25 C
Accra, Ghana
July 11, 2020
Image default
Helpful Reads

This Is Why Bitcoin Transaction Fees Are So High

This is reason why you have seen Bitcoin transaction fees going that up and looking ridiculous; well, not so bad but it is higher compared to the norm. Basically, Bitcoin transaction fees increase based on demand and supply, network congestion, mining difficulty, and many other factors. People are siting this problem with the recent halving, yeah, it could be the case or some of the aforementioned reasons.

Size and time matters, at each particular time based on demand and supply which will determine the number of transactions in a single block

Usually, this happens based on demand and supply of Bitcoin with regards to how many transaction goes into a block The number of transactions confirmed within a single block, and the input and output of the transaction will determine the transaction fee, basically. In any case, a block contains a certain number of transactions before it is added to the main Blockchain ledger. In a situation where demand is low, and the number of transactions expected in a block is less, while the transactions are supposed to confirmed anyway, miners choose to confirm the transactions with higher fees so that they can validate the transaction and be incentivized properly.

In another scenario where supply is high and there are a lot of demands for Bitcoins, the network gets congested with a lot of transactions to be validated, and in such cases, miners are left to be selective ;thereby choosing transactions with higher fees so they can validate it and be incentivized.

In either situations, transaction fees sky rocket and we pay higher transaction fees. Because Bitcoin has a decentralized monetary system, miners can only choose transactions with higher fees to validate in order to be satisfactorily incentivize. Most of the times, instances like this increase mining difficulty as hash rate also fall to new lows. Hash rate is the overall performance of the Bitcoin network and its security. For us to have enough miners on board for block validation and security, transaction fees must be increased. Most often, when mining difficulty sees new highs and hash rate sees new lows, it is recommended we use higher fees so that miners can choose to validate transaction faster with enough remuneration.

Best Recommended Solution

Usually, most wallets recommend the fees to be paid to get a transaction confirmed faster. Also, the fees to be paid may be chosen in case the wallet’s recommendation is high or low for the miner. But in all, bear in mind that instances like this compel miners to choose transactions with the higher fee, and so sometimes, the wallets recommend higher fees based on the Bitcoin network and mining difficulty so that your transactions can be confirmed faster. Whichever way it goes, you can also choose your own transaction fees, not forgetting that the lower the fee paid, the longer it is going to take for a transaction to get confirmed.  It is therefore recommended you use higher fee so that your transactions will confirm faster.

 

Also instances like this cause problems such as having say $100 where maybe just $60 is spendable.  In cases like this, it is probably because you had this $100 by collecting smaller bits of transactions to amounting to the $100 at hand and therefore, the fees required to spend that $100 is way higher; so the wallet chooses the amount spendable to able to recommend fees for faster confirmation, and with input and output of the transaction considered.

 

I Am CryptoRas.

 

Related posts

What is Blockchain??

I Am CryptoRas

Bitcoin Halving Explained And What You Should Expect.

I Am CryptoRas

What are smart contracts.

I Am CryptoRas

Leave a Comment