How does the payout of my bitcoin work?
The payout process at Pocket works as follows:
- Incoming payments: We receive incoming payments throughout the day.
- Verification: All payments we receive are verified.
- Bitcoin purchase: For all complete and valid payments, we then purchase bitcoin at the current rate.
- Accumulation of payouts: As the costs for on-chain payouts can be very high, we use the so-called batching method for the payout of your bitcoin. The process is as follows:
- Pending payouts are accumulated during the day.
- We often combine hundreds of payouts into a single bitcoin transaction. This "collective transaction" has several hundred outputs, unlike usual bitcoin transactions.
- At around 10 PM, one or more bitcoin transactions are processed with the bundled payouts. At this time, we determine the network fee (sats/vByte) we will pay for the transaction based on current fee and estimates.
Batching allows us to minimize the network fee per person. This is because the full network fee does not have to be paid for each individual payout, but only once for the collective transaction. The costs can be spread over hundreds of payouts and are therefore much lower per person.
This reduces the costs for the payout to a minimum. Our on-chain payouts are sometimes even cheaper than transactions in the Lightning network.
The time it takes for your withdrawal to be confirmed can vary greatly, as the confirmation depends on various factors, such as the current network utilization. As a rule, our bitcoin transactions with your payouts are processed relatively quickly in the network and confirmed overnight. However, it can sometimes take longer.
In the past, it has happened several times that the network has been very busy and network fees have risen sharply within a short period of time as a result. Since miners prioritize transactions with higher network fees because they earn more from them, there is a possibility that our bitcoin transfer with the payouts will not be processed immediately because we have estimated a fee that is too low.
In special events, such as the Ordinal hype, the fees have risen so quickly that our bitcoin transaction has not been processed for several hours. In such cases, we initiate the transaction again the next day. We can subsequently replace the transaction in the network with a new transaction with exactly the same payouts but a higher fee. This procedure is called RBF, which stands for "replace by fee".
If this measure becomes necessary, we will cover the costs of the fee increase. This means that you only ever pay the fee specified in the confirmation email and you do not incur any additional costs despite the higher fee.
Our aim is to process payout transactions within 24 hours at the latest.
As soon as the payout has been triggered by us, the bitcoin transaction is displayed in your wallet. The payout initially still has the status "unconfirmed", as the transaction has not yet been confirmed in the network. However, this status indicates that your purchased bitcoin are on their way to you and will soon be available in your wallet.
As soon as the transaction has been processed in the network, the status will be adjusted to "confirmed".
To track your payout, you will find a link to track your payout in the confirmation email we send after your payment has been received. To do this, scroll down in the email and click on the "Track payout" button.
You will then be redirected to a website where you will be shown how many bitcoin you have purchased and the current status of your payout.
As long as the payout is still pending, you will be informed that we will carry out the transaction by 10 pm in the evening.
As soon as the payout has taken place, you will be shown additional information about the payout. Click on the "Show transaction" button to view the transaction details in the Blockstream Explorer.
Still have a question? Do not hesitate to contact us.