Topic: What triggers high or low transaction cost on the bitcoin blockchain (Read 173 times)

The topic contains many points that have been interpreted without its true meaning, and therefore it cannot be taken as accurate information.
The Bitcoin network does not depend on supply and demand primarily, but it is one of the things that may affect the fees indirectly, meaning that the price can rise and the fees remain fixed for a long time without changing.
Also, some factors affect transaction fees that make prices high, even if the price is stable or low.
So linking it to the economics of supply and demand is wrong.

I paid the minimum these days, 1 sat per byte many times when BTC price wasn’t that high and network wasn’t that busy. Nowadays, it’s not anymore possible to get a tx free of charge (may be a miner can get) but back in the day, it was possible to get tx with free cost.

What you said is not entirely true. The best way to phrase it is that the unconfirmed bitcoin transaction count in the mempool tends to be low during periods of low market activity like right now. Low number of unconfirmed transactions in the mempool = Low fee rate for one's transaction to be included in the next block.

Should there be any price spike (high demand) and dump (low demand). People are going to move Bitcoins and the network is going to get clogged so inevitably, the optimum transaction fee rate will be high as well.

That's because some wallets able you to change the cost of fee like electrum wallet and also trustwallet then during weekend there are fewer people who use the bitcoin network then the miners will have to add transactions that pay smaller fees when there are limited transactions with higher fee. Not long ago I use a 20 sats/byte but the transaction didn't get confirmed faster and it takes 1 week before it is confirmed because miners prioritized higher fees when there are lots of unconfirmed transactions in the mempool

If anything full nodes "process payments" (ie. validation and updating chainstate while preventing fraud including double spend) while miners process "block headers" although the term "payment processing" is a very weird one to use for bitcoin specially since we have centralized payment processors such as BitPay and Coinbase for merchants. It is indeed misleading.

The post was copied and partially paraphrased. There is no link to the source. The OP claims its own authorship.

https://bitcointalksearch.org/topic/m.57215380

Isn't the miner a person who processes payments? I wouldn't say that it's misleading.

My recommendation is to stop mentioning a bitcoin transaction as a traditional one, that goes from one wallet to another. There are no hidden wallets in Bitcoin, the transactions are publicly announced; a wallet software provides you the key pairs to prove the ownership of your addresses.

While this is true for the price of Bitcoin, I wouldn't say that it's the same for the transaction fee. It'd be much simpler to state that:  If there are many transactions unconfirmed, the miners have to decide by their fees what to choose to include into blocks, because a block has a size limit; they can't put a million transactions into a block. In other words, the more transactions there are into miners' memory pool, the biggest the competition is and hence, the more will be the offerings for including them into blocks. These offerings are the fees.

Yep, it's called lightning network. It's not a scam, it's not a shitcoin and it's not a centralized service.
(Extra tip: it's the only “salvation” for using Bitcoin as a currency)

I had once paid 471 sats on-chain and 1 sat off-chain. I guess an experienced miner may have paid 0 sats for his transactions.  

Are you new to cryptocurrency, or have you been into the system for a long while? I am sure you must have come across people saying statements such as "high transaction cost" or "low transaction cost" or fee, vice versa, as the case may be, most especially when referring to bitcoin and Ethereum blockchain. So in this article, I will be bisecting and dissecting what transaction cost or fee is, why its value increases/decreases for the popular blockchain of the likes of bitcoin and Ethereum.


AREA OF FOCUS
1. What is transaction cost?
2. Why do transaction costs rise or fall?
3. How does Bitcoin transaction cost works?
4. What are the possible time when a transaction cost is high or low?
5. Summary


1. What is transaction cost?

A transaction cost or fee is the amount that you pay a payment processor to transfer your money from one location to another, like from one bitcoin wallet to another or from your credit card to a business.



2. Why do transaction cost rise or fall?

Understanding why a transaction cost of bitcoin rise or fall, requires a basic knowledge of the economics law of demand and supply, which states that "as the supply of goods and demand for that goods changes relative to one another, then the price that purchasers have to supplier, or that supplier can charge to purchaser changes. This means, when demand is high compared to supply, the price will be higher, while when demand is low compared to supply, then the price will be lower. In other words, what this statement means is that, when the demand for bitcoin is higher, so will its transaction cost increases, but when its demand is lower, then so will its transactions cost also decreases.


3.  How does a bitcoin transaction works?

For bitcoin transaction to be processed, it has to be confirmed within a block of the transaction on the blockchain, of which there are so many transactions that can fit within a single block on the blockchain, whereby a single block on the blockchain is created roughly every ten minutes, which contains an average of 2000 transactions.


4.  What are the possible time when a transaction cost is high or low?

Bitcoin tends to have a low transaction cost mostly during periods of low demand, and sometimes weekends because fewer people are trying to use the bitcoin network. However, during periods of high demand for bitcoin, like the bull market or the decentralized finance (DeFi) rally, transaction costs can get quite high as more people compete to purchase the limited transaction space on the blockchain.


5. Summary

With the transaction cost of bitcoin been high or low at times, there are still exchange such as Coinbase who offers free transaction rate for its user from one person to the other on the same exchange, and there are still some other ways to lower your transaction fee while carrying out transaction during a bull market.

So Thank you...

I remain your young crypto enthusiast...😍😍 "Muenalo"



And that brings us to the question of the day

Q... What is the silliest transaction fee you have ever paid to transfer your bitcoin?
Please, share your experience in the comments section below... Thanks