What Happened?
A Bitcoin user made a costly mistake by paying nearly $60,000 in transaction fees due to an operational error. The incident centers around a user who, while utilizing the “Replace-by-Fee” (RBF) feature, seemingly paid a fee far exceeding the normal requirement, leading to significant financial loss. Experts believe that this exorbitant transaction fee event was likely the result of anxiety or operational mistakes, such as entering incorrect values or misunderstanding the fee units.
Bitcoin User Pays Nearly $60,000 in Transaction Fees Due to Mistake
In the early hours of April 8, a Bitcoin user made a transaction and allegedly paid a staggering fee of nearly 0.75 Bitcoin, which, at the time, equated to about $60,000. This incident has reignited discussions regarding Bitcoin transaction fees and the “Replace-by-Fee” (RBF) feature. The RBF feature in Bitcoin can be thought of as a “regret remedy”; when a user’s transaction has not been confirmed, they can resend the same transaction with a higher fee to expedite processing.
According to data from the blockchain explorer Mempool.Space, this transaction occurred approximately 30 minutes after midnight on April 8. It was the user’s second attempt to use the RBF feature to modify the transaction. Initially, the user intended to send 0.48 Bitcoin (about $37,770), but due to a low fee setting, the transaction remained unconfirmed by miners.
The user likely aimed to slightly increase the fee using the RBF feature but may have mistakenly entered a much higher fee due to anxiety, a slip of the finger, or issues with the wallet software, resulting in a fee of almost 0.75 Bitcoin (approximately $60,000)—an amount exceeding the original transaction value.
Experts believe the user was eager to prevent the original transaction from being included in a block and confirmed, prompting them to quickly initiate a subsequent transaction. However, while entering the fee, they may have accidentally misused commas and periods, “perhaps intending to use 30.5692 satoshis (the smallest unit of Bitcoin), but due to haste or a slip of the finger, they mistakenly entered 305,692 satoshis.” Alternatively, they might have confused the fee units, thinking they were just paying a little extra, only to end up with an astronomical figure.
How to Use the “Replace-by-Fee” Feature?
The RBF feature allows users to initiate a new transaction to “replace” an original one if they realize the fee was set too low and the transaction is not being confirmed by miners. The new transaction will include a higher fee, making it more likely that miners will prioritize processing it. Different Bitcoin wallet software may have slightly different interfaces, and users should check whether their wallet supports the RBF feature before use.
This article will use CoolWallet App, a cold wallet company from Taiwan, as a demonstration of the “Replace-by-Fee” operation process.
Step 1: Initiate the Original Transaction
First, proceed as usual by entering the recipient’s address, transfer amount, and setting a fee in the wallet. However, sometimes to save money, users may set a lower fee, or if the Bitcoin network is congested at the time, it can cause the user’s transaction to remain in a “pending” state. Before proceeding, check if the RBF feature is enabled; some wallets have it enabled by default, while others require manual activation. During the transaction process, some wallets provide an option for users to select whether this transaction can be replaced by RBF.
For CoolWallet, the transaction must meet the following criteria to display the “Increase Fee” button:
– The currency being sent is USDT (OMNI) or BTC.
– The transaction is an RBF (Replace-by-Fee) transaction.
– The transaction contains only a single receiving address and a single sending address. Currently, the CoolWallet App only supports single address sending and does not support transactions with multiple different sending or receiving addresses.
Step 2: Find the Unconfirmed Transaction
In the personal wallet transaction history, locate the transaction that remains in “waiting” or “pending” status.
Step 3: Initiate the Replacement Transaction
For this unconfirmed transaction, the wallet usually provides an option such as “Increase Fee,” “Replace by Fee,” or something similar.
Click this option.
Step 4: Set a Higher Fee
The wallet will allow users to reset the transaction fee, at which point they can enter a higher amount than before to attract miners to prioritize the new transaction. The wallet typically provides some suggested fee options based on the current network congestion.
Of course, users can also increase the fee further according to their capacity by using the “Edit” button. However, if the user’s BTC balance is insufficient to cover the intended amount plus transaction fees, the fee will be directly deducted from the transaction amount.
Once the new fee and receiving address have been confirmed, the wallet will broadcast this new “replacement” transaction to the Bitcoin network. When miners receive the new transaction, they will see that its fee is higher than the original, thus making it more likely to prioritize packaging the new transaction into the next block. Once the new transaction is confirmed, the original transaction with the lower fee will be considered invalid and will not be processed by miners.
The Controversy and Discussion Surrounding the “Replace-by-Fee” Feature
While this feature appears convenient, “Replace-by-Fee” is actually a highly debated aspect of Bitcoin. The RBF feature was initially designed to allow users to increase fees when they are insufficient, enabling transactions to proceed smoothly. However, the controversy primarily stems from the fact that it allows changes to transaction contents before they are officially confirmed. This means that a user might first make a transaction to purchase something, but before the merchant receives the payment, they could use another transaction with a higher fee to transfer the funds elsewhere, potentially leading to issues of “double spending.” Some individuals even worry that this could be exploited by malicious users to commit fraud.
As a result, cryptocurrencies like Bitcoin Cash (BCH) have even eliminated this feature, as they place a higher value on transaction immediacy and certainty. Thus, RBF acts as a double-edged sword; it has both advantages and disadvantages, and different communities and users have varying opinions on it, which is why it has been a subject of continuous discussion.
References: cointelegraph, CoolWallet