The Cost Of Cryptocurrency: Bitcoin Fees
The question of bitcoin transaction fees has often caused excitement among bitcoiners. This excitement is because ,for a long time, people believed that you don't need any fees to send bitcoins. With exorbitant transaction fees in banks and financial institutions, this would be a relief.
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Fees for Miners
It is worth noting that the mining process is full of trial and errors. A lot of resources, mental energy and a long waiting time make up huge price that miners have to pay. As they toil day and night, the intention is always to secure a block, with which comes a reward of 25 bitcoins. In the beginning, miners would get 50 BTC, but the program is set to halve this amount every 4 years.
It goes without saying that the reward received by miners every 4 years (since 2009) will continue to go down. In 2012 it came down to 25btc, and in July 2016 it will further go down to 12.5 BTC. This process will continue until the production of bitcoins ends at 21 million.
For every new block completed by the miners, it is up to them to secure the transactions in the blockchain. During this joyful moment, they are at liberty to include an extra charge in fees. This is, essentially, an opportunity for miners to appreciate themselves. Users of bitcoins, on their own volition, sometimes give some fees to miners. This is to try and see if their transactions will appear in the new blocks. In a simple way, both the miners and the users of bitcoins get encouraged to keep looking for more bitcoins.
To the miners, the small fee is an increment to the 25 BTC that comes with every block, hence creating higher earnings.
Fees and Delays
60 Satoshis per byte currently amounts to the cheapest and fastest bitcoin transaction fee. 1 Satoshi is equal to 0.00000001 BTC, which is the fee per byte in every transaction data.
Several blocks are usually required to make a confirmation in successful mining. Delays refer to the waiting period between blocks. The delay can be short or long, depending on how fast the confirmations happen. Usually, the higher the transaction fees, the lower the delay. With higher bitcoin fees, the delay may actually be at zero. This increases the possibility that confirmations will happen in the next block.
The process of predicting delays
Blockchain data for the last 3 hours, alongside pending confirmations, form the prediction basis. Current unconfirmed pools of transactions, plus miner behavior, create a Monte Carlo simulation for predictions.
Predefined bitcoin fees can be preset by users and used by default as floating fees by Bitcoin Core. This fee can apply for one or all of a user’s transactions. You can base this setting on relays or priorities.
To view updated predictions in Satoshis per byte, https://bitcoinfees.21.co/ is a good starting point. Other fee plotting sites include https://bitcoinfees.github.io/,https://statoshi.info/dashboard/db/fee-estimates and http://p2sh.info/dashboard/db/fee-estimation.
In the past, it was possible and safer to send transactions without fees. Even so, this only happened for amounts smaller than 1000 bytes or with huge priorities. Clients need to keep checking the size of every transaction in bytes for charges per kilobyte.
Bitcoin Transaction Fee, the better option!
When you think about it, bitcoin fees are, so far, the best alternative in the financial markets. Whenever bitcoiners pay little or no fee at all, indeed they have to wait longer for transactions. But thinking about other alternatives, transactions fees are often more than 3%. In some cases, there are charges for both the sender and the receiver, and the waiting may add up to 5 days! Bitcoin fees remain user friendly and the transaction time is still the far superior option!
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