How to know the commission of a Bitcoin transaction
Welcome to another Bit2Me Academy tutorial. In this article we will talk about how to calculate the commission to carry out your transaction in bitcoin or another cryptocurrency. You will discover how much you will pay in commissions so that your transaction is accepted.
Rremember that all Bitcoin transactions In order to be confirmed, they need to make a “donation” to the network. This means that you have to pay a small commission that the miner will receive for it to validate your transaction.
Commissions in Bitcoin, as in almost all cryptocurrencies, are not paid based on the value of the amount that is sent. In other words, if you send 1000 bitcoins you do not pay more than if you send 0.1 bitcoin, it is not a percentage or a scale. In fact, it could happen that you pay more by sending 0.1 bitcoin, than 1000 or a million BTC.
At this point you will ask yourself, why does this happen? Well, in this new tutorial from Bit2Me Academy you will learn to understand in detail what factors determine the cost of a transaction. In addition to how to know what commission to put to try to make a Bitcoin transaction arrive as little as possible.
What determines the cost of a transaction?
In Bitcoin, being purely digital money, the commission of a transaction is determined by the size of disk space that a transaction occupies. This size is given in units of bytes. In this sense, it does not matter how much the value of the transaction is. What does matter is the size of it at the computer level.
In this sense we can say that:
The commission is not something fixed, nor explicitly imposed, it is the user who determines how much he is willing to pay based on his need.
As we mentioned in how transactions work, a transaction is not required to have a single entry and a single exit. On the contrary, it can be made up of multiple inputs and outputs. Based on this, the transaction will have more or less content, that is, it will occupy more bytes on disk.
It is as if it were a transport company, they do not charge you for the value of the content, but for the size of the box. In any case, the transport charge is determined by the size of the box necessary to transport what you want.
How long does it take to confirm my transaction?
Another question that newcomers to the world of cryptocurrencies often ask is, How long does it take to receive confirmation or validation of our transactions?. Well, in Bitcoin (and other cryptocurrencies) this point is closely related to the value of the commission we have paid and the level of load of the network of miners.
When the Bitcoin mining network is overloaded, transaction confirmation tends to lag. This is because the capacity of the network is exceeded by the demand for transactions that are carried out. Simply put, a long waiting list is generated for transactions waiting to be confirmed. A waiting list that we can see embodied in the mempool.
Now, What happens if we put a higher commission?. Well, you will simply have a higher priority. The reason for this is very simple: miners want to make money and the more commission you pay them, the faster they will take your transaction to confirm it. In short, the higher your commission, the faster you will receive a confirmation. But of course, The one you pay more will not make the confirmation time more precise, it will only give you a higher priority. This is because other factors also come into play, which can affect the speed of confirmations.
This is why, when in certain periods Bitcoin is used a lot, and since the block in Bitcoin has a limited size (up to 4 MB using followed), miners prioritize those who pay the most. Consequently an escalation of the commission cost begins. This is because there are people who need to have their transaction delivered as soon as possible and they are raising the price (they pay more commission). Those who pay little stay at the bottom of the mempool.
That is, the size of the block in Bitcoin generates that at certain times the cost of a transaction is exorbitant, since miners are free to select which transactions they take from the mempool to add to a block, it does not go by order of entry.
Finally, it must be understood that Bitcoin does not add blocks every 10 minutes, but in an average of 10 minutes. Maybe the next block from now, take 8 minutes or 35, 10 minutes being the average of the last 2016 blocks. What does this mean? Well, you could pay the recommended commission, the network would not be overloaded and your transaction would take 35 minutes, for example.
In short, there are three main variables that determine when your transaction will be able to be confirmed:
The size of your transaction.
The time in which the blocks are mined.
What commission do I need for my transaction to process?
Considering that a transaction with 1 input (or input where those bits come from) and 2 outputs (output), occupies about 250 bytes, with about 150 satoshis / byte you should have enough for your transaction to process sooner rather than later.
But beware! We must pay attention to the three points explained above. The previous estimate is theoretical, it does not have any validity beyond an approximate calculation because each transaction can be composed in a different way and the state of the network will be different at each moment. If for example, your transaction has many inputs since the balance of the wallet is distributed in many directions with little quantity, probably the commission that you must add to the transaction is higher.
That if you are always free to add the commission you want, just as miners are free to validate the transactions they want.
How is the proper commission calculated?
The optimal commission (or fee) for a Bitcoin transaction to be confirmed quickly (in 1 block) is marked by the network and is NOT always the same.
Each Bitcoin transaction occupies a size, that is, it weighs X bytes.
At all times the network is in an overloaded state.
This weight is multiplied by the ratio of satoshis / byte that the network is marking as best at that moment and you get the total amount of the appropriate commission for a quick confirmation.
To determine the size of the transaction we must carry out a relatively simple technical process. First, to calculate the weight they have to take the inputs and outputs signed with the private key, convert it to hexadecimal and obtain its size in bytes.
If after that the transaction weighs 226 bytes and the fee charged by the network is 220 satoshis / byte, we would have the following:
226 bytes * 220 sat / byte = 49720
This means that the optimal commission for this transaction is 49720 satoshis. Which is the same, 0,0004972 bitcoins.
Of course, this is much easier using the wallets or pursesWell, many of them already have this type of calculators integrated. So do not complicate yourself, we leave you some tools that can help you with this task.
Services indicative of recommended fee
The best way to know what commission to put in a transaction is to follow the recommendation of specialized services in it. Sometimes the wallets themselves already give us a recommendation (but not all wallets do the math correctly).
In order to estimate the commissions depending on the urgency with which you want to process your transaction, different tools have been developed where you can check the approximate fee per transaction.
What tools are they? Here are our 5 favorites:
Bitcoin Fees from earn.com: One of the best services. They have representation in satoshis, bits, mBTC or BTC of the fastest and cheapest transaction with which your transaction will be processed. As we have previously done, We remind you that this commission is totally approximate. And although the website has a very accurate calculation, it varies depending on the other transactions on the network.. So it can be useful to check it from time to time.
Unconfirmed-tx from btc.com: under the idea of bitcoinfees, this statistical tool from the portal btc.com will allow us to know transaction fee recommendations current in satoshis / byte and BTC / KB.
Bitcoinfees Feesim: this portal will allow you to filter by: 1 minute, 30 minutes, 3 hours or 1 day and see the commission ratio in satoshis per kB to have a 90% chance of confirming in 1, 2, 3, 6 and more than 6 blocks.
Fee estimates of statoshi.info: portal where you can graphically view recommended transaction fees to confirm in 2, 3, 4, 5, 6, 10, 20 and up to 25 blocks in case you're not in a rush to confirm.
Fee estimation of p2sh.info: very similar to statoshi.info but in this case just allows us to see the commissions for a confirmation in the next 1-2 blocks, 3 or 6.
Some purses in which you can modify the fee
Bitcoin Core: With the estimator of Bitcoin Core which is a desktop wallet, you can see how much you would have to add as a commission to have a 95% probability of it being confirmed in N blocks.
Bitcoin Walletdeveloped by Schildbach: in this wallet you can choose between 3 priority modes. The economic, the medium and the fast. Each of them will add a recommended fee for the transaction.
Electrum: This wallet is also a favorite for many users and has dynamic control. This will allow you to establish the desired commission each time you prepare to make a payment with BTC. Have you ever tried it?
Other wallets, such as Bit2Me Wallet They calculate the recommended fee to enter the next block in order to simplify the operation for users.