
Historically, every time Bitcoin peaks and transactions increase, network fees increase as well. During its unprecedented run-up to near $20,000 in December 2017, average transaction fees soared from an already-high $3.75 to a staggering $34.00.
Implementing transaction batching, as Kraken and ShapeShift already have, will result in significant savings in terms of both fees and transaction times.
Transaction batching will be available for Coinbase and Coinbase Pro platforms.