Topic: Does increasing the miner fee lead to faster confirmations? (Read 1473 times)

Once I sent a small transaction without a fee knowing it would be problematic. The blockchain.info stats showed estimations between 3 hours progressively to 12 hours because the network was having bad luck and there were thousands of transactions waiting. It went through in 7 hours from broadcast time.

The trade-off between time and money when it comes to transactions is there, have fun experimenting.

Also thanks for this. Was always curious how miners 'Picked' which transactions to include.

Interesting. Thanks

Yep. The reference software (which is to the best of my knoweldge what basically everyone is using) orders w/ fee (e.g. above some minimum threshold) transactions by fee per byte.

I have the same question

Ok the thing is mining is not done manually. So when you say "miners choose" or "miners do" you are referring to the software that they employ and the decisions it makes automatically based on how it has been configured by the human beings behind the mining operation, right? So what I want to know is whether the software is smart enough to pay attention to price signals like the ones DannyHamilton referred to?

Miners who mine the block can include the transaction they want, no matter what. They do not have to chose the highest fees first, even if they usually do so.

So the software that miners use responds to price signals like these automatically? That is it is smart enough to give priority to transactions with higher fees when there is limited space available?

It really depends on how many transactions are pending, and what sort of fee the rest of the pending transactions are paying.

If there aren't many pending transactions waiting to be confirmed, then your transaction will most likely be included in the next block regardless of whether you pay a fee of 0.0001 BTC or 100 BTC.  You can't alter how fast that next block will be created, only whether or not a miner will choose to include your transaction in that block, or if you will have to wait for a later block.

If there are a LOT of transactions pending, AND most of those transactions are all paying a fee of 0.0005 BTC, then a 0.001 BTC fee provides an incentive to the miners to include your transaction in the block they are working on INSTEAD OF one of the transactions that are paying 0.0005 BTC.  This means that your transaction gets into the next block (as soon as it is created/solved), and the transaction that payed 0.0005 BTC has to wait a bit longer hoping to be included in the block after the one with your transaction.

That's about where things stand today.

Eventually in the future:

It is possible that bitcoin will be so popular, that most people start paying a 0.001 BTC fee just to get into the next available block.  If bitcoin ever reaches such a popularity, you may find that a fee of 0.0015 will allow you to get into the block currently being worked on and bump out one of the transactions paying a fee of 0.001 BTC so that they have to wait longer.

The more popular bitcoin becomes, the more transactions that will be competing for the same block space, essentially creating a silent auction where each transaction bids for space in the next available block.  This can lead to higher fees and longer wait times for those paying a lower fee.  If the fees get high enough (and the wait times get long enough), people will choose other payment methods, and the number of pending transactions will begin to drop.  As there are less pending transactions, they won't require as high of a fee to be included, and lower fee transactions will be more likely to make it into the next block.  The fees necessary and the number of blocks a particular fee must wait for is likely to bounce around a bit as the number of people willing to pay the necessary fee grows and shrinks in reaction. After enough time, the fee structure and number of transactions ought to eventually reach an equilibrium.

Usually I dont find that changing the miner's fee changes anything imo. I just put the minimum of 0.0005 everytime and it goes through in a few minutes!

yes and no. The block interval will still be ~10 min on average. But a miner will have a bigger incentive to include your transactions in a block.

Depending on the size/priority of the transaction, by increasing the fee you could make the first confirmation to happen earlier. If the transaction is small/high priority, you won't likely improve things that much.

The rest of confirmations will always come at the same expected rate of 1 every 10 minutes.

Ok this may be a dumb question, but I know the recommended miner fee to pay is about .0001 BTC or .0005. 

Sometimes when I send, I will do .001 in the hopes that the transaction will get confirmed faster. I figure the miners will get to it more quickly because it is more income for them.

Does this have any validity?  Thanks.