Transaction fees are extra money that are earned by the Bitcoin miner that creates the transaction block that contains your Bitcoin transaction. You have to know a few things about how stuff works, so here's a "Bitcoin fees for dummies":
- Outstanding Bitcoin transactions are "packaged up" in to blocks about every 10 minutes by Bitcoin miners,
- Creating a transaction block takes solving a difficult computational challenge, this high difficulty makes it hard to counterfeit the blockchain record of all Bitcoin balances, and the harder it is, the better,
- Miners are rewarded 50BTC when they find a block solution, and it is hard because so many miners are computing trying to get that 50 BTC,
- A miner who create a transaction block also receive all the transaction fees of transactions they include in the block.
- Minimum fees are required for small transactions to discourage spam, the sending of many insignificant amounts that create blockchain bloat,
- A bitcoin transaction consists of inputs and outputs, an input is your bitcoin address, and an output is the recipient of your payment,
- each input and output has an amount of Bitcoins assigned to it; when the input is larger than the output, the remainder is the transaction fee that the miner earns when they include your transaction in the blockchain.
-The fees are not calculated as a percentage by either the client or the minimum fee for small transactions, so I don't know where you get that. They are set amounts.
-The minimum fee for small transaction amounts is a certain amount based on transaction data size, not money amount (currently .0005BTC per KB in Bitcoin). 1 KB is the size of the data in your transaction; you can usually send to several people at once in one transaction before the size grows over 1KB.
-The fee you set in your client is an amount you want to include with every payment you send. This is like a "donation", a way to ensure that your transaction is promptly included in a block by rewarding the miners.
-Only the smaller of the minimum fee and the fee you set in the client is used, they aren't combined.
-Litecoin is dumb, it's one of many Bitcoin knock-offs with little change to the code, usually created for selfish reasons.
- Outstanding Bitcoin transactions are "packaged up" in to blocks about every 10 minutes by Bitcoin miners,
- Creating a transaction block takes solving a difficult computational challenge, this high difficulty makes it hard to counterfeit the blockchain record of all Bitcoin balances, and the harder it is, the better,
- Miners are rewarded 50BTC when they find a block solution, and it is hard because so many miners are computing trying to get that 50 BTC,
- A miner who create a transaction block also receive all the transaction fees of transactions they include in the block.
- Minimum fees are required for small transactions to discourage spam, the sending of many insignificant amounts that create blockchain bloat,
- A bitcoin transaction consists of inputs and outputs, an input is your bitcoin address, and an output is the recipient of your payment,
- each input and output has an amount of Bitcoins assigned to it; when the input is larger than the output, the remainder is the transaction fee that the miner earns when they include your transaction in the blockchain.
-The fees are not calculated as a percentage by either the client or the minimum fee for small transactions, so I don't know where you get that. They are set amounts.
-The minimum fee for small transaction amounts is a certain amount based on transaction data size, not money amount (currently .0005BTC per KB in Bitcoin). 1 KB is the size of the data in your transaction; you can usually send to several people at once in one transaction before the size grows over 1KB.
-The fee you set in your client is an amount you want to include with every payment you send. This is like a "donation", a way to ensure that your transaction is promptly included in a block by rewarding the miners.
-Only the smaller of the minimum fee and the fee you set in the client is used, they aren't combined.
-Litecoin is dumb, it's one of many Bitcoin knock-offs with little change to the code, usually created for selfish reasons.
As stated in a bullet, Litecoin is similar to the Bitcoin chain. The Litecoin fee protocol works similarly to Bitcoin.
