A guide to UTXO management: Save transaction fees and organize your bitcoin

https://blog.keys.casa/utxo-management-guide/

Understanding UTXOs is crucial for managing your bitcoin held in self-custody — they’re a crucial building block in bitcoin transactions.

In recent years, market demand for blockspace has resulted in increased transaction fees on the base layer of the bitcoin network. If you’re bullish on bitcoin and believe it’s an exponential opportunity, smart UTXO management can help you maximize that potential. 

Properly managing UTXOs can help you avoid overpaying on transaction fees, keep track of your holdings, and improve overall transaction efficiency.

What are UTXOs and why do they matter?

Bitcoin only exists on the internet. It gets reassigned from place to place with each transaction on a public ledger called a blockchain.

A UTXO (unspent transaction output) is a deposit that has been made into your wallet. Every time you receive bitcoin, a new UTXO is created that will later need to be spent. You can think of UTXOs as individual data entries written on the bitcoin blockchain.

Each UTXO lists an amount of bitcoin tied to an address, and an address can have multiple UTXOs. When you spend bitcoin, your UTXOs (outputs) become inputs in your transactions.

Why are UTXOs important?

There’s no free lunch in bitcoin. Each transaction has a cost, either in BTC or energy used to mine a block.

It costs BTC to write data to the blockchain, which includes UTXOs. Each incremental UTXO you add to an address becomes a sliver of data you’ll have to pay to move in a later transaction.

Accumulating too many UTXOs in your wallet can lead to various challenges, especially when using certain hardware wallets. These challenges arise due to memory and processing limitations, which can affect the efficiency of your wallet and increase transaction fees.

Imagine you have many small coins in your piggy bank, like pennies and nickels. It’s fun to collect them, but when you want to buy something big, you might need to use lots of those small coins. It can get heavy and take a lot of time and energy to count them all. There’s little economic value in filling your piggy bank with pennies when you can trade them in for dimes and quarters.

UTXOs work in a similar way. If you have too many small UTXOs in your bitcoin wallet, it can become a bit unwieldy and cost you more to transact with than it’s worth.

UTXOs should contain at least 0.01 BTC

With a little forethought, you can avoid having your wallet bogged down with dust and excessive UTXOs. It’s best to create UTXOs with at least 0.01 BTC for viable spending in the future, and ideally much larger than that amount. This means you should be a bit strategic about how you acquire your bitcoin and send it to self-custody.

How spendable a UTXO has to do with transaction fees, which fluctuate according to market demand. It’s hard to know what the transaction fee market will look like in the future. If you create data entries with not enough BTC, there’s a possibility that BTC may not be spendable in the future because the transaction would cost more BTC than the UTXO contains. This is especially true to UTXOs containing less than 0.0001 BTC, also known as dust. Avoid creating dust at all costs to keep your bitcoin worth your while.

It’s easy to create dust if you send unnecessary transactions. For instance, if you purchase $10 of bitcoin a month, it may be a few months, perhaps years before you acquire an amount that is reasonable to send to self-custody and back. Mining rewards are similar. If you only earn $25 from mining a block, it may not be a distribution you want sent to an address on the bitcoin base layer. 

In many cases, it can make sense to postpone sending bitcoin to self-custody until you have a large enough amount to justify creating a UTXO.

Keep your piggy bank neat with UTXO consolidation

To save on fees and make things easier, we suggest you keep your piggy bank neat and tidy and combine smaller UTXOs into bigger coins. This is like trading all your small coins for a few shiny, big ones. It makes spending your bitcoin faster and simpler.

To ensure your wallet continues to operate smoothly and to optimize your transaction experience, we recommend keeping the number of UTXOs in your wallet below 100 UTXOs. When your UTXO count approaches this threshold, it’s essential to consider consolidating your UTXOs into fewer, larger ones. This process, known as UTXO consolidation, helps streamline your wallet and reduces the strain on wallet memory and processing power.

UTXO consolidation is a straightforward process that involves creating a new transaction that combines multiple UTXOs (inputs) into a new UTXO (output). Once this transaction is sent and confirmed on the bitcoin network, the consolidation is complete. Through UTXO consolidation, you can maintain a healthy bitcoin wallet.

A guide to UTXO management: Save transaction fees and organize your bitcoin
In UTXO consolidations, UTXO inputs of varying size (left) can be combined into one output (bottom right) with a small transaction fee (top right).

Why consolidate UTXOs? Save on transaction fees

The advantage of UTXO consolidation lies in preserving value and optionality. A reality of markets is, sometimes, investors sell assets not because they want to but because they’re compelled to for financial reasons. If you’re ever in a situation where you have to sell bitcoin immediately, you won’t have control over the transaction fee market, but an already consolidated UTXO maximizes the value of your holdings.

Timing is key for consolidating UTXOs. If you watch the transaction fee market, you can send a transaction when fees are low and reduce the fees you might otherwise pay in the future. What constitutes a low fee is subjective, but you can easily monitor fee markets with a block explorer such as Mempool.space. Transaction fees are assessed in satoshis per virtual byte.

Monitoring fees is especially important for multisig wallets like the Casa vault because multisig wallets are “heavier” and process more data on the network, resulting in higher fees than single-signature transactions. For this reason, the stronger security model of multisig is better suited for long-term holdings.

If this process sounds technical, don’t worry. Our team is here to assist you with this process and provide guidance every step of the way. If you’re a Casa member and would like assistance, please reach out to our advisors at help@team.casa and we’ll be happy to help you consolidate your UTXOs efficiently.

Are you a little technical and planning on sending a transaction soon? Our co-founder and CTO Jameson Lopp built a handy calculator for estimating fees. Select “P2WSH in P2SH” as the Script Type for Casa Vaults and “P2WPKH in P2SH” for Casa Pay.

Consider privacy before consolidating UTXOs

Because bitcoin transactions are public, it’s worth giving thought to each individual UTXO before proceeding with a consolidation. If you’ve intentionally kept your coins separate for privacy reasons, combining them into larger UTXOs can reduce that privacy. 

It’s a bit like putting all your different coins together in one glass jar instead of keeping them in separate pockets. While this can improve efficiency, it might make it easier for others to see how much bitcoin you have. If privacy is a top concern for you, please reach out to our support team. We can provide guidance on how to balance privacy with the need for efficient UTXO management, ensuring you make the best choice for your unique needs.

Let’s review. Why take action?

By managing your UTXOs proactively, you can:

  • Minimize transaction fees
  • Ensure the optimal performance of your wallet
  • Simplify your bitcoin holdings for easier tracking
  • Avoid creating unnecessary data on the bitcoin network

Casa is committed to providing you with the best possible bitcoin experience, and effective UTXO management is a crucial part of that journey. Think ahead and you can master your UTXOs and make the most of your bitcoin.


Want more tips on how to manage your bitcoin?

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Get your crypto taxes in order with IRS Guard Dog

https://blog.keys.casa/tax-prep-with-irs-guard-dog/

Tax season is here. Whether you’re new to buying bitcoin or a longtime crypto investor, now’s the time to start preparing your income tax return. 

It’s easy to focus more on the attention-grabbing threats when securing your bitcoin, ether, and other assets, such as hacks and exchange collapses. Poor tax planning is an often underestimated threat that can put you and your assets at risk.

Please note this article is provided for informational purposes only and is not intended as tax advice. At Casa, we’re not tax advisors but our friends are. We’ve recently partnered with IRS Guard Dog, a service offered by CryptoTaxAudit to help you protect yourself and stay in compliance with your taxes.

Tax season is here. Whether you’re new to buying bitcoin or a longtime crypto investor, now’s the time to start preparing your income tax return. 

About IRS Guard Dog

IRS Guard Dog is a tax advisory service that monitors your status with the IRS and allows you to mobilize an audit defense quickly while keeping an eye out for refunds you might not otherwise know about. In this article, we’ll explore why it makes sense to have a tax expert in your self-custody toolbox.

The IRS is paying attention to digital assets

One misconception among investors is that the IRS is not interested or capable of enforcing tax regulations with crypto. This could not be further from the truth.

Whenever BTC, ETH, and other assets increase in price, it typically results in increased attention from the news media, social media, and law enforcement agencies. Moreover, there’s a perception among tax authorities that crypto investors, like other early tech adopters, are wealthier than the average taxpayer. 

Bitcoin is more than 15 years old. Even if the U.S. government isn’t fully orange-pilled at this point, the IRS is still interested in collecting tax revenue from these assets.

Why tax preparation matters for self-custody

Holding your keys is an excellent way to secure your assets without relying on trusted third parties. Going it alone on your taxes, however, can be rather difficult and risky.

Bitcoin and digital assets are a relatively new form of investment, and their tax treatment is evolving over time. If you’re not a tax professional, it can be hard to keep up with changes to the tax code. And the risks of getting your taxes wrong are substantial.

Even if you’re not too keen on fiat currency, Uncle Sam wants his dollar. Tax penalties can include hefty fines and even jail time. Ignoring the IRS is a dangerous risk to you and your bitcoin you don’t have to take. 

Similar to how Casa makes self-custody easy for you, working with a tax expert is a smart, proactive approach to staying compliant. Trust us: you don’t want to be the investor who HODLed bitcoin through bull and bear markets only to sell off a stash to pay back taxes. Security is about planning ahead and that includes tax preparation.

Two types of tax non-compliance

While the U.S. tax code is complex, there are two primary ways to get in trouble with the IRS: not filing income tax returns and under-reporting income.

Not filing tax returns is a bad idea, especially in years when you lock in high income. The IRS knows if you haven’t filed in a while or at all, so suffice it to say you’re on their radar if you’ve sold a lot of bitcoin recently, started driving a sports car, and didn’t file a tax return.

Hiding income and profits from the IRS isn’t an option either. In recent years, centralized exchanges began filing forms with the IRS, so it’s reasonable to assume they know you’ve sold bitcoin even if you don’t report transactions. Receiving crypto is also taxable income which goes for tips, airdrops, or staking rewards, so it’s crucial to keep track of even transactions that take place outside of exchanges.

Did you sell assets in 2023? Remember capital gains

The IRS considers digital assets to be property, like a house, stock, or car, which means whenever you sell crypto, it’s a taxable event and could result in you owing capital gains taxes to the IRS.

Capital gains are an important consideration of holding any investment, including crypto, and amounts can vary depending on how you’ve held the asset in question. If you sold or paid for goods or services with bitcoin, you could owe the IRS capital gains taxes. 

To calculate your capital gains, you will need to know your cost basis, or the price at which you acquired assets. For instance, if you trade bitcoin, you would need to know bitcoin’s market price at the time you bought and sold it. Similarly, keeping track of timestamps is important because the amount of capital gains you owe can vary depending on how long you’ve held your assets.

Maximize your tax refund the right way

Tax planning isn’t just about managing risk — if done correctly, you can also make the most of opportunities. Savvy investors understand proper tax preparation can sometimes work in their favor. 

An expert tax professional can help you identify possible deductions from your taxable income so you don’t overpay the IRS. For instance, if you sold bitcoin during a bear market for a loss, a tax professional can show you how to properly claim the loss and carry it forward to future tax years, a process known as tax loss harvesting

If you take a DIY approach to your taxes, it can be all too easy to get this calculation wrong. With time and expert tax advice, you can learn to make every transaction count.

Don’t wait for an audit — get proactive now

All too often, investors think they can wait for an IRS audit to get their taxes in order. In reality, that strategy can lead to rather painful results. Audits can be time-consuming, stressful, and costly, and when they happen, representing yourself can be a risky strategy. When you’re notified of an audit, you are essentially under investigation. Anything you can say can be used against you in a court of law. It’s wise to put your best foot forward.

The good news is audits can be managed and avoided with an expert on your side who speaks the same language as the IRS.

IRS Guard Dog helps you stay ahead on your tax preparation. They monitor your status and can notify you in advance of an upcoming audit, so you can update your recent filings. With plans as low as $12 a month, you can receive a monthly report of your tax status so you can stay duly informed of any new changes. They also provide individual consultations to help you prepare for current and future capital gains.

Self-custody is about peace of mind, and you can maintain it with smart tax planning through IRS Guard Dog. Because every sat counts.

Sign up here.

Why ETF investors should consider self-custody

https://blog.keys.casa/why-etf-investors-consider-self-custody/

Please note this article is provided for informational purposes only and is not intended as financial, legal, tax, accounting, or investment advice. Casa urges you to consult a qualified professional for any such advice or service.

The introduction of spot bitcoin ETFs represents a breakthrough in the mainstream adoption of bitcoin. But if you’ve spent some time studying bitcoin, you might wonder if this type of investment vehicle is the best way for you to hold bitcoin for the long term.

At Casa, we’re not financial or investment advisors — we’re security experts. We help our members take self-custody of their bitcoin, so they own it for all intents and purposes, protect it from third-party custodial risks, and keep it for the next generation.

Our team recently conducted a deep dive into ETFs and the risks associated with them. In this primer, we’ll discuss some of the differences between owning shares in an ETF and holding bitcoin in self-custody, so you can make an informed decision.

What are bitcoin ETFs?

Exchange-traded funds or ETFs are securities that offer investors exposure to an underlying basket of assets, according to Investopedia.

For the purposes of this article, we will focus on spot bitcoin ETFs, which a third-party institution holds bitcoin in custody for a fee. In this type of offering, the basket of assets consists of one or more bitcoin addresses typically secured by a custodian, such as Coinbase. The collection of assets are packaged as shares that are traded on the public markets.


Want to learn more about bitcoin security?

Once you buy bitcoin, you need to stay ahead of new and evolving threats. Our weekly Casa Security Briefing helps you stay in the know with stories, analysis, and tips. Sign up below.


ETFs are not all bad

There are many reasons why ETFs are popular with investors. They’re a convenient, low-cost way to obtain indirect exposure in an asset without dealing with custody, and they’re easy to buy and sell in a tax-advantaged retirement account.

Retirement is a big deal in the world of finance. Together, retirement assets represent nearly a third of all household financial assets in the U.S. as of September 2023, according to the Investment Company Institute.

It’s possible to hold bitcoin in self-custody within a tax-advantaged account through a self-directed IRA, but this process can be costly and cumbersome for investors just getting started with bitcoin. 

So, there are a lot of incentives for owning shares of an ETF as a proxy for owning bitcoin, but these benefits come with trade-offs.

ETFs rely on trust

Owning shares in an ETF isn’t the same as owning bitcoin directly. It has to do with how bitcoin is designed.

An ETF is essentially a collection of IOUs traded on the securities markets. When you own a share, you have a depository receipt, which is a claim to the fund’s underlying assets. If you find yourself in a dispute with the ETF issuer, you become a creditor and that receipt becomes the basis for a series of legal proceedings. This system works reasonably well for real-world assets, but bitcoin is different on a practical level.

Unlike stocks, bonds, and other investment vehicles, bitcoin is the native token of a parallel, borderless system in cyberspace. It’s a closed system with barely any knowledge of the outside world.

Ownership on the bitcoin network rests with keys. If you have the key to a bitcoin address, you can spend the bitcoin at that address. There are no do-overs with bitcoin transactions, which is why it’s essential to keep your keys safe.

When a company issues a bitcoin ETF, they either custody the underlying bitcoin themselves, or they outsource that custody to a third party. So, they hold the keys or they pay someone else to hold the keys.

This creates a chain of trust that, if broken, can have disastrous consequences. We often advise our members not to leave bitcoin with an exchange or custodian because you never know what could happen with them. We’ve seen these companies go bankrupt and lose customer funds in hacks and accidents, such as Mt. Gox, FTX, and Fortress Trust in recent years.

Bitcoin ETFs have the potential to create the same scenario just on a much larger scale because these offerings rely on third-party custodians.

ETFs miss out on the broader bitcoin economy

There’s a lot more to bitcoin than just buying and holding it. The bitcoin network enables peer-to-peer payments. Whether it’s buying a pizza with bitcoin, buying a t-shirt at a conference, or minting an inscription, you need your own set of keys to send a bitcoin transaction.

When you own shares in a bitcoin ETF, you can’t participate in the bitcoin network. If you’re interested in the technology behind bitcoin or believe in its incorporation into everyday life, it’s important to remember any underlying bitcoin in an ETF is boxed out from that world, at least for regular investors.

Owning bitcoin in an ETF is similar to owning shares of gold in a vault somewhere you can never lay eyes on. The price might go up but you’re far from the action.

You can’t get your BTC out of an ETF

Because it exists on a peer-to-peer network, bitcoin is one of the only assets you can transact with even if the traditional financial system is not operating. But if you’re interested in bitcoin as a hedge against the financial system, a spot bitcoin ETF could work against you. 

At this point in time, the SEC has favored ETF filings with a “cash creates” redemption model, which means the authorized participants and market makers are using cash to create new shares in the traded product with the ETF provider. This arena is known as the primary market.

Retail investors participate in the secondary market. In between primary and secondary markets sit layers of exchanges and broker-dealers, which allow you to trade fiat currency for shares. This article has details about how ETFs are created and redeemed.

Spot ETFs are designed to maintain parity with the fair market value of an asset. If there’s a significant difference between the underlying value of an ETF and the current spot price, institutions can typically engage in arbitrage in the primary market, which closes the gap in the secondary market.

This means if you purchase shares in an ETF, don’t expect to trade your shares in for bitcoin anytime soon. You’d probably receive a cash redemption, similar to when you sell shares.

Why self-custody matters

Though it’s part of the world we live in, the traditional financial system is a complicated web of trusted third parties. And it has let the general public down on more than one occasion.

Bitcoin was designed to take trust out of the equation. By holding your own keys, you can opt out of trusting third parties with your assets. And you ensure your bitcoin remains available for you to transact with as you see fit.

With the right tools, you can hold your bitcoin with peace of mind from hacks, accidents, and custodial risk. Casa vaults allow you to secure bitcoin with multiple keys and multiple devices to protect against single points of failure. This protocol, known as multisig, requires you to sign a transaction with more than one device. Learn more here.

Self-custody gives you greater control and freedom over your bitcoin than even the best custodian can provide.

Final thoughts

Spot bitcoin ETFs can be a compelling option for investors with tax-advantaged portfolios, but there is a lot of trust involved. Buying and selling an ETF is not all that different from trading bitcoin on an exchange, especially when most ETFs are using the same custodian.

If you choose to participate in such offerings, be sure to understand the trade-offs. Holding additional bitcoin in self-custody can be a smart way to diversify custodial risk and makes the most of bitcoin as a hedge against the financial system. If you want to own bitcoin, we would recommend having your own wallet in addition to any ETF holdings you may have.

It’s one thing to buy bitcoin — it’s another thing to keep it. Hold bitcoin in self-custody and you’re much closer to unlocking bitcoin’s true value.


Secure your bitcoin for real

Casa helps bitcoin investors take self-custody of their bitcoin with multiple keys for robust protection against hacks, theft, and custodial risk. With a Casa vault, you can be sure you own your bitcoin fair and square for full peace of mind.

Schedule a call with a Casa advisor to learn more.

Protect your stablecoins: Hold USDC and USDT with Casa

https://blog.keys.casa/hold-stablecoins-with-casa-vault/

Imagine a world where your bank is available 24/7.

We’re not talking about a world where you send a mobile app payment and it finally reaches the other person’s account two days later. We’re talking about real, always-on, instant access to your wealth.

In this world, your money would be just as online as you are. You could send payments whenever and wherever you want without relying on a bank. And you wouldn’t have to worry about your money being caught up in a banking crisis. Your money would be fast, instant, and available to you and you alone. You secure it, you control it.

Today, we’re happy to share that world is one more step closer to a reality. You can now hold two stablecoins within a Casa vault: Tether (USDT) and USD Coin (USDC). This makes Casa a comprehensive, self-custodial vault for bitcoin, ethereum, and dollar-pegged stablecoins.

What are stablecoins?

Stablecoins are tokenized assets on ethereum and other blockchains that are pegged to fiat currency reserves (typically U.S. dollars) maintained by the issuer. Because stablecoins exist on crypto infrastructure, they allow for peer-to-peer transactions with nearly instant settlement and no third-party companies or financial institutions required to process the transaction.

Why secure stablecoins with Casa? Multiple keys means better security.

Casa helps you hold your digital assets without fear of loss or theft. Casa vaults are built with multiple keys (multisig), so if you lose a key, you don’t lose all your assets.

Casa’s technology uses a mix of hardware wallets like Ledger, Trezor, Coldcard, and mobile phones to secure your vault. These devices, or keys, are used to send and receive assets within that vault. 

Protect your stablecoins: Hold USDC and USDT with Casa
Casa vaults use multiple devices stored in different locations for resilient protection. This 3-key vault requires two keys to send a transaction.

A Casa Standard membership comes with a 3-key vault, which requires you to approve a transaction with two keys to send assets. For instance, you could use your phone as key #1 and a hardware wallet as key #2 to sign a transaction. If you lose one of those devices, you can use our Casa Recovery Key, an emergency key we hold on your behalf. This allows you to have peace of mind that even if something were to happen to one of your devices, your assets are still safe and able to be recovered.

Casa can transform your phone or hardware device into a high-security vault to store all of your bitcoin, stablecoins (USDT and USDC), and ethereum. Never worry again about getting locked out of bank accounts, theft, hacks, and third-party failures, like crypto exchanges going bankrupt.

Self-custody reimagined

For ages, everyday people have had a complex and tenuous relationship with banks and financial institutions. Before the advent of bitcoin, we were heavily dependent on banks to safeguard our wealth. These institutions frequently took that trust for granted with questionable lending practices and chronic mismanagement.

Even for digital assets, it’s all too common for people to purchase them and leave them in the care of a “trusted” custodian or exchange, often with unfortunate consequences. 

Until recently, you couldn’t escape these trusted systems and hold your assets yourself without shouldering security risks. But now, thanks to the invention of bitcoin, we have moved past storing “money in the mattress.” With a well-distributed Casa vault, you can hold bitcoin and USD stablecoins and transcend the financial system of yesterday with self-custody.

Maintain your own savings

The traditional banking system operates with fractional reserves. This policy allows a bank to hold only some of the money you deposit in your account and lend out the rest. This arrangement encourages economic activity, among other purposes, but it also increases the likelihood that one or more institutions will fail with a bank run.

This system defeats the purpose of saving money, which is to keep it for when you need it. What’s the point in saving if you give your money to someone who turns around and lends it out, especially if you don’t get paid any interest on your deposit? 

Casa vaults give power back to you, the depositor, and allow you to manage your own savings securely.

Greater resilience against geopolitical instability

Digital assets exist on a spectrum of risk and resilience against varying threats. Bitcoin offers some resilience over fiat currency reserves and jurisdictional risks whereas stablecoins can provide some resilience against individual institutions and volatility with bitcoin itself. Today, even the most passionate crypto investors still use dollars and other government-backed currencies on a daily basis, and investors around the world use stablecoins to hold their wealth. 

There is also merit to securing fiat reserves with crypto technology. For those in countries with weak or failing currencies, dollar-pegged stablecoins provide a way to benefit from the stability of the U.S. dollar relative to other currencies. In recent years, we’ve unfortunately seen inflationary crises and bank failures emerge in many nations, and you don’t have to be another victim. 

In more U.S. dollar-integrated nations, holding stablecoins in self-custody could provide a useful hedge in the event of a financial crisis. Because you can transact peer-to-peer, you retain the ability to participate in the broader crypto ecosystem that knows no banking hours. 

Casa is a robust, flexible solution for holding dollar-pegged stablecoins wherever you are in the world.

Final thoughts

Today, being your own bank is more than a meme. You can take a major step with multiple keys for resilience while maintaining autonomy and control of your stablecoins with Casa.


Already have a hardware wallet? Create your vault now.

It’s super easy to set up your own 3-key vault. Our Standard membership comes with a self-guided onboarding where we add two keys to your existing hardware wallet. This protects your assets so one hack or accident doesn’t mean lost assets.

Get started here.

Ethereum gas fees: Understanding the cost of ETH transactions

https://blog.keys.casa/ethereum-gas-fees-understanding-cost-of-eth-transactions/

For crypto investors, owning ether (ETH) is just one part of the excitement. There’s a wide world of utility you can access with ETH, but that requires you to develop an understanding of gas fees.

Gas is an essential component of conducting ETH transactions and interacting with dapps. You may sometimes hear other investors discussing gas fees and how to avoid spending too much on them.

Casa helps you secure your ETH with multiple keys. In this article, we’ll cover some of the basics around gas, so you can be more confident when venturing into web3.

What are ethereum gas fees?

In ethereum, gas is a transaction fee paid in ETH that reflects computational cost. The ethereum network acts as a decentralized computer where you pay to run programs known as smart contracts.

Since the network’s transition to a Proof of Stake algorithm, gas is paid as a reward to validators in return for staking ETH and process transactions. This provides an economic incentive for validators to enforce consensus on the network.

When do you have to pay a gas fee?

Gas is required for ETH transfers and any other update to the Ethereum Virtual Machine (EVM), the blockchain for the ethereum network. You can expect to pay a gas fee for the following purposes:

  • Sending and receiving ETH
  • Depositing and withdrawing from exchanges
  • Staking tokens
  • Minting assets
  • Participating in a DAO
  • Replacing a key in a Casa vault
  • Performing any computation on the EVM

Why does gas cost so much?

The gas price on ethereum fluctuates according to the dynamics of supply and demand. Sometimes, the network can be congested resulting in higher gas than normal, which is common during a crypto bull market. Conversely, gas may be lower when there is less traffic on the network.

On an individual transaction level, gas increases depending on the extent of the code you intend to execute. This cost prevents bad actors from bogging down the network with spam.

How are gas fees calculated?

Gas Fees = Gas Units x (Base Fee + Priority Fee)

Gas fees are determined according to the above equation, but each variable has its own stipulations.

Each ethereum block has a gas limit which is set to a target rate of 15 million units, though the limit can increase up to twice that amount during times of high demand. Gas units are a calculation of the total computation required in an update to the EVM. A typical ETH transfer can use about 21,000 units.

All blocks contain a base fee, which provides a minimum cost. This is determined according to previous blocks. If you want your transaction or update to be confirmed sooner rather than later, you can designate a priority fee, which is akin to adding an extra tip to move to the front of the queue. Gas fees are denominated in gwei, which is one-billionth of an ETH.

Because gas fees are rather dynamic, it can be a smart practice to check the gas fee market before proceeding with a transaction. There are a variety of tools to help you monitor gas, such as this one from Etherscan. The Casa app can also help you set a maximum fee in advance to avoid paying too much.

Can ethereum gas fees be reduced through Layer 2 scaling solutions?

Indeed, there are several projects in the works across the ETH ecosystem that are aimed at reducing gas fees and overall congestion on the network with a lot of potential.

One premise is to batch transactions together before posting them to the mainnet, a process known as rollups. Additionally, there are also sidechains and state channels, the latter of which uses multisig contracts for off-chain transactions with final settlement on-chain, which is similar to the Lightning network on bitcoin.

Many of these solutions are in active development, so don’t try them at home unless you know what you’re doing or experimenting.

How can users manage the cost of ethereum gas fees when sending transactions or interacting with dapps?

The most important way to keep gas fees down is to only deploy a smart contract when you are highly confident it will work. Ethereum is designed to be Turing-complete, meaning it can theoretically run any program, even ones that don’t work as intended, are not economically feasible or take too long to terminate.

Computation is computation, and gas fees are nonrefundable. Ethereum is designed to reject code that supersedes the gas limit. Additionally, because gas costs scale with the complexity of code, it’s prudent to avoid bloating a transaction with frivolous elements or unnecessary calls to other smart contracts. Less is more. To avoid wasting gas, it is advisable to use standard, professional-tested smart contracts instead of attempting to build your own from scratch.

Final thoughts

Gas is an integral piece of the ETH ecosystem and broader crypto economy. By paying for computation, you can use ethereum to explore dapps, DeFi, and any number of digital assets. With a little forethought, you don’t need to fear the price at the pump.


Protect your ETH with a multi-key vault

Too many accidents and hacks take place in crypto, and it’s easier than ever to take self-custody of your ETH.

Casa helps you secure your ethereum (and bitcoin) with multiple keys so one incident doesn’t mean lost crypto. Interested in learning more about our vaults? Schedule a call with a Casa advisor now.


Read more

How ethereum smart contracts work
What are smart contracts and what can they do? Learn more about the programmable side of ethereum and its potential.
Ethereum gas fees: Understanding the cost of ETH transactionsCasa BlogTeam Casa
Ethereum gas fees: Understanding the cost of ETH transactions

What is ethereum? Key terms explained

https://blog.keys.casa/what-is-ethereum/

What is ethereum? Ethereum is a decentralized computer used for designing and executing smart contracts. It has its own blockchain, cryptocurrency (ether/ETH), and smart contract framework.

Okay, that’s a lot to take in. Don’t worry. We’re going to discuss each element one-by-one, so you have a basic understanding of all the moving parts.

What’s a decentralized computer?

Let’s start with the very basics. Computers are mathematical machines that receive inputs and generate outputs. A calculator is a basic computer. Enter “2+2” and it will tell you “4.”

Most computers today are centralized, meaning they are housed in one location. Computers rely on microprocessors and tangible materials like silicon. Even today, when you perform computation on the internet, you receive data from a server or a group of servers known as the cloud.

Ethereum was conceived as a way of taking computing power and spreading it around the world. Nodes in its network maintain a virtual machine, a computer on top of a computer. This open-ended nature has led many to deem it a “world computer.”

What is a smart contract?

Contracts are a set of rules that govern a transaction between multiple parties. Up to now, contracts have been written on paper, and they generally rely on some other party to enforce them, such as the participants, court, or government. But what if contracts could enforce themselves?

Smart contracts are a complex form of script through which conditions are set for an ethereum transaction. A contract can contain a simple if/then rule or a massive set of a million rules expressing the circumstances under which you spend funds and various contingencies.

Together, smart contracts represent the open-ended nature of ethereum. Theoretically, there are no limits to the computation you can perform with ethereum, a feature known as Turing completeness, so long as you can cover the costs. Learn more about the inner workings of smart contracts below.

How ethereum smart contracts work
What are smart contracts and what can they do? Learn more about the programmable side of ethereum and its potential.
What is ethereum? Key terms explainedCasa BlogTeam Casa
What is ethereum? Key terms explained

What is ether (ETH)?

Ether (ETH) is the technical name for ethereum’s native currency. It is divisible by a quintillion — imagine a 1 with 18 zeros — and the smallest denomination is known as a wei.

What is gas?

Gas is the cost of computation on the ethereum network. Similar to how bitcoin charges bitcoin-denominated fees for every transaction, you need to own ETH to pay for gas.

Imagine you had a computer that could perform any possible calculation, but it had a coin slot like a vending machine where it charged you for each simple query.

The cost of gas tends to fluctuate, and it is usually represented in gwei, one billionth of one ETH. It’s best to ensure you have enough ETH to cover your gas regardless of whether you’re trying to take self-custody of your ETH, mint an NFT, or launch a decentralized app. Computation is computation. If you plan on exploring ETH as a utility token, keep a close eye on the gas price.

What is proof of stake?

Consensus represents the mechanism for arriving at a shared truth, and it is an essential component of cryptocurrencies and the protocols underpinning them. Without consensus, there would be no viable blockchain and no agreement on which transactions should be added to it.

Proof of stake is a consensus algorithm where transactions are validated by people who personally supply their ETH to the process in exchange for rewards.

This feature is one of the ways ethereum is different from bitcoin, which uses proof-of-work mining predicated on competition and energy usage. Ethereum initially began with a proof-of-work algorithm, but the protocol shifted to proof of stake in mid-2022.

What is fee burn?

In the ethereum network, there is a variable supply of ETH that can increase or decrease depending on market conditions. A small amount of new ETH is issued on a regular schedule while ETH is also spent as gas, a process known as “burning.”

If more ETH is spent through computation than it is issued, then the supply could decrease, and the inverse is also possible. If computation demand falls, the total supply could also rise.

This dynamic is called fee burn, and it was introduced as a part of ethereum’s transition to proof of stake.

What is an ethereum private key?

Cryptocurrencies only exist online, so when you own ETH, you really own the ability to spend ETH on the blockchain, which is only possible with a private key.

Private keys are your proof of ownership, also known as a “secret.” You use them to sign transactions and verify ownership, and they need to be kept secure at all times.

When you first buy ETH on an exchange, the exchange holds the key. It isn’t until you take the active step of withdrawing your ETH onto your own keys that you actually own your assets. This is called self-custody and it’s the best way to maintain control of your assets. Casa helps you practice safe self-custody of your ETH using a multi-key vault.


Want to be notified when ETH support is available?

Soon, you’ll be able to secure ethereum with Casa in addition to bitcoin. We’re releasing ethereum support in Q1. Sign up here and skip the line when ETH vaults are ready.

Create digital vaults with your Trezor for the best crypto protection

https://blog.keys.casa/create-digital-vaults-with-your-trezor/

Create digital vaults with your Trezor for the best crypto protection

Securing your crypto with a hardware wallet is an important first step in protecting your digital wealth. If your assets represent a significant amount of your net worth, however, it makes sense to upgrade your protection to the industry standard: multiple keys.

Trezor is a great selection to get started with self-custody. In this article, we’ll go over why you should consider incorporating a Trezor device into a multi-key vault with Casa for the ultimate crypto security.

About Trezor

Trezor is one of the leading manufacturers of hardware wallets. Not only were they the first to create a hardware wallet, but they are consistently ranked among the top wallet manufacturers in reviews.

Today, Trezor produces two primary devices: the Model One and the Model T. The Model One is a popular choice that is easy to use and supports bitcoin, ethereum, and other assets. The Model T is a more advanced model with a touchscreen and broader asset support.

The below article provides an overview of how these devices function.

How a bitcoin hardware wallet works
Hardware wallets let you secure your bitcoin away from hackers. Learn the basics of how they operate.
Create digital vaults with your Trezor for the best crypto protectionCasa BlogTeam Casa
Create digital vaults with your Trezor for the best crypto protection

Why should you use multiple keys?

Hardware wallets use one key to secure your funds. Owners of any hardware wallet are always at risk of losing their device, rendering their bitcoin (BTC) or ether (ETH) worthless. Trezor makes owners save a set of 12-24 words — called the seed phrase — that can be used to restore the lost wallet, but these can also be lost or stolen.

Multiple keys add redundancy to your security and help you preserve access to your assets even if one key is compromised.

Use digital vaults to secure your ETH and BTC

One of the inbuilt functionalities of bitcoin is to enable multiple keys to be able to access bitcoin at a particular address. This can also be done with ethereum using smart contracts. At Casa, we refer to these security setups as a vault, also known as a multisig wallet.

With these vaults, more than one private key is required to access the cryptocurrency stored at a particular address. Casa has implemented the following options:

  • 3-key vault: One hardware wallet such as a Trezor, a mobile key, and the Casa Recovery Key
  • 5-key vault: Three hardware wallets, a mobile key, and the Casa Recovery Key

By using multiple keys, these vaults provide you with the redundancy you need and allow you to distribute the personal security risk of holding your own keys. To spend funds, you simply sign a transaction with a majority of keys in your set.

Think of this like a bank vault with multiple keys that must be inserted and turned at the same time to open the vault. This way, if hackers do steal your seed phrase or one of your private keys, they are still powerless to access your BTC or ETH because they would need access to one or more keys, depending on your setup, to open the vault.

How does a Casa vault work with a Trezor?

Our vaults act as an extra layer of protection on top of your existing foundation of cold storage with a Trezor. Using the Casa app with a Trezor device would look like this:

Another private key is stored on the Trezor wallet itself, and you can choose to back up the seed phrase if you wish. You can also use your existing Trezor as long as you know it hasn’t been compromised.

Next, we would generate a mobile key stored on your phone or tablet within the Casa app itself. This key is secured using highly sophisticated cryptography making it very difficult for hackers to access even if they get hold of your phone. If you prefer, you could also opt for a second hardware device.

Last but not least, the Casa Recovery Key will be stored on Casa’s secure servers — again, using highly sophisticated cryptographic algorithms and methodologies that make accessing the key supremely difficult should hackers ever breach the system. If one of your other keys is compromised, you can access this key by contacting us and verifying your identity. The greatest benefit of vaults is that, even if cyber criminals do manage to compromise a single key, that key is completely worthless to them because they would need at least two keys to do anything with your BTC or ETH. Learn how to create a 3-key vault with your Trezor here.

Which vault is right for me?

“Secure your bitcoin like it’s an order of magnitude more than the current market valuation.” — Jameson Lopp, Casa co-founder and CTO

If you manage only modest amounts of digital assets, you’re probably okay with using only the Casa app on your smartphone, which includes a single key.

If your assets reach a value where you would be upset if anything bad happened to them, you might want to create a 3-key vault using a Trezor One or similar device.

For life-changing amounts, the 5-key vault is recommended, requiring at least three signatures to execute any transactions. In this arrangement, we would use three devices of different types because key diversity makes it harder for bad actors to replicate attacks across devices. This option offers maximum security and peace of mind in the world of ever-increasing cyber threats.

Although no one can guarantee security, the 5-key vault is by far the most secure option on the market for protecting large digital stores of BTC and ETH.

Each of these vaults is easy to set up, and Casa offers a variety of options including personal onboarding and legacy planning for complete asset protection.  

👉 Get started here.


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FAQs about Trezor and Casa cryptocurrency vaults

How does a multisig crypto wallet work?

A multisig crypto wallet is a type of crypto wallet that requires more than one signature to authorize transactions from the wallet. These offer the highest level of security available.

What are the benefits of using Casa with a Trezor Wallet?

The Trezor One hardware wallet is a proven hardware wallet with best-in-class security and encryption built into it. Coupled with Casa’s multisig solution, these two products offer the highest level of security available for cold storage wallets.

How does integrating Casa with Trezor provide additional layers of protection?

The Trezor One and Trezor Model T are both proven hardware wallets though they require only a single key to carry out transactions. Combining your Trezor device offers the highest possible protection for your cryptocurrency.

How does integrating Casa with Trezor protect from malware and social engineering?

Even if hackers obtain a single key from you by using malware or social engineering, they still can’t steal your cryptocurrency because they need multiple keys to access your crypto. Multiple keys make it exponentially harder for hackers to gain access to your funds.