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bitcoin

how Localbitcoins and other bitcoin wallet able to send/receive without network fee


I have been exploring bitcoin API and I found there is network fee for every transaction which is around 0.0001 but I noticed many trading and bitcoin related agencies doesn't charge any network fee at all for transfer between user on same Website/App. Few of which are cryptopia, Zebpay and localbitcoins.

Could someone help me understand that how they are able to transfer between wallet without any network fee.


Solution

  • Organizations that offer online wallets aren't obligated to handle transactions using the actual Bitcoin blockchain; they may instead choose to keep their own off-chain record of transactions between users. While faster and cheaper than on-chain transactions, this system is often less secure, especially since the transaction records are centralized.

    Only when a user transfers Bitcoins between an external wallet would an organization utilize the blockchain; this is when a transfer would cost some network fee and take some time to process.