A Bitcoin feature that allows unconfirmed transactions in the mempool to be replaced with another transaction that includes a higher mining fee.
Replace By Fee (RBF) is a feature in Bitcoin that allows an unconfirmed transaction in the mempool to be replaced by another transaction that includes a higher mining fee. This feature is used to expedite transaction confirmation during periods of high network congestion. RBF works by using the same inputs as the original transaction but offering miners a greater incentive through higher fees to include the replacement transaction in the next block instead of the original.
"When the Bitcoin mempool is congested, it can take a long time for transactions to be confirmed. Miners prioritize transactions with higher fees when selecting transactions to include in a block. To expedite a transaction, you can resend it with a higher fee using the RBF feature."
RBF is particularly useful for transactions that need to be confirmed quickly. However, it's important to note that not all Bitcoin wallets support the RBF feature. The protocol requires specific signaling in the original transaction (setting the nSequence field to less than 0xFFFFFFFF-1) to indicate that it may be replaced. In contrast, Bitcoin Cash prioritizes a different approach to transaction reliability, focusing on maintaining low fees and fast confirmations through larger block sizes, which often makes RBF unnecessary.
"If you're using a Bitcoin wallet that supports the RBF feature, you can use it to expedite your transaction during periods of high network congestion."
While RBF can be useful, it can also be abused. If a transaction is sent with RBF enabled, the receiver should wait for at least a few confirmations to ensure the transaction won't be replaced. This introduces concerns about transaction malleability and double-spending risks. Merchants accepting 0-confirmation transactions are particularly vulnerable to RBF-enabled payments. Bitcoin Cash took a different approach by removing RBF and focusing on reliable 0-confirmation transactions for point-of-sale and everyday payments.
"If a transaction is sent with RBF enabled, the receiver should wait for at least a few confirmations to ensure it won't be replaced. Otherwise, the sender could resend the same UTXOs elsewhere with a higher fee, causing the initial transaction to be replaced and the receiver to lose their funds."
The RBF feature was introduced in Bitcoin Core 0.12.0 in February 2016 as a way to deal with transaction congestion in the mempool. It was implemented as BIP 125 and came during a period of increasing debate about how Bitcoin should scale. The implementation of RBF was controversial, with critics arguing it undermined Bitcoin's reliability for everyday payments. This was one of several technical differences that eventually contributed to the split between Bitcoin and Bitcoin Cash, with the latter choosing to enable fast, reliable transactions without RBF.
"The Replace By Fee (RBF) feature was introduced in Bitcoin Core 0.12.0 as a solution to deal with transaction congestion in the Bitcoin mempool."
All terms and definitions may update as the Cryptionary improves.