OKX is likely one of the world’s 10 largest crypto exchanges and processes over $100 billion in spot bitcoin transactions yearly. Nevertheless, regardless of its measurement and seven-year working historical past, its staff made a rookie mistake that hints at solely a fundamental understanding of the Bitcoin community and managing unspent transaction outputs (UTXO).
The alternate lately repeated an embarrassing mistake that it first made in October 2023: bidding in opposition to itself. Particularly, it broadcast UTXO-consolidating bitcoin transactions at common payment charges however then, extremely, began bidding in opposition to its personal transactions.
Due to poor safeguards whereas coping with the Bitcoin community, OKX wound up paying six-fold the payment fee than it might have in any other case paid had it not bid in opposition to itself.
In the long run, OKX bid over 350 satoshis per digital byte of knowledge (s/vb) after a beginning bid of simply 53 s/vb to consolidate its UTXOs.
What are bitcoin UTXO consolidations?
Bitcoin wallets that obtain and ship many transactions find yourself with a number of UTXOs. These are generally often known as merely ‘bitcoin,’ the unspent cash in a pockets.
In contrast to account-based blockchains like Ethereum which routinely consolidate belongings right into a single stability, every bitcoin UTXO requires bidding a separate transaction payment in order that miners embrace that specific UTXO inside a legitimate block of knowledge.
When transaction charges are excessive on Bitcoin, massive wallets normally enable their UTXO units to proliferate. After a couple of months have handed and payment charges have declined, massive wallets take the chance to consolidate their UTXOs.
Learn extra: Ordinals break bitcoin: Transaction charges exceed rewards as congestion rises
Fairly than paying over 1,250 bitcoins in day by day charges to retailer knowledge blocks on Bitcoin’s ledger on April 19, for instance, bitcoin customers who waited till at the moment will pay lower than 15 for a similar quantity of knowledge storage.
Persistence for UTXO consolidations actually permits Bitcoiners to save lots of on their transaction charges — until, after all, they insist on bidding in opposition to themselves.
Protos reached out to OKX for remark however had not obtained a response by press time.