How are bitcoin transaction fees calculated?

Feerate is measured in Satoshis per byte. It basically means how many Satoshis (the smallest unit of account in Bitcoin) are you willing to pay for each byte (unit of size) of your transaction. Bitcoin fees are determined by the amount of data used by the transaction and not by the value being sent. You can use the calculator above to determine the cost of any transaction for any amount.

Bitcoin fees are a fascinating component of network game theory and an indispensable element without which the economic sustainability of the entire project becomes questionable. Now that bitcoin is on a bullish streak and more users are rushing to use the digital currency, bitcoin transaction fees are skyrocketing again. However, for a transaction to be added to Blockchain, it must first be validated by miners who solve a complex mathematical problem to verify the transaction. UX improvements in recent years have made bitcoin easier to send and receive, but calculating fees is still a dark art.

At the time, bitcoins were hardly worth anything and it was important that the mempool network (the memory pool that stores unconfirmed transactions until they are collected by miners) was not flooded. Transactions that take up more space, on the other hand, need more work for validation, so they must carry a higher fee to be included in the next block. Use an online rate estimator to do the calculations and leave the minutiae of the satoshi calculations by byte to the experts or to your wallet's built-in estimator. The price of the apartment is similar to the total rate you pay, but how you measure the cost of the apartment depends on how much you are willing to pay per square foot.

Adding a higher fee to your transaction will likely make it go faster because miners have more incentive to include more profitable transactions in the blocks they mine. If you want to send bitcoins, you have to pay the flutist, that is, the miners whose machines secure the network and confirm the hundreds of thousands of transactions that go through it every day. This is the total commission you pay on a transaction, such as 10,000 satoshis or 0,0001 bitcoins. Keep in mind that for this strategy to work, you'll need to choose a wallet that allows users to set custom transaction fees.

If you are afraid that the mempool will feel when you least expect it and that your transaction will lose priority, you can also choose to use the “Replace by Fee (RBF)” option. While there is technically no obligation to attach fees to a transaction, there is also no obligation for the miner to include any transactions in the block he is confirming.

Benny Iwanowski
Benny Iwanowski

Big crypto nerd. Incurable music geek. Wannabe social media guru. Evil zombieaholic. Proud zombie expert.