Edmond Chan

Be careful with the amount of fees you pay when playing with cryptocurrencies. It could get painful.

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I was calculating my returns in my cryptocurrency portfolio. Something wasn’t quite adding up though. I couldn’t reconcile the amount of Bitcoin that I’d bought in total with the amount of Bitcoin that I had in my three Bitcoin wallets.

I thought maybe I’d put some in another wallet that I couldn’t remember having. Uh oh.

I went through every transaction. All purchases. All transfers. All switches into other altcoins. I was still 0.05 BTC out.

Then it dawned on me. These must be the fees I’ve paid to move Bitcoin around. 0.05 BTC!!

Even 6 months ago, at those prices for a Bitcoin, it works out as a large sum of money. At USD 2,000/BTC, that 0.05 BTC is 100 USD!

At USD 15,000, that’s 700 USD! (Apologies for all the exclamation marks, but that’s a lot of money! Can you imagine how painful that would feel at USD 50,000/BTC? That would be USD 2,500! Just to move money around.)

Hmm. This needed further investigation.

So for a flavour of how much Bitcoin transaction fees are, I went into my Electrum wallet and started to look at the transaction fees I’d paid for every transaction I’d made out of the wallet.

Check out the below spreadsheet where all units are in mBTC (which are 1/1000th of a full Bitcoin):

So the actual amount I’d paid when transferring Bitcoin was nowhere near the figure that I thought it was. Stranger and stranger. Curiouser and curiouser.

Where was the remaining 0.0435 BTC?

It must be the fees paid when exchanging Bitcoin to other cryptocurrencies.

Let’s look at the Changelly and Shapeshift transactions. (I did the Shapeshift transactions through the Exodus wallet).

I’ve done three transactions through Changelly:

  • 3 x 0.05 BTC to Monero (XMR)

And I’ve done three transactions through Shapeshift:

  • 1 x 0.05 BTC to OmiseGo
  • 1 x 0.05 BTC to Augur
  • 1 x 0.05 BTC to LTC

That’s 0.3 BTC exchanged to altcoins.

Let’s look at what the missing 0.0435 BTC is as a percentage of the 0.3 BTC:

0.0435 / 0.3 = 14.5 %

That’s a huge chunk!

Let’s look at what Changelly’s fees comprise of.

From their website:

If we take the DOGE fee first. That’s 1980 DOGE / 396,000 DOGE = 0.50%. Which isn’t that big.

This means that of the 14.5% we saw we lost from the Changelly fees (above), 14% was down to the exchange rate.

Is this so different to the exchange rates we see on Poloniex (an actual exchange where you can see live buy and sell orders)?

Maybe not.

Here’s a live price (BTC to LTC) from Changelly:

and here’s a live price (BTC to LTC) from Poloniex:

(to calculate the BTC to LTC price above, divide ‘1’ by 0.00980755 to get 101.9622638.

So Changelly on this occasion, offered less Litceoin for BTC than was available on Poloniex.

Changelly offered 101.3905 LTC/BTC.

Poloniex offered 101.9622638 LTC/BTC.

That’s a fair difference. On Poloniex, you get 0.56% LTC more for your BTC, than you do for your BTC on Changelly.

Conclusions

Inconclusive. I’m still not 100% sure where my 0.0435 BTC went.

To be continued.

Can anyone help? Please let me know in the comments below!

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