Transactions fees are high. Did you manage your UTXOs appropriately while fees were low? Learn how to avoid getting burned by future high fees:

https://blog.lopp.net/economically-unspendable-bitcoin-utxos/


As a general principle then is it okay to daily stack in a custodial setting like Strike and then send to self custody after a certain threshold?


Yes, in general I wouldn't withdraw to self custody more frequently than monthly.


Coinjoining during low fee environments kind of takes care of this as a benefit additional to privacy. You tend to end up with larger-size post-mix UTXOs with the change being the (presumably small % of your stash) area to worry about future spendability.


This is an important heads up ⬆


use monero or litecoin , get privacy and be happy


But do you think keeping all the money in one UTXO is a security risk? I have the irrational fear that people will brute force over private keys (not the 24words seeds) and might catch something so it feels like a better idea to keep them separate. 🤷🏻


My tax software would read my transaction history and see a capital gain when entering the coinjoin and then as income when exiting the coinjoin (assuming the value is directed back at me)


I seen a lot of people say it's as easy as sending all utxo to a single newly created receive addr on the same wallet with 1sat fee.

Is that right? Wouldn't that never ever confirm at 1sat or am I missing something?


> "Transactions fees are high. Did you manage your UTXOs appropriately while fees were low?"
>
> — Jameson Lopp, Casa co-founder and CTO

Ordinal inscriptions are clogging the network and driving Bitcoin transaction fees through the roof.

High fees make transactions unaffordable and although Lightning can help avoid some of those fees, that will only work if you have your Lightning channels already setup and with sufficient liquidity.

---
## Buying Bitcoin

While fees were low, it was ok to buy $20 worth of Bitcoin at Swan or Strike and then send it to your wallet but that is not a good option anymore.

Just like it's not a good option anymore to send $20 worth of Bitcoin from Fold or whatever Bitcoin rewards program you use to your Bitcoin wallet.

Let's consider a transaction with 1 input (one of your UTXOs) and 2 outputs (payment to the recipient and change coming back to you). This transaction will have a size of 226 vbytes according to this [calculator](https://bitcoinops.org/en/tools/calc-size/). With transaction fees as high as 700 sats/vbyte this means a transaction fee of 158,200 sats.

If you send 1,000,000 sats from your custodial wallet to your own wallet, you will create a new UTXO in your wallet with 1,000,000 sats and when you try to spend it you will be able to make a payment of up to 841,800 sats with a fee of 158,200 sats: **a whopping 18.8% transaction fee.** 😱

You will need to balance the risk of having a large amount of sats in a custodial wallet with the the fee you're willing to pay to decide when to withdraw.

> With the current transaction fees, UTXOs will incur the following fees when you try to spend them to the max after deducting the sats for fees:
>  - 1,000,000 sats: 18.8%
>  - 2,000,000 sats: 8.6%
>  - 5,000,000 sats: 3.3%

## Non-custodial Lightning wallets

Non-custodial Lightning wallets are great from a sovereignty perspective. You hold your Bitcoin and no one can rug you.

But there is no such thing as a free lunch. The increased sovereignty comes with the burden of Lightning channel management.

I recklessly transferred small amounts of Bitcoin to my Mutiny wallet to  pay the weekly allowance to my kids and now the wallet has 10 Lightning channels, **each with limited liquidity and effectively useless**.

![](https://i.nostr.build/jayV.jpg)

To avoid making the same mistake as I did, create Lightning channels with at least 5 million sats. Otherwise you will end up a Lightning channel that is holding a majority of your Bitcoin as unspendable Bitcoin on reserve for when the channel is closed.

Swapping from Bitcoin to Lightning is a double whammy:
- You spend a large amount of Bitcoin in the transaction that creates the new Lightning channel
- A large amount of the Bitcoin that makes it to the channel is held as reserve for when the channel closes

Here is what Mutiny is suggesting if I try to swap 200,000 sats from Bitcoin to Lightning within the wallet. This transaction would likely end up with somewhere around 100,000 sats of spendable Bitcoin for the cost of 261,774 sats.

![](https://i.nostr.build/PWwZ.jpg)

## Summary

> Create UTXOs that are large enough to justify the transaction fees that you will incur when you spend them.
>
> Create Lightning channels that have big enough liquidity so that the Bitcoin held in reserve becomes a very small factor.

---
# Notable notes

nostr:note1ltwhq9zky20rnpxq84qgfq0r25kswuyxzhgzvhc4hyzssvgjxjuseajxk4

nostr:note1rc4sj2jt75x5vd8yqchsffjask3zcg4005lqxz08y2ee4wmw4qequlknvv

---
# Recommendations
## Jameson Lopp

I don't always agree with Jameson but I always learn something new from him.

You can follow him [here](nostr:npub17u5dneh8qjp43ecfxr6u5e9sjamsmxyuekrg2nlxrrk6nj9rsyrqywt4tp).

---

## What did you think of today's newsletter?
Your feedback helps me create the best newsletter possible for you.

Please leave a comment and checkout comments from other subscribers and readers.  I love hearing from the Bitcoin For Families community ❤ 🙏🏻

---
See you again next week!
— Alejandro

This newsletter is for educational purposes. It does not represent financial advice. Do your own research before buying Bitcoin.

Ordinal inscriptions are driving Bitcoin transaction fees through the roof. Today I'm sharing my mistakes and steps you can take to protect yourself from paying exorbitant fees when using your Bitcoin.

This is a long form article, you can read it in https://habla.news/a/naddr1qq38qun0w3jkxarfdenj67t0w4e8xetvvckkvun0d5kks6t8dqkkvet9wvpzpjxldt5gd3c3kr584heymgqcraggru4k2wnp5ga3q4drvq3zjwsxqvzqqqr4gu93f3kx


At these fee rates, it would probably fall out of most mempools at 1sat/vbyte.


Thanks lopp


I don't think they ever get lost. I know a mempool with a 5GB capacity. Receipts are kept.

It doesn't mean that they'll ever be added to a block though.

A 1.1 sat/vB is a better.


Lol - be careful with your arrows 😆

https://i.nostr.build/nayq.jpg#m=image%2Fjpeg&dim=1024x776&blurhash=%2365%7Dmp%7EW-%3B%25MWARjIoIUIV%25LtRt7a%7BWBWBWBazV%40E1IoNGRjbHofofs%3As%3A-%3B-%3A%252xuoeWBRkM%7BNGIUt7xuayofWBaybHWB4n9FD*M%7BWBofxuxu%25Lj%5DRQM%7BWCWBkCoyoftQ&x=fea2492ac1843b321960f4ee644342fd32586dbfcf29c43e5ce6e77f35b61993


Haha this must be a setup :)


Tx fees are not high. They're incredibly cheap.

Few.

nostr:nevent1qqspu2cf9f9l2r2xxnjqvtcy5ewctg3vy2hh60srp8nj9vu6hdh2svspp4mhxue69uhkummn9ekx7mqzyrmj3k0xuuzgxk88pyc0tjnykzthwrvcnnxcdp20ucvwm2wg5wqsvqcyqqqqqqg652j4p


Maybe people working low pay jobs putting $25-50 per month (if that) into bitcoin may not even need to think about sending bitcoin to a L1 wallet, at least for a while?

Although, what might be considered a small utxo in usd terms might be larger in future terms. Right now 100k sats is worth between $42-44 where in the future could be worth $1k. But even then at $1M per BTC, that's still not a lot of money, especially in the future as the dollar is worth less.

At a bare minimum what amount of sats is a safe amount to start moving into a L1 wallet in a single utxo? And for those doing utxo management to fix bad utxos (other than waiting for low fees) would it be better to think in terms of percentages relative to an individual's stack? E.g. if you had 20M sats split utxos into 4 equal amounts of 5M per utxo?

And for the other end of the spectrum is there a utxo too big?


Sounds like tax software to not use, or to edit the report it generates.


Absolutely. I used to DCA with Swan but would wait tiI I had a certain amount before I withdrew. All the maxis that say you need to withdraw immediately aren't telling you the disadvantages of doing that.


This is also how an IRS agent will make a determination on the taxes you owe unless you trace the coinjoin for them (if you get audited).


What is the point of coinjoining if you’re going to just link your input and output transactions for the government?


Well, coinjoins don't look like normal transactions, they look like coinjoins. I guess it depends on if you think you can lie to their face and get away with it. A field audit usually goes on for 2-3 years, and they don't really let up. If they think you are lying then it becomes a crimal investigation instead of a financial investigation. Just being honest with them is emotionally exhausting because of how intrusive they are. I'm guessing you've never had IRS agents audit you for all your crypto transactions before.


Nope, but it’s probably something that will increase in frequency. Moving business out of the US may be the only option for avoiding it if you want to maintain any privacy.