UTXO consolidation - What's you best option(s)? \ stacker news ~bitcoin

UTXO consolidation - What's you best option(s)?

2845 sats \ 48 comments \ @BitcoinIsTheFuture 23 Mar bitcoin_beginners

I've been in the Bitcoin space for 3 years now and still learn so much here everyday! I never consolidated UTXO's before. I've also made some poor decisions in the past, staking on Gemini earn and losing my precious Sats. Once I got a big chunk of Sats I'd move them to cold storage. I have a multi sig set up and now I have 50 UTXO's. looking at https://mempool.space/ and monitoring fees on the multisig site I have been monitoring fees for about 3 weeks. I got down to a 9 sat byte fee but ran into issues to verify the second key. Then finally I just got a 12 sat byte fee and got the consolidation in! It was a long journey, but now I can sleep better at night knowing I have generational wealth in cold storage in one UTXO!

What's next?

Well I stack daily, but I'm thinking sending larger chunks to cold storage? The con here is that you leave sats on exchanges for longer, but I only use Bitcoin only exchanges now. Do you think it's always a best practice to consolidate into one UTXO or are a few bigger ones just as good or better in certain situations?
Get me seed off of paper. Something like this https://www.seedor.io/en-us, but was thinking of making my own
Per my previous post work on the inheritance planning with it.

Here are some other great articles from fellow Stackers on UTXO's: #298282 #278285 #285930

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143 sats \ 1 reply \ @Murch 16 Aug

Instead of consolidating into a single UTXO, in the future you could consider splitting it into several pieces of different value. You could follow for example the "Preferred series", or an exponential distribution.

E.g. if you have A bitcoins, you could split it into pieces of 1/8×A, 2/8×A, and 5/8×A. If you have a larger amount, continue to follow that distribution and split into e.g. 1/38×A, 2/38×A, 5/38×A, 10/38×A, 20/38×A. That way you still have few UTXOs to keep your future spending cost limited, but you don’t have to show your entire stack if you want to make a small payment.

Also, feerate has lately dropped below 3 ṩ/vB at times.

42 sats \ 0 replies \ @BitcoinIsTheFuture OP 16 Aug

Thanks! Yes, I’ve reassessed my approach. I’m leaving the larger one for now, but have built up some other medium sized UTXO’s and will be sure not to have any more small to extra small ones on chain.

57 sats \ 1 reply \ @expatriotic 24 Mar

A few thoughts:

You say you lost sats because of Gemini earn, but you're using exchanges? Use HodlHodl, Peach, Bisq or Robosats...

a. https://expatriotic.bearblog.dev/secure-the-bag/ b. https://expatriotic.bearblog.dev/acquiring/ c. https://bitcoiner.guide/nokyconly
Having one massive UTXO isn't great either. Presumably you didn't buy all these sats just for them to sit there looking pretty. Eventually you may want to spend some (or all of them). Just imagine going to a convenience store and paying for a pack of gum with a money clip that has ALL OF YOUR EARTHLY MONEY VISIBLE FOR THE WORLD TO SEE... Sorry all caps, but you get the idea. You sound like someone who bought on a KYC exchange... So "they" know you have this money, and they can track ALL of your spending. So buy KYC-free sats and/or coinjoin with Whirlpool (available through Samourai (android) or Sparrow (desktop)). And Passport HWW let's you even mix to cold storage!
Stack weekly or monthly, your UTXO will be more manageable. Daily stacking is... well not great when it comes to this externality. Because you should ideally be getting a UTXO at point of sale (sale of fiat I mean).
Yes! Get some steel. Many people provide this. One that comes to mind is the Ronin Dojo team that makes the Tanto. Look at my links.

21 sats \ 0 replies \ @BitcoinIsTheFuture OP 24 Mar

Thanks these are all really great next steps to consider! I’ll work on some medium sized UTXO’s next (the ones before had many way too small ones, as I didn’t realize what I was doing). I live in the US and almost all my sats are KYC, so yes I should work on that. I finally got off of Custodial Lightning wallets last week and am learning about non-custodial via Phoenix and may set up more depending on the use case. Thanks again!

99 sats \ 3 replies \ @k00b 23 Mar

I really enjoy these posts that resurface and reframe old content.

54 sats \ 1 reply \ @jakoyoh629 23 Mar

These posts are a real highlight for me. I miss out on a lot of content because I can't come here as often as I'd like, so it's great to see these kinds of posts every now and then.

11 sats \ 0 replies \ @BitcoinIsTheFuture OP 27 Mar

Yeah it would be good to see condensed ones that pull stuff together. Any other topics you think would be candidates?

31 sats \ 0 replies \ @BitcoinIsTheFuture OP 23 Mar

Yup, totally @k00b! You and the team do a great job with this site. Being newer to Bitcoin, taking basically my whole stack and consolidating it to one UTXO was a bit intimidating and nerve wracking. But if you want to be your own bank, you need to take ownership of all aspects! There is such great material on stacker news. Just glad I found this place!

31 sats \ 1 reply \ @BTCLNAT 5 Nov

This type of post is always interesting.

Don't you think that having MULTISIGNATURE in a wallet that only you will use is a bit complicated? You even had difficulty with one of the signatures and that delayed your management of the UTXOs. Using a cold wallet is quite safe, so is using the OnlyWatch wallet. Likewise, instead of using a single wallet, use several and separate stashes.

The size of the UTXOs will always depend on their purposes. I even think that @DarthCoin's recommendations are good practice, using several wallets with different purposes. It would be a wallet for Holding, a Wallet for Cache with which you finance the channel, a node you do LN/Onchain swaps; and the spending wallets, preferably Lightning, for daily, weekly expenses, etc.

And finally, I have seen that mining fees have been around 2 to 3 SAT/vB. So always waiting will have good results.

Thanks for sharing your experience. Successes

0 sats \ 0 replies \ @BitcoinIsTheFuture OP 5 Nov

Good thoughts. The goal will be for my children to inherit this stack and to pass it on to their kids!

36 sats \ 1 reply \ @KLT 23 Mar

When stacking on a bitcoin only exchange, I prefer to stack as large of a UTXO that I’m comfortable with and do one big withdraw.

Ideally if you have a good relationship with the exchange, there’s a scenario where you could request quicker withdraw times so maybe your sats are on there for 10 days or less. Obvious risk but there’s no one size fits all as far as I can tell, only tradeoffs.

0 sats \ 0 replies \ @BitcoinIsTheFuture OP 23 Mar

Yeah makes sense. I was sending way too small amounts in the past and didn’t realize future problems I was setting myself up for.

30 sats \ 8 replies \ @030a29f333 23 Mar

This is a solid flow. Obviously can switch out Cash app for whatever exchange you use. Liquid as an intermediate layer for building up enough sats for a large base layer UTXO.

20 sats \ 0 replies \ @BitcoinIsTheFuture OP 23 Mar

This is an interesting play, thanks I’ll look into that!

0 sats \ 6 replies \ @BitcoinIsTheFuture OP 27 Mar

Have you used liquid? What pro’s and con’s have you noticed? It seems like an interesting option to expand scaling.

5 sats \ 5 replies \ @030a29f333 27 Mar

Liquid is a sidechain operated by a federation of companies in the Bitcoin space. It uses L-BTC, a token pegged to bitcoin, as it's currency. You can use this to see how much bitcoin Liquid has and what the health of the peg is. https://liquid.network/

You get some interesting benefits with using Liquid, mainly being improved privacy, faster settlement, and lower fees (as long as Liquid usage is lower than base chain). IMO the best use case for it today is a place to build enough sats for a swap to the base chain with a single large UTXO (1m sats minimum, ideally more). Your sats are generally safer on Liquid than an exchange, but less safe than base layer, so I think of it as a middle ground.

Given that this is a federation, there are trade offs to be aware of. There is the risk of a rug if the vast majority (I want to say 11/15 but dont quote me on that) want to act maliciously. I believe they can also censor txs. Understand the companies involved in the federation and whether or not you're comfortable with this trust model. Again, not ideal for life savings, but maybe for working capital 🤷‍♂️. https://liquid.net/

5 sats \ 2 replies \ @BitcoinIsTheFuture OP 27 Mar

Cool thanks! Yeah listed to a WBD podcast on it and it sounded pretty interesting https://youtu.be/LGR_visD5S4?si=m4SzGDf-TZzS1F_Q

10 sats \ 1 reply \ @030a29f333 27 Mar

That was a good one! Wanna know more about that network upgrade he mentioned...

5 sats \ 0 replies \ @BitcoinIsTheFuture OP 27 Mar

Same will be interesting to see how that plays out!

10 sats \ 1 reply \ @030a29f333 27 Mar

I recommend Aqua wallet if you want to try out Liquid. Smooth experience overall and you can pay LN invoices with your Liquid sats (just be aware of fees, which will be higher than LN in most cases)

5 sats \ 0 replies \ @BitcoinIsTheFuture OP 27 Mar

Cool, yeah that was shared in the podcast I listed to above. Good to hear from real stackers like you on how it’s going though!

20 sats \ 10 replies \ @OT 23 Mar

Some exchanges have a threshold set for auto withdrawals.

I think the best way (if stacking daily) is to send directly to your LN wallet. When it becomes full you can swap a large chunk to cold storage.

20 sats \ 9 replies \ @BitcoinIsTheFuture OP 23 Mar

Thanks for the tip! I just set up my 1st non- custodial lightning wallet (Phoenix), used custodial before that. I usually go exchange to cold storage, but could try the lightning path. Due to liquidity channels I assume lightning is more expensive? Exchanges like Swan allow free withdrawals

5 sats \ 8 replies \ @OT 23 Mar

Free withdrawals? How do they manage that?

The exchange I used to use in Australia is called bitaroo. They have 1k sat withdrawal fees to wallet of satoshi. 3k to other LN wallets.

Yeah, phoenix has higher fees. Its the price you need to pay to hold your own keys and have a LN wallet that works well.

I personally don't mind using custodial LN for smaller amounts. I think when you get around 1m sats, its time for cold storage.

15 sats \ 0 replies \ @doofus 23 Mar

Strike has free withdrawals if you wait 24 hours

10 sats \ 0 replies \ @BitcoinIsTheFuture OP 23 Mar

Yup on the fees. Here you go https://www.swanbitcoin.com/fees/

10 sats \ 5 replies \ @BitcoinIsTheFuture OP 23 Mar

Yeah I’m 0 for 2 with custodial ones in the US. Blue Wallet and Wallet of Satoshi no longer work for me. Any good custodial ones for smaller amounts?

10 sats \ 4 replies \ @OT 23 Mar

coinos.io

Or try the others with a VPN

101 sats \ 3 replies \ @BitcoinIsTheFuture OP 23 Mar

Ok thanks for the homework:-)

0 sats \ 2 replies \ @BitcoinIsTheFuture OP 27 Mar

@OT coinos.io sounds interesting. I assume you use it? Looks light a custodial lighting wallet?

5 sats \ 1 reply \ @OT 27 Mar

Its custodial.

I have used it in the past.

view replies

15 sats \ 7 replies \ @SpaceHodler 23 Mar

I tend to keep my UTXOs to around 10m sats, although these days it means creating a UTXO less frequently.

I withdraw to Liquid every couple million sats and peg out to on-chain once it exceeds 10m-ish. It's a trade-off.

6 sats \ 1 reply \ @doofus 23 Mar

baller

1 sat \ 0 replies \ @BitcoinIsTheFuture OP 23 Mar

https://m.stacker.news/22633

5 sats \ 0 replies \ @Krv 24 Mar

I do around 2m each. Maybe that will be too low. Why do you chose 10m?

5 sats \ 2 replies \ @nblumberjack 24 Mar freebie

What platform/app/service do you use for liquid?

36 sats \ 1 reply \ @SpaceHodler 24 Mar

I use Bitfinex to go from LN to Liquid for free.

From Liquid I peg out to on-chain using Sideswap for a fee of 0.1% + Liquid tx + Bitcoin tx.

For my Liquid wallet I use a Jade with Blockstream Green. On the on-chain side I use Sparrow connected to the same Jade to get a new address for each peg-out.

0 sats \ 0 replies \ @nblumberjack 24 Mar freebie

Okay, gotcha. Thanks! Cheers

0 sats \ 0 replies \ @BitcoinIsTheFuture OP 23 Mar

Ah noice plan!

15 sats \ 3 replies \ @TheWildHustle 23 Mar

TheWildHustle recently payjoined into multisig with a 3 UTXO's

Next Steps are getting more involved with Bisq2 for a solid non kyc stack and probably buying another S9 and or Bitaxe for the mining stack and bitcoin lotto.

If Aqua wallet comes through with the Bitcoin billpay service, I'll probably start using a small liquid stack to save on fees and explore the interoperability.

50 sats \ 2 replies \ @BitcoinIsTheFuture OP 23 Mar

Ah cool need to look into some of that, including non KYC bitcoin

25 sats \ 1 reply \ @030a29f333 23 Mar

Also have HodlHodl, Robosats, Peach, etc as options!

10 sats \ 0 replies \ @BitcoinIsTheFuture OP 23 Mar freebie

Cool thanks yeah the ecosystem is really growing!

5 sats \ 3 replies \ @Satosora 24 Mar

What is a UTXO?

61 sats \ 2 replies \ @BitcoinIsTheFuture OP 24 Mar freebie

UTXO refers to Unspent Transaction Output (plural: UTXOs). Funds in the Bitcoin network are tracked in the form of individual UTXOs. Your wallet’s balance is the sum of the UTXO amounts it can spend, however, the total amount you can send from your wallet is lower, since you will need to pay fees on the transaction.

Here is a good link from a Stacker for more details- #298282

And from Unchained - https://unchained.com/blog/what-is-a-utxo-bitcoin/

5 sats \ 1 reply \ @Satosora 24 Mar

Thanks, l had no idea.

0 sats \ 0 replies \ @BitcoinIsTheFuture OP 24 Mar

Yeah it’s a deep rabbit hole. I’ve learned a ton on Stacker News! As you can tell based on this thread I’ve got a lot to learn, but the more I learn and adjust helps me sleep better at night!