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Sending Bitcoin
Sending bitcoin is as easy as choosing the amount
to send and deciding where it goes. The exact
procedure for doing so will depend on the type of
Bitcoin wallet you are using, but the main thing you
need to know is the 'address' of the recipient.

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Table of Contents

1. What is a Bitcoin address?

2. How to send Bitcoin
3. What is the Bitcoin network fee?
4. How do I set the BTC network fee in
my Bitcoin wallet app?
5. What happens if I set the fee too
low?
6. How much does it cost to send
Bitcoin?
7. Why is there a Bitcoin network fee?
8. How are Bitcoin fees determined?
9. How are Bitcoin fees measured?
10. What is the UTXO model and how
does it work?

What is a Bitcoin address?

A Bitcoin address is a digital identifier that serves
as a location where Bitcoin can be sent. It’s a bit like
a bank account number in the Bitcoin blockchain
network. Bitcoin addresses are created by Bitcoin
wallet software.

Here’s what a typical Bitcoin address looks like:

3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy

How to send Bitcoin

One way to send bitcoin is to copy the recipient's
Bitcoin address to your clipboard, then paste it in
the send field of the Bitcoin wallet app you're using.

Bitcoin addresses can also be displayed in QR code

format. If you're sending bitcoin from a mobile
wallet app like the Bitcoin.com Wallet, you can use
your phone's camera to scan the QR code of the
address you want to send to. This will automatically
fill in the address.

Once you have inputted the recipient address, you

will enter the amount of bitcoin to send. Most
wallets allow you to toggle between showing the
send amount in bitcoin (BTC) or showing it in a local
currency like dollars.

Here's a quick video demonstrating how to send

Bitcoin in the Bitcoin.com Wallet app:

Read more: Learn how to receive bitcoin securely.

What is the Bitcoin

network fee?
When you send bitcoin, you must pay a fee to the
Bitcoin network. Your Bitcoin wallet app will
automatically calculate the fee for you. The best
wallets enable you to customize the fee by deciding
how fast you would like your transaction to be
confirmed.

How do I set the BTC

network fee in my Bitcoin
wallet app?
This depends on the wallet. Some wallet providers
don't give you any control over the network fee.
Instead, they have a predetermined fee (which is
almost always set higher than the actual fees they
will pay). In other words, they profit when their
customers send/withdraw bitcoin. This is a common
revenue-generation strategy for cryptocurrency
exchanges.

Most self-custody wallet apps sallow you to

customize the fee you attach to your Bitcoin
transactions. The Bitcoin.com Wallet app has
three convenient fee settings, as well as the option
to set custom fees. The default speed (“Fast") is
set to have your transaction confirmed most likely
within the next three blocks (so less than 30
minutes). If you change it to “Fastest," you’ll pay a
higher fee and likely have your transaction
confirmed in the next two blocks (so less than 20
minutes). Changing it to “Eco" will save you some
money, but still result in your transaction most likely
getting confirmed within the next six blocks, so
generally less than 60 minutes. For advanced
users, you also have the option of setting a custom
fee. You’ll want to use a tool like Bitcoinfees to
ensure you are choosing an appropriate fee given
the current state of network congestion.

Here’s a video demonstrating how to set the Bitcoin

network fee in the Bitcoin.com Wallet app:

What happens if I set the

fee too low?
If you're not in a rush to have your transaction
confirmed, you can save money by opting for a
lower fee. However, you need to be careful because
if you set the fee too low, your transaction may take
hours or get stuck for days. Don't worry though,
you're never in danger of losing bitcoin by setting
the fee too low. In the worst case, you'll have to wait
with your bitcoin in limbo until the transaction is
cancelled, at which point you will again have access
to it.

You can check the status of your BTC transactions

by entering your transaction ID here:
https://explorer.bitcoin.com. Please see
this guide for how to find your transaction ID in
the Bitcoin.com Wallet app
.

How much does it cost to

send Bitcoin?
The
median all-time Bitcoin (BTC) transaction fee is
$0.75 and the average all-time transaction fee is
$1.99. When the Bitcoin network is congested, fees
for sending bitcoin may spike dramatically. The
average fee for a Bitcoin transaction has spiked
above $30 on several occasions since the Bitcoin
network launched in 2009. You can monitor
average, median, and currents fees for Bitcoin
transactions here.

Why is there a Bitcoin

network fee?
Network fees were initially an anti-spam
mechanism. In other words, they deterred people
from flooding the network with transactions. While
that original use persists, nowadays fees mostly act
as incentive for Bitcoin miners to include
transactions in the next Bitcoin block.

How are Bitcoin fees

determined?
Bitcoin fees are determined by market forces.
Transactions take up space on the Bitcoin
blockchain, which is limited in size. Transactions
with higher fees attached to them are picked up
sooner by miners, who optimize for profitability.
This means that higher-fee transactions are more
likely to be included in the next batch, or 'block,' of
transactions that is added to the Bitcoin blockchain.

How are Bitcoin fees

measured?
Bitcoin fees are measured in satoshis/byte. A
satoshi is the smallest divisible unit of bitcoin,
which is 0.00000001 BTC (a hundred millionth of a
bitcoin). Each transaction is made up of data, which
is measured in bytes. More “complicated" (usually
bigger) transactions involve more data and so are
more expensive. Generally speaking, this means
higher value transactions (involving more bitcoin)
consume more data, and so require higher
transaction fees. However, it's not exactly that
simple. In fact, it's entirely possible for a 1 BTC
transaction to involve more data (and therefore
require higher fees) than a 2 BTC transaction. To
understand why, we need to look in some detail at
how the Bitcoin blockchain actually works.

What is the UTXO model

and how does it work?
The system for sending and receiving bitcoin runs
on what's known as the Unspent Transaction
Output (UTXO) model, which is an efficient and
privacy-enhancing way to manage the Bitcoin
ledger. Here’s how it works:

At first, coins are minted through the mining

process. These new coins form what's known as
the 'coinbase.' A Bitcoin miner who has won the
right to add the next block to the chain will receive
the block reward as compensation. At the time of
writing, the block reward is 6.25 BTC.

Now imagine this miner, who has received the 6.25

BTC block reward, decides to send 1 BTC from the
block reward to Alice. On the ledger, this appears as
6.25 BTC sent to Alice and 5.25 BTC sent back to
the miner, leaving Alice with a balance of 1 BTC and
the miner with a balance of 5.25 BTC. The miner
has an unspent transaction output of 5.25 BTC.

The system is analogous to paying for something

using a cash note: if the cost of the item is $2.50,
you don't cut a five-dollar note in half. Instead, you
hand over the whole five-dollar note and receive
$2.50 in change. In our example, the miner has sent
over a 6.25 BTC 'note' and received 5.25 BTC in
change.

As it relates to fees for sending bitcoin, even

though the amount of bitcoin involved in this
transaction is significant, the fee for completing the
transaction will be relatively small because the
transaction is relatively simple. That's because
there's only one output (1 BTC to Alice) and it
comes from only one input or 'note' (the 6.25 BTC
coinbase transaction). If we think of notes as taking
up space on the Bitcoin ledger, we can see that this
transaction takes up the least amount of space
(bytes) possible.

Now let's imagine Alice buys one more BTC at a

later date from a different miner. Alice will then
have 2 BTC in her wallet, but each one will have
originated from a different 'note.' In effect, this
means Alice has two 1-BTC notes in her wallet. If
Alice wants to send 2 BTC to Bob, she will be
sending those two notes. And since more notes
means more data, and more data means higher
cost, this transaction will be more expensive than if
Alice had sent a single ‘note.’ Put another way, the
transaction will consume more bytes, so Alice will
have to pay more satoshis to convince a miner to
include it in the next block.

For the average user, this means you'll end up

paying significantly more for a transaction if it
involves moving many 'notes.' For example, imagine
you've received a hundred small payments into your
wallet from different people, over a period of
months, until you've accumulated one full bitcoin.
Now, if you want to send that one bitcoin to
someone else, you'll actually be sending 100
'notes.' This will incur significantly more fees than if
you'd sent a single 'note' as our miner did in the
first example.

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