A Guide to Bitcoin Transaction Fees

sentinelblog

From Crush the Street, by Eric Grisholm

While Bitcoin is a platform for sending money from one person to another, it is decentralized, requiring a type of incentive to keep the system going. It comes at a great cost, and this has to be repaid somewhere. Bitcoin block rewards are only set up to be a temporary payment model, rather than permanent, with the end goal being survivability through the collection (and paying out) of fees.

The Order of Transactions

Transactions are given a “weight” of sorts to determine which ones should be prioritized in any given block, with those that have the highest weight being first. There are a few things that go into this calculation, which are:

  • Size (in kb): this is the actual data makeup of the transaction, comprised of metadata, inputs, and outputs
  • Age: as the input coins get older, they gain more weight
  • Fees:…

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Author: Alfred E. Neuman

70 year old geek, ultra-conservative patriot.