Transaction Fee

Mining fee, tx fee

1. concept

A Transaction Fee is a fee paid to miners as an incentive to include a transaction in a block. As blocks fill up, miners prioritize transactions that offer higher fees. For a cryptocurrency to be usable for everyday transactions, it's crucial that transaction fees remain low.

1.1 BTC December 2017

During the late 2017 bull run, when demand for Bitcoin (BTC) was high, the blocks and the mempool were full for weeks. This led to fees increasing to high levels, with transactions costing up to the equivalent of $50 USD for quick confirmation. While these high fees are less of a concern for large value transactions, they can hinder the network's usability for everyday small transactions.

2. impact

Transaction fees play a significant role in the security and operation of a blockchain. They serve as an incentive for miners to maintain the network and prevent spam transactions.

2.1 BCH Stress Test

On September 1st, 2018, Bitcoin Cash (BCH) conducted a stress test to demonstrate the network's scaling capabilities and identify any issues. Throughout the day, the Bitcoin Cash (BCH) network processed over 2.1 million transactions, maintaining transaction fees at 1 satoshi per byte. This translated to an average transaction cost of around $0.001 USD, or one-tenth of a cent, demonstrating the network's ability to handle a high volume of transactions while keeping fees low.

3. calculation

Transaction fees are typically calculated based on the size of the transaction in bytes, not the amount of value being transferred. This is because a larger transaction takes up more space in a block.


"A Bitcoin transaction that inputs 10 UTXOs and outputs 2 UTXOs will have a higher fee than a transaction that inputs 1 UTXO and outputs 2 UTXOs, even if the amount of Bitcoin being sent is the same."

* All terms and definitions may update as the Cryptionary improves.