How to reconcile a “dust” wallet (one with many small amounts)

Ticker

1 BTC = $56532.11 USD  (via Coinbase)
1 ETH = $4547.51 USD  (via Coinbase)
1 LTC = $204.26 USD  (via Coinbase)
Quotes delayed up to 2 minutes.

Kryptous

Crypto Coins News - Ratings - Reviews

1 News - 247 News - 247 Bitcoin - 1 Search

BTC - BCH - ETH - LITE - XRP

Buy Sell Trade Crypto Here

 

If you have a "dust" wallet, which is an HD wallet with several subwallets/addresses, each containing only a small amount like 0.0001 bitcoin, you should think about reconciling it very soon.

"Dust" is a synonym for wallets or transactions of very low value, like grains of dust. The expression hails from the Satoshi Dice gambling site, if my memory serves me well.

The method to reconcile the "dust" is to send the entire content of the HD wallet to another address, which can be your own. I think most wallets allow to send everything to the next HD address, i.e. to the same HD wallet of yours.

The problem is that currently the fees are higher and slowly growing, so the fees may well eat a large fraction out of your "dust" holdings when you send them. And if you send from a HD wallet with several addresses with small values, the transaction will be voluminous and therefore command a much higher fee than a usual, simple transaction.

My recommendation is to create a transaction moving all these "dust" entries to one new address and set a low fee, perhaps around 20 to 30 satoshi per byte, in the hope that you will catch one of the occasions when there are few transactions and many blocks. This is unpredictable, so you just have to keep trying.

If you cannot easily find the size of the transaction and therefore cannot calculate the total fee, use the fee your wallet recommends and divide it by 5. Enter this 20{88c91daedd271a990a10650c05d769cae2765e0603edf30ca95f18704e5748e8} fee, which will probably be in the range of 20-30 satoshi/byte. You can, of course, try even lower fees, particularly if the amounts in your addresses are very low. The chances of success are then also even lower and you may have to try for weeks or months until you succeed.

If your wallet does not allow you to set a lower fee, you have to use a different wallet temporarily, using your backup to get at your HD wallet.

To give one example, 4 hours ago there was one such opportunity, when almost all pending transactions, down to fees like 10 satoshi/byte, were processed. The opportunity will come again, but the occasion will become rarer as transaction numbers and fees rise.

In most cases transactions that are not taken into a block are automatically cancelled, effectively refunded to you within 72 hours, but there is no guarantee for this. If your millibitcoins come back like that, just enter a similar transaction again for another try. Keep repeating this. Trying is free. You pay the fee only for a successful transaction.

For those who miss these opportunities there will be a few new ones in the future, mainly the following two:

  1. Immediately after a block capacity increase, for example after SegWit gets activated
  2. When a second-layer payment system, such as the Lightning Network, begins to be widely used

This is because LN or others will take many low-value transactions off the main blockchain and thus reduce the transaction load and lower the required fees.

Background information

A transaction currently costs around $5 to $10. Most of these costs are subsidized by the block reward, so the miners can make a profit and keep up their important work even you pay only a $0.30 transaction fee. However, the block reward will be halved soon and keep being halved regularly. Eventually the entire miner revenue will have to come from fees. This was designed into bitcoin and is expected.

There are good reasons to believe that the cost of one transaction can be lowered over time through better, cheaper hardware and to some extent through increasing the block size or the block frequency. Another very good way is to offload casual, everyday, low-value transactions to second-layer payment systems like the Lightning Network, which at the same time provides instantaneous payments and thus solves the slowness problem of the main bitcoin blockchain. This would leave high-value transactions in the blockchain, for which high fees, like $1 or $10, are still very cheap and unproblematic.

This is currently being discussed widely and will lead to a resolution, probably later this year. Meanwhile follow the advice given above and rest assured that Bitcoin is working very well and will keep doing so if it is not sabotaged.

submitted by /u/hgmichna
[link] [comments]

Kryptous

Crypto Coins News - Ratings - Reviews

1 News - 247 News - 247 Bitcoin - 1 Search

BTC - BCH - ETH - LITE - XRP

Buy Sell Trade Crypto Here

 

Ticker

1 BTC = $56532.11 USD  (via Coinbase)
1 ETH = $4547.51 USD  (via Coinbase)
1 LTC = $204.26 USD  (via Coinbase)
Quotes delayed up to 2 minutes.

Leave a Reply