Transaction Fees

A transaction may include a transaction fee, to encourage miners to include the transaction in the blockchain. When a transaction is included in a block, miners can collect the included fees. Transactions fees may supplement, and must eventually replace, the diminishing block reward paid to miners.

Most transactions require a mandatory fee when they spend recently received bitcoins. The minimum fee rules are enforced by relay nodes and miners to discourage spam-like or attack transactions that may degrade network performance or unnecessarily bloat the blockchain; without a minimum fee, the transaction will be discarded.

A minimum fee is automatically calculated when sending a payment, but for preferential treatment, a larger optional fee can be included with a transaction. As the Bitcoin network becomes more utilized, a fee higher than default should be specified for timely transaction processing, and future software clients may recommend the best additional fee for your type of transaction.

㋔ Geek Facts

Bitcoin adds a transaction fee by paying more in inputs than the amount sent as outputs. Miners claim the fee when they mine a block, by adding it to the transaction that creates new bitcoins.

Minimum fee amounts are based on transaction data size, currently 0.0001 bitcoins per kilobyte. A transaction can include about five inputs and outputs before it is larger than a kilobyte. Certain transactions below 1kB in size can be sent for free, but not including a fee can delay their processing.

Further reading

This is only a summary of Bitcoin. To review in-depth information, you can read the original paper that describes Bitcoin’s design, or explore detailed subjects on the Bitcoin wiki.