Bitcoin Transaction Fee Satoshi Per Byte

bitcoin transaction fee satoshi per byte

A bitcoin transaction typically looks as follows.

https://blockchain.info/tx/8579dbd969341adef4a3b2155a766b8fd19d22b87c1df54f2b1e6473e713cca7

For each transaction there is

180 bytes of input 34 bytes of output 10 bytes extra

= 224 bytes

If input is compressed 180 - 32 = 148 bytes

You can find the formula here. https://bitcoin.stackexchange.com/a/3011

In the simplest typical case, you'll have one input and two outputs (the recipient, and change). So in=1 and out=2. According to the linked formula, the transaction size will be about 160+ 2 * 34+10 = 258 bytes

1 satoshi = 0.00000001 BTC = 10^-8 BTC

https://bitcoinfees.earn.com/

Today you can see most transactions with 1-10 satoshis/byte.

Lets take 10 satoshis/byte then 258 * 10 = 2580 satoshis = 0.00002580 BTC

Even if we have more inputs and outputs, we can say the transaction fee should be typically 0.0001 BTC.

Why transaction fee goes up

The block size is limited to 1 MB. So a miner has to choose transactions to fit in 1 MB of size. Each transaction comes with its own transaction fee.

If the miner successfully mines a block, he gets all the transaction fees for the transactions he included in his block. So naturally, he will pick the transactions with the highest transaction fee.

Calculating the block mining fee

Don't confuse this with the block reward of 12.5 BTC.

Lets say a transaction pays 0.001 BTC for it to go throw. And other transaction pays 0.005 BTC.

And they are 512 KB each. So the miner gets 0.01 + 0.015 = 0.025 BTC

Lets say 4 transactions pays 0.01 BTC each with size of 256 KB, now the total fee for the block will go up to 0.04 BTC. Since all four transactions can fit in the block.

Here we understand that

Transaction fee does not matter to the miner. Satoshis/Byte Matters to him

In the above example he can calcuate

0.01 BTC/512 KB = 0.00001950 BTC/KB = 1950 Satoshis/KB = 1.95 Satoshi/Byte ((0.015/512)/1000) 10^8 = 2.92 Satoshis /Byte (0.01/256) 10^5 = 3.9 Satoshis /Byte

The miner can easily determine the transactions, he should include the block to optimise the mining fee.

How transaction fee is related to confirmation delay ?

Your transaction will not be confirmed unless its included in a block. If you pay lower Satoshi/Byte than what most people are paying, your transaction will not be picked up from the pool till better paying transactions are there for miner.

Why the fees was so high in Jan 2018 ?

It is said a group of people wanted the bitcoin to become useless. So they inflated the transaction fee.

How is that possible.

They simply paid a large fee for the transaction.

So lets say someone pays 0.1 BTC for transaction of size 256 KB. So fee become 39 Satoshis/Byte.

But still this individual is lettting in 4 other such transactions by paying 3.9 satoshis/Byte

So he adds a lot of unnessary signatures to the input, making the size go up to 1 MB. Still paying a higher fee than others

(0.1/1024)* 10^5 = 9.7 Satoshi/Byte and filling up all the space in the block.


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