This rate varies depending on how much the network is crowded with transactions. It basically means how many Satoshis (the smallest unit of account in Bitcoin) you are willing to pay for every byte (unit of size) of your transaction.Īt any given moment you can check here what’s the estimated required feerate that will get your tx included into the next block. The apartment price is similar to the total fee you pay, but how you measure the apartment’s expensiveness is through how much you are willing to pay per square foot.įeerate is Bitcoin’s cost per square foot.įeerate is measured in Satoshis per byte. When you come to buy or rent an apartment there’s usually a cost per square foot. Let’s explain this with an example from a different market. Since miners want to maximize their profit, they will prioritize transactions that have a larger fee to size ratio, or feerate for short. The only way to deduce what fee was paid by the sender is to calculate the difference between how many Bitcoins were sent minus how many were received and how many were returned as change (explained in chapter 3).Įvery Bitcoin transaction requires a fee in order to get mined.Ĭalculating the appropriate Bitcoin transaction fee isn’t as straightforward as it seems so let me explain a bit about how it’s done:Įvery transaction has a size, just like a file size on your computer. The Bitcoin blockchain doesn’t list the fee paid for each transaction explicitly. It’s important to note that fees are always paid for by the sender of the transaction. If you’re not so time sensitive you can do with a smaller fee. If you want to get confirmed faster you’ll attach a larger fee. So fees are a way of signalling to the miner how urgent your transaction is. Transaction fees of pending transactions inside the mempool At times when the network is crowded and there are a lot of transactions waiting to be confirmed the miner will prioritize which transactions to pick up based on the miner fee attached to the transaction. This short video explains the whole process:Ī block can only hold a finite amount of transactions (at the moment the average amount is 2500). Once a miner picks up the transaction and includes it in a successfully mined block the transaction is considered to be confirmed. You can view the current state of the Mempool here.ģ. This is sort of a “waiting room” where the transaction sits and waits for a miner to pick it up and pack it into a block of transactions.Īt this point the tx is considered an “unconfirmed transaction” or a “0 confirmation transaction”. After a transaction is deemed valid it goes into the Mempool (short for Memory Pool). The transaction is checked by every computer holding a copy of the Bitcoin blockchain for validity (these computers are also known as nodes).īasically, at this stage the nodes are checking Bitcoin’s transaction history to prove that you actually have the Bitcoins you want to spend in your balance.Ģ. But in order to understand fees in detail we, first need to understand what happens when you send Bitcoins to another address:ġ. For a detailed explanation keep on reading, here’s what I’ll cover:įees are what Bitcoin owners pay to bitcoin miners whenever they transfer funds to another bitcoin address. Not paying enough fees can sometimes get your transaction stuck for a very long time. To determine whether to include a transaction in the blockchain is worth their while, miners will take a look at which transaction has the highest fee attached. Don’t like to read? Watch our video guide insteadīitcoin transaction fees (sometimes referred to as mining fees) allow users to prioritize their transaction (sometimes referred to as tx) over others and get included faster into Bitcoin’s ledger of transactions known as the blockchain. This guide will explain the basics of Bitcoin fees from how they are calculated to what you can do in case you didn’t pay a big enough fee.
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