An explanation of Bitcoin fees
We're changing our fees. Up until now, sending and receiving Bitcoin with Luno was free. But the network is changing and we've had to make this change to continue providing you with a safe, simple platform.
In this post, we'll explain the fees, why we've added them and how you can continue using Luno for free.
Bitcoin is often advertised as a cheap solution for small payments. Known as micropayments, these low-value transactions are expensive for businesses because of bank fees. You've probably seen that many independent shops charge 50p for payments under £5. That's because it's not worth the processing fees otherwise.
So, Bitcoin used to be a good option for micropayments because it cost less than using a bank. But that's not the case any more. To understand why, we need to take a quick look at the technology behind cryptocurrencies.
You've no doubt heard about the Blockchain. This is like a digital record book, except it's not stored in any single place. It's distributed between the computers of everyone who runs the Bitcoin software. So it can't be edited or tampered with, and it's extremely secure.
The downside is that every Bitcoin transaction needs to be recorded by every computer in the network. One way to think of this is to imagine a group of thousands of people who each have to write down the transaction details. It would take a lot of time, paper, ink and effort to do. Even though the costs might be small for each person, it would add up as the network grew. If the number of transactions increased, it would be even harder for those people to keep up. At some point, they would happen too fast for everyone to write them down, so the network would have to pause and let them catch up.
That's what it's like for the Bitcoin network. As it's grown, the costs of running it have risen. A lot. While it used to be inexpensive to process transactions, the price of all that power and computing resources has gotten enormous. With so many people using Bitcoin now, the poor Blockchain can't cope.
So we've ended up with major delays. The people operating the network decided that the only way to solve this problem and help them cover their costs is to start charging fees for transactions.
Here is a graph showing the daily Bitcoin network transaction fees over the last few years:
Up until now, Luno chose to pay your transaction costs for you. But more people than ever now use Luno and fees are 20 times what they were. So we're adding fees for sending and receiving Bitcoin.
Luno doesn't profit from this. We only charge you what the network charges. Luno doesn't set those fees, and we'll adjust them if any new technologies make the network more efficient.
Update: In February 2017, Luno integrated with SegWit, a Blockchain update that cuts the fee for sending Bitcoin by as much as 25%. We'll continue keeping an eye out for anything that can help us save you money.
A free alternative
But it's still possible to send and receive Bitcoin for free! If a transaction is between you and another Luno customer, we can process it ourselves, rather than asking the network to do it.
This feature is already available to all Luno customers. Enter the email address or mobile phone number of the recipient when sending your payment and we’ll process it instantly with zero fees.
For more information, check out the following Help Centre articles:
- How do I buy or sell cryptocurrency?
- What does it cost to use Luno?
- How do I send Bitcoin for free?
- What are the fees for trading on the Luno exchange?
- Why is my transfer amount less in GBP?
- How do I monitor the price of Bitcoin?
All our pricing information on a per-country level is in the Fees & Features section.