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Last week, a Bitcoin user unintentionally paid a $3.1 million transaction fee while trying to speed up the confirmation of their transfers.

Our SVP of Client Relations, Joanna Summers, shares her thoughts on the incident, highlighting the importance of taking extra precautions and exercising caution when dealing with cryptocurrency.

One of the features of crypto transactions is the ability to speed up the confirmation process by replacing an unconfirmed transaction with a new version that has a higher fee using the replace-by-fee (RBF) feature. However, Joanna reminds us that using this feature requires caution and understanding, as irreversible mistakes can occur, especially when transactions are done quickly, as in this case, within minutes of creating the wallet.

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Accidentally spending  millions on RBF  transactions

An accidental, staggering transaction fee of over $3 million. The user, who either had a software error or was unaware of the non-cancellation policy for replacement fees, sent 83.7 BTC with a fee of $3.1 million, receiving only 55.77 BTC at the destination address. 💸

The replace-by-fee (RBF) feature allows you to replace one version of an unconfirmed transaction with a new version that pays a higher transaction fee. By paying more to expedite the transaction, the amount of time it takes to confirm your transaction decreases. This feature can be used multiple times while the transaction is unconfirmed. It can be a useful feature when you need to expedite a transaction or if the network becomes congested and fees rise. However…

This scary incident again highlights the need for education, governance structures, and additional safeguards when working with crypto.

Someone should always double-check your transaction because it’s (almost always) irreversible if you make a mistake. RBF is a feature that can usually be disabled either through settings or in an RBF toggle before sending, but you have to know what to look for and what the settings mean. This exorbitant fee appears to be from a rushed transaction with the wallet made right before the incident.

While these fees are generally less than $15, Bitcoin transaction fees are rising. Look up Ordinal Inscriptions for more information.

When Paxos faced a similar incident by accidentally overpaying on transaction fees, the miner reimbursed the $500k fee overpayment. No word yet on if Antpool will return the funds.

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