Bitcoin wallet Xapo announced that it will no longer bear user transaction fees. Is the era of free Bitcoin transactions coming to an end?

Quite a few Bitcoin companies are shifting Bitcoin transaction fees to users, a situation that has become common among cryptocurrency exchanges recently. Bitcoin company Coinbase has previously announced that it will no longer bear user on-chain transaction fees. User-paying fees seems to be gradually becoming a standard for all Bitcoin companies.

Recently, Bitcoin wallet provider Xapo has notified their users that if they want to transfer Bitcoin from their Xapo accounts, they will have to pay network fees.

When a user broadcasts a Bitcoin transaction, the user needs to attach a handling fee to reward miners for packaging the transaction into the next block.

The higher the fee, the more likely a miner is to want to include the transaction, since they will be able to collect all the associated fees if their block is accepted by the wider network.

According to an email Xapo sent to users, users will need to cover these fees themselves, but the startup clarified that all transfers between Xapo accounts will not be charged these fees.

Xapo cited the sharp increase in network transaction fees caused by growing network activity as the main factor in their decision.

Xapo claims that the fee will be calculated in a dynamic way, based on the current state of the Bitcoin network. Users will pay this fee at the end of the transaction. It is expected that more Bitcoin companies will adopt a similar withdrawal method in the future.

Xapo explained:

“As the number of transactions on the Bitcoin network grows, we want to give users some control over their transactions. That means Xapo will allow users to choose the type of fee they want to pay — standard or high priority — giving users the ability to choose how quickly their transactions are processed.

Although Xapo did not specify when the policy would take effect, the email said it would be in the "next few days."