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Bitcoin Fee

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Written by   33
1 week ago

Why are there bitcoin fees? And how much do you pay so it may transact faster?

This are some of the questions that will be explained here in this article.

Bitcoin fee

Bitcoin fees are payments for bitcoin miners for processing a transaction.

Understanding how bitcoin transaction works

When you are transferring a fund to another bitcoin address, the first step is transaction verification. It means the transaction is checked in the network by all the computer that holds the bitcoin blockchain for validity. After validation, the transaction goes to the mempool. It serves as a waiting room for unconfirmed transaction. When miners pick it up to be packed and successfully included it in a mined block, the transaction becomes a confirmed transaction and the transferring of funds is complete.

Take note of this, a block has a limited size so it can hold a small amount of transactions. Miners prioritize this transactions according to the fees attached to it.

Fees are a way of telling the miners how urgent your transaction is. So if you want your transaction to be faster, you can attach a higher fee.

Calculating Fees

Calculating fees is complicated! Every transaction has a size. Since miners wants to maximize their profit, they prioritize transaction with a larger fee to a text size-fee ratio often called as feerate.

  • When buying a house, the cost will be computed as cost per squarefoot. Now, feerate is computed as satoshi per byte.

Calculating text size

A transaction size depends on different factors.

  1. Number of inputs - the more inputs you transacts the bigger the text size. When you acquired 1 btc to a different sources and transferred the whole btc, it will include all the inputs on how you acquired that 1 btc.

  2. Number of outputs - this are the numbers of addresses your paying to. (I'm gonna explain this on other article 😁)

  3. Script complexity - some transaction requires special features that increase the text size

I know it is hard to compute this by your own but no worries, your bitcoin address will be the one to compute this for you based on average fee rate.

Reducing Fees

For all you knew, reducing fee is very comfortable for the eyes. Lower fee means less money will be lost. Here are somr tips to reduce fee:

  1. Avoiding rush hour - when bitcoin network is congested with transactions it is for sure feerate is high

  2. Use wallet that has segwit - a program that reduced your transaction into smaller files

  3. Input grouping - consolidating all inputs makes lower fee transactions

  4. Output grouping - if your wallet support this, your in luck. This groups all payments into one transaction that will reduce fees

Wallets and fees

Wallets suggest a reasonable fee based on the current fee rate and activity in the bitcoin network.

Some wallets makes you configure the setting into slow, average and fast fee rate. It will depends into you if you want your transactions to be slower and faster.

Stuck Transactions

  1. Fee is to low - remember miners prioritize transactions with higher fees and depends in the congestion of the bitcoin network

  2. Sending unconfirmed funds

Fee troubleshooting

Here are tips when you encounter stuck transactions

  1. Wait - if your transactions is not that urgent just wait it out.

  2. RBF - rebroadcasting your transaction in the bitcoin network with higher fees

  3. Transaction accelerators - you can request mining pools to do your transactions. (Feels like bribery 😅)

Conclusion

Bitcoin fees all depends in the miners and how busy the bitcoin network is.

The more you want the transaction to be faster, the more you need to pay.

"There's no art where there's no fee" - Aristophanes

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Written by   33
1 week ago
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Comments

Bitcoin fee is to high. It isn't good for us people who wanted to do daily transactions. It will be more likely a robbery in a broad daylight. Btw, i'm using bch and xrp to transfer funds from another. It works well, less fee faster transactions.

$ 0.00
1 week ago

Yes. You got it right

$ 0.00
1 week ago

Very good write-up, this is an eye opener to me, before i intend to swap my crypto to Bitcoin , now i understand why Bitcoin cash should be considered over Bitcoin, thumb up for you.

$ 0.00
1 week ago

Thanks for the compliment. That's the reason why people should go for bch. Bitcoin is not the one that is in the whitepaper of Satoshi Nakamoto. Bitcoin would never be a peer-to-peer electronic cash system. BCH will.

$ 0.00
User's avatar V1
1 week ago

Thanks to you, now I've increase in my knowledge about Bitcoin and the advantages BCH have over it.

$ 0.00
1 week ago

It is best not to use BTC at all (as I do). I use Bitcoin Cash BCH. Bitcoin Cash network has almost zero fees and I don't have to worry about anything. Every transaction is included in the next block.

Here is the fee comparison: https://bitcoinfees.cash

$ 0.00
1 week ago

But do you hold BTC sir? The price is so high now.. And will be higher in the future.. But still worried bout fees 😅

$ 0.00
1 week ago

No, I do not hold BTC. I sold my entire BTC over 2 years ago. In my opinion, the price of BTC is completely excessive. In my opinion, the coin has no growth potential in the long run. People don't buy it to use it, but in the hope of selling it more expensive at some point. That only works up to a point, then at some point everything collapses. Do you know the history of tulip prices in Holland in the seventeenth century?

Bitcoin Cash has simple fundamentals https://read.cash/@MobTwo/bitcoin-cash-simple-fundamentals-0df3d9e6

$ 0.00
1 week ago

Yeah in most cases, people just hold btc and swap to stablecoins.. But do not really use for other transactions..because of expensive trans fee... And i believe that BCH will be a king of crypto in the future. 😊 I already have read that article by mobtwo 😁.

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1 week ago

BTC has unfortunately become a speculative coin. BCH has a chance to become a world currency. But it will still take some time. The ecosystem still needs to grow.

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1 week ago

Yeah.. Many still don't know bout bch. They are only familiar of btc..

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1 week ago

Yes. I know that bitcoin cash has almost zero fee. That is why im using it for transaction. Just posted this article for everyone to know how bitcoin fee is a pain in a**.

$ 0.00
1 week ago

You have written a good article. It is always important to write that the BTC fees are very high. Many newcomers do not know this. They make a transaction and are surprised that much less money arrives. Then they think that Krypto is a scam and turn away from it. BTC does a very bad job for crypto adoption.

$ 0.00
1 week ago

Thanks for the compliment. Been a fan of bitcoin cash since i've joined this platform. It was love at first sight.

$ 0.01
1 week ago