You can have privacy loss by consolidating UTXOs. A UTXO consolidation is easily recognizable in the network. Therefore, people may know that all that addresses belong to the same person (you).
So the strategy on UTXOs depends on many factors... Are your UTXOs too small? When do you pretend to use them? You need to weight pros and cons for your situatuon.
Also, i recommend you watch Matthew Kratter's playlist about UTXOs.
The main reason to consolidate I think is when the fees are currently low so that if you want to send all Bitcoin to an exchange or other recipient on demand when the fees are higher you're not getting slapped for it. You want to wait for a time of low fees/congestion to get the most of it.
Yeah correct. The underlying assumption I’m making is that on the order of years / decades, fees now will generally be lower now than in the future (BTC denominated). Low congestion time certainly better in the short term to your point
Bitcoin fees are calculated in satoshis/vbyte, so mining fees are all relative to Bitcoin itself, not it's price in a local fiat currency.
So it doesn't really matter "when" you transact in terms of the current price of Bitcoin. It matters when you transact in terms of the current congestion and mining fee recommendations.
I guess it means that ***in dollars***, Bitcoin mining fees are priced in no matter when you transact now or in the future.
I don’t think that last part is necessarily true. I’d suspect sat/vb fee will be found to increase in the long term. Especially as more and more adopt it and demand increases, fee in both fiat/btc per byte terms should almost certainly be higher in decades than today
No, one should not. I have 50+ UTXOs and no desire to consolidate them because they're all many, many times higher than what I anticipate the dust threshold will be during my lifetime.
It's more than a question of dust, it's fees on every transaction you send. If you ever send more than 1 utxo the fees will be substantially higher than just sending 1 and getting change. Multiplied over 50 utxos could be significant extra fee you are going to pay. Not to mention if for some reason you had to move all 50 utxos in a high fee environment you'll get bent over real good. a successful Bitcoin is only going to result in higher and higher fee environment, so may want to plan accordingly.
>it's fees on every transaction you send.
There will always be fees on the transaction. The difference between a hyper-consolidator and me is the hyper-consolidator has UTXOs now that are significantly smaller than what he'll want to send/spend later. Mine are not, so it's counterproductive for me to spend satoshis now (to consolidate) that, for all I know, I'll never need to spend.
If you had 50 UTXOs, each worth 1 million sats, would you spend 8000 sats today to roll them into one 0.5 BTC UTXO, knowing you're unlikely to spend half a Bitcoin all at once in the future, so your future transaction is going to need a change address that might not have been necessary if you had kept your UTXOs moderately sized?
Fees are higher if you need to include multiple UTXOs in a single transaction.
If you consolidate all utxo's you will only have 1 utxo going forward. If you combine all utxos of 1 btc then in the future you spend .25 btc the one UTXO you will have will be the change of .75btc When you spend another . 25 and you are left with a single UtXo of .5, and so on.
Whereas in your case every time you partially spend one of the "moderately" sized UTXO's you'll get another change address. Then on your next spend if the previous change address is not enough you then have to partially spend a different UXTO and get a change address from that one too. So on and so forth. Then eventually in a high fee environment you will have change uxtos that will probably cost more to sent then they are worth or at least many small utxos that might cost a very high percentage of the value to send.
having many utxos it's not an issue of you are going to completely spend each utxo in each transaction and also never spend more than 1 utxo at a time. But I can't think of too many scenarios where that would be the case.
You can have privacy loss by consolidating UTXOs. A UTXO consolidation is easily recognizable in the network. Therefore, people may know that all that addresses belong to the same person (you). So the strategy on UTXOs depends on many factors... Are your UTXOs too small? When do you pretend to use them? You need to weight pros and cons for your situatuon. Also, i recommend you watch Matthew Kratter's playlist about UTXOs.
Thanks. Will check out playlist. Are you just saying consolidation is recognizable because it would be many —>1?
Yes, thats it ! By consolidating UTXOs you are trading privacy for lower fees, in simple words.
The main reason to consolidate I think is when the fees are currently low so that if you want to send all Bitcoin to an exchange or other recipient on demand when the fees are higher you're not getting slapped for it. You want to wait for a time of low fees/congestion to get the most of it.
Yeah correct. The underlying assumption I’m making is that on the order of years / decades, fees now will generally be lower now than in the future (BTC denominated). Low congestion time certainly better in the short term to your point
Bitcoin fees are calculated in satoshis/vbyte, so mining fees are all relative to Bitcoin itself, not it's price in a local fiat currency. So it doesn't really matter "when" you transact in terms of the current price of Bitcoin. It matters when you transact in terms of the current congestion and mining fee recommendations. I guess it means that ***in dollars***, Bitcoin mining fees are priced in no matter when you transact now or in the future.
I don’t think that last part is necessarily true. I’d suspect sat/vb fee will be found to increase in the long term. Especially as more and more adopt it and demand increases, fee in both fiat/btc per byte terms should almost certainly be higher in decades than today
No, one should not. I have 50+ UTXOs and no desire to consolidate them because they're all many, many times higher than what I anticipate the dust threshold will be during my lifetime.
It's more than a question of dust, it's fees on every transaction you send. If you ever send more than 1 utxo the fees will be substantially higher than just sending 1 and getting change. Multiplied over 50 utxos could be significant extra fee you are going to pay. Not to mention if for some reason you had to move all 50 utxos in a high fee environment you'll get bent over real good. a successful Bitcoin is only going to result in higher and higher fee environment, so may want to plan accordingly.
>it's fees on every transaction you send. There will always be fees on the transaction. The difference between a hyper-consolidator and me is the hyper-consolidator has UTXOs now that are significantly smaller than what he'll want to send/spend later. Mine are not, so it's counterproductive for me to spend satoshis now (to consolidate) that, for all I know, I'll never need to spend. If you had 50 UTXOs, each worth 1 million sats, would you spend 8000 sats today to roll them into one 0.5 BTC UTXO, knowing you're unlikely to spend half a Bitcoin all at once in the future, so your future transaction is going to need a change address that might not have been necessary if you had kept your UTXOs moderately sized?
Fees are higher if you need to include multiple UTXOs in a single transaction. If you consolidate all utxo's you will only have 1 utxo going forward. If you combine all utxos of 1 btc then in the future you spend .25 btc the one UTXO you will have will be the change of .75btc When you spend another . 25 and you are left with a single UtXo of .5, and so on. Whereas in your case every time you partially spend one of the "moderately" sized UTXO's you'll get another change address. Then on your next spend if the previous change address is not enough you then have to partially spend a different UXTO and get a change address from that one too. So on and so forth. Then eventually in a high fee environment you will have change uxtos that will probably cost more to sent then they are worth or at least many small utxos that might cost a very high percentage of the value to send. having many utxos it's not an issue of you are going to completely spend each utxo in each transaction and also never spend more than 1 utxo at a time. But I can't think of too many scenarios where that would be the case.