The increasing amounts of Bitcoin transactions have slowly led to an increase in Bitcoin fees as miners favor the transactions with fees as priority transactions. This means that it can take a longer time for a Bitcoin transaction to clear. Some transactions, small ones without fees generally, can be lost to the Bitcoin ether, only to be returned to sender a few day later.
Transaction fees have been touted as one of the best reasons to use Bitcoin. The world’s first truly international value transfer system boasts the lowest transaction fees. Though these fees have been quietly rising over time – and sparked the abovementioned, intense debate about how to keep them low – they remain to this day considerably lower than other value transfer alternatives.
Transaction fees are processed by and received by the Bitcoin miner every time a new Bitcoin block is created. While voluntary, transaction fees can determine how quickly a transaction is processed. By paying transaction fees, a sender provides incentive for a miner to include a transaction into a particular block. Blocks are created each ten minutes approximately. Many wallets, like Bitcoin Core, use floating fees.
21.c0, provider of the above-shown unconfirmed transaction chart, has introduced new ways of plotting Bitcoin transaction fees as of this month available at this website https://bitcoinfees.21.co/, with code discussions at https://bitcoinfees.github.io/.
For a long time in Bitcoin’s existence, miners would process transactions without fees. All miners today expect transactions to include fees due to the overall volume of the network and to avoid spamming of the Bitcoin network.
Rising Bitcoin transaction fees is good for the network. Low transaction fees are unsustainable as they do not provide incentive for miners to continue processing transactions. As Gavin Andresen stated of transaction fees in 2014: “Right now, we have subsidies, so we don’t really need any transaction fees,” he said. “Because of subsidies, miners are willing to mine. But later on, as the subsidy goes away, we definitely need to figure out a balance between miners and users of the network.”
A wire transfer often costs the sender more than $20. Sometimes the receiver is charged. Cheques take a long time to clear, but have no transaction fees. Sometimes, banking institutions charge on cash deposits. It’s illegal to send cash in the mail. It’s easy to see the benefits of sending Bitcoin compared to other ways of sending money, especially internationally. For that reason, rising Bitcoin transaction fees far from portend the death of Bitcoin.
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Last modified: March 4, 2021 4:48 PM