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Coinbase generate a new btc or eth address after every deposit. But how does it send funds from these addresses to another address.

In case of btc, a transaction can have multiple from addresses. But if I have 10,000 addresses and if I want to send all the btc in all those addresses than won't the transactions size become too big and get rejected by the miners maybe.

In case of eth, a transactions cannot be signed by multiple wallets. So if I have 10,000 addresses than I need to create and broadcast 10,000 transactions so the transaction fees will be too high.

How does coinbase.com deal with these problems?

  • What are your findings? – Jus12 Nov 2 '17 at 16:17
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Partial answer a year later:

Not an answer about Coinbase in particular, since I don't have an account. However, due to the public nature of transactions on blockchain (at least until zk-SNARKs become popular on Ethereum), you can easily follow the money by looking at the transactions originating from an address and see what happens. For example, Shapeshift seems to build the cost of this into its business model and simply eats the cost of doing a simple value transfer. Here is a randomly selected transaction moving money from a temporary Shapeshift account into a main Shapeshift wallet: https://etherscan.io/tx/0x13357efff14ed97c24fdb2cc23dd2b15669a3530f83b7a9be0a5c6024b50700b

Shapeshift recoups costs/makes a profit through its mining fee, denominated in the receiving currency and through a spread on the market price. Of course, just like no one member of a firing squad is usually held responsible for an execution, you can't point your finger at any specific activity and say "that's what's paying for the transaction". You can do the same analysis on Coinbase on wherever they make money. Unless they charge a deposit fee, it'll be the same thing as Shapeshift: they eat the cost and try to make it back in other ways.

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