How To Select Your Own Fee
This growth can be attributed to the drop in the average transaction fees on the Bitcoin network, which was earlier proving to be a hindrance in the way of the adoption of this cryptocurrency. However, the average Bitcoin transaction fee has come down rapidly since then. But what has caused such a massive drop in the average Bitcoin transaction fees? To find out, we will first have to understand why Bitcoin fees are charged. A Bitcoin transaction has to be added to the Blockchain in order to be successfully completed.
However, for a transaction to be added to the Blockchain, it first needs to be validated by miners who solve a complex mathematical problem to verify the transaction. These miners spend a lot of computing power and energy when verifying a block of transactions from the Bitcoin Mempool short for memory pool , which contains unconfirmed transactions waiting to be added to a block for confirmation. Now, miners need to be incentivized for the time, effort, and resources that they are putting in to validate the unconfirmed transactions. As a result, they are given a fee of Each block of transactions on the Blockchain cannot contain more than 1 megabyte of information, so miners can only include a limited number of transactions in each block.
This is why miners prioritize those transactions where they have the potential to earn higher transaction fees. So, if the mempool is full, users looking to get their transactions through will compete on fees. The transaction size also has a role to play in the fee determination. As miners can only include select transactions within the 1 megabyte block, they prefer selecting small transaction sizes because they are easier to confirm. Transactions occupying more space, on the other hand, need more work for validation so they need to carry a higher fee in order to be included in the next block.
So, there are two factors determining transaction fees -- network congestion and transaction size -- and they also play a critical role in the time taken for a transaction to be confirmed. In such cases, it could take several hours for the transaction to be confirmed.
However, if a user is willing to pay a higher transaction fee, then the first confirmation could arrive in 10 minutes, which is the time taken to mine a block. The Bitcoin community requires six such confirmations for a transaction to be completely validated. Earlier we saw that Bitcoin fees have dropped rapidly over the past year, spurring a growth in the number of transactions. This can be attributed to the smaller Bitcoin Mempool size.
However, in case the number of unconfirmed transactions increases at a faster pace than the rate at which new blocks are mined, there will be network congestion. This is when the average Bitcoin transaction fees will go up. This is the scalability problem faced by Bitcoin thanks to the limited number of nodes. However, the community is coming up with ways to circumnavigate this issue so that numerous transactions are executed quickly with low fees. Earlier this year, a user was able to carry out 42 transactions using the Lightning Network and spent just 4.
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First a clarification: Anyone giving a flat fee in response to this question is not giving sufficient information. Transactions are generally selected by fee rate. This means that besides the flat transaction fee that was included, the weight of your transaction plays a critical role:. In order to get a confirmation, you need to successfully compete with the other waiting transactions for block inclusion. Depending on your time preference, you either have to place your transaction within the top 4,, weight units of the block author's mempool sorted per transaction fee rate, or be willing to wait until blockspace demand cools down a bit to drop to the fee rate that you're willing to pay.
There are a number of services that attempt at predicting appropriate fee rates for various inclusion times, e. There are also sites that give perspective on the mempool to facility users picking their own fee rates, e. Finally, there is a general lower limit, the minRelayTxFee which despite the name is a fee rate , for which the default currently is 1, satoshis per kvB, or 1 satoshi per virtual byte. Sending a transaction below a node's minRelayTxFee will cause the node to drop it from their mempool instead of relaying it, i. Conclusion: If you have a low time-preference, e.
What is appropriate varies depending on network conditions, transaction load and, what fees other people are sending.
Bitcoin Average Transaction Fee
Bitcoin Core includes a fee estimation when sending transactions in bitcoin-qt, so that you can select a target confirmation time n blocks and it will suggest an appropriate fee for that target. Note that this still does not guarantee that a transaction will be confirmed in n blocks and the simple rule stands; higher transaction fees generally result in shorter confirmation times.
If you make a transaction with a fee of 0. There is no way that it will be confirmed in a few days. But that's a lot more than 0.
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That's 0. They are high at the moment and the poeple pay that price. If you pay 0. Sign up to join this community. The best answers are voted up and rise to the top.
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What is the best suitable transaction fee to avoid high fees but still get confirmed? Ask Question. Asked 3 years, 2 months ago.