What does Bitcoin commission depend on?

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Bitcoin Mempool Load

Right now we are in a happy time of low Bitcoin fees. The average transaction fee is 0.000023 BTC ($1.46), and in reality you can transfer BTC even cheaper.

But this is not always the case, and in extreme periods the average transaction fee soars a hundredfold. Let's see what it depends on using the official client as an example (it used to be called just Bitcoin, and now Bitcoin Core, source code). Interestingly, over 15 years and 28 versions, the client interface has changed only minimally - that's what stability means).

For most users, the standard means of transferring digital money is USDT. But this instrument is not very suitable for long-term savings due to its peg to the US dollar, which is subject to inflation. Therefore, Bitcoin as “digital gold” remains an important means of long-term savings. Although there is one thing that spoils life a little, it is the unpredictable commission:

Different networks for USDT transfer​

First, let's see what fees you have to pay when transferring USDT. There, the size of the fee depends on the transport (network) through which the assets are transferred. For example, the OKX exchange sets the following fees for different networks:

• Tron network (TRC20) — 1 USDT
• Ethereum (ERC20) – 2.08 USDT
• Arbitrum One — 0.098 USDT
• Avalanche C-Chain – 0.22 USDT
• Optimism — 0.15 USDT
• Polygon — 0.8 USDT
• Solana — 1 USDT
• TON — 0.15 USDT
• X Layer — 0.1 USDT

On the Bybit exchange:

• ERC20 network (Etherium) — 8 USDT
• TRC20 (Tron network) - 1.3 USDT
• Arbitrum One — 1 USDT
• Solana — 1 USDT
• BSC (BEP20) — 1 USDT
• zkSync Lite (paused) - 0.3 USDT
• Polygon — 1 USDT
• OP Mainnet (Optimism) – 1 USDT
• AVAXC (Avalanche C-Chain) – 1 USDT
• Mantle Network — 0 USDT
• KAVAEVM (suspended) - 0.3 USDT
• CELO — 1 USDT
• TON — 0 USDT

Different platforms support a different set of networks for transferring money.

The situation is approximately the same with individual wallets, with relatively fixed fees everywhere.

Tariffs are periodically revised, but not dramatically. For example, for the Tron network (TRC20), the fee has grown from 0.8 USDT to 1-1.3 USDT over the past year and it seems unlikely to return to the previous level. But new, cheap networks have emerged, such as TON and Arbitrum One.

The situation is different for Bitcoin. There is only one blockchain, and there is no zoo of networks. On the other hand, the fee is higher:

It is good if BTC are stored in a long-term cold wallet and you do not plan to send them anywhere. But there are emergency situations. For example, when you need to transfer them to another wallet, exchange them for cash from another user or through an exchanger. Monitoring of Exnode

What does BTC commission depend on?​

In short, the commission depends on

1. Bitcoin network load at the moment;
2. transaction volume in bytes (number of recipients and senders).

Each client can specify an arbitrary fee size when sending an unconfirmed transaction (TX) to the network. The network bandwidth is limited. If the number of unconfirmed transactions from clients exceeds the maximum bandwidth (block size), then the transmission nodes (relays) and transaction creation nodes choose the most profitable offers for themselves. In other words, unconfirmed transactions with a higher fee are processed first. They are included in the mempool, and then in the blockchain. The remaining TX are queued.

This mechanism ensures self-regulation and reliability of the Bitcoin system.

For example, now (October 2024) the system processes 25,000 transactions per hour, the load is very low, so the fee is small:

As you can see, the average arithmetic fee for a confirmed transaction is 0.000023 BTC ($ 1.46), and the average median is three times less due to the large number of transactions in the lower price range. Currently, it is 0.00000077 BTC ($0.483).

To more accurately determine the actual fee for a particular transaction, it is better to calculate it in satoshi per byte, taking into account the transaction volume in bytes. 1 satoshi = 0.00000001 BTC, for more details, see the documentation, Bitcoin Core user forums, and other information resources.

Arbitrary commission size​

The official Bitcoin Core client * has two types of fees:

• recommended (smart commission);
• arbitrary.

In the settings file bitcoin.confyou can change the default parameters for the commission, including:

# Commission rate (in BTC/kvB) below which the commission is considered zero when
# a transaction is created (default 0.00001). This is essentially the minimum
# commission level that can be specified in the client interface. # Likely the same "zero limit" is set on most
# Bitcoin nodes that process transactions
mintxfee=<amt>

# Fee rate (BTC/kvB) to add to transactions sent
# (default 0.00)
paytxfee=<amt>

# If paytxfee is not set, automatically add the fee value so that the transaction
# starts receiving confirmations after n blocks
# (default 6)
txconfirmtarget=<n>

# Fee rate (BTC/kvB) below which fees are considered zero for
# relay nodes, mining nodes, and transaction creation nodes
# (default 0.00001)
minrelaytxfee=<amt>

By changing these default settings, you can reduce the fee you pay for sending a transaction. It is theoretically possible to transmit Bitcoin with a very small fee, but then your transaction could be stuck in a queue for days, weeks, or months. It is technically possible to conduct transactions with zero fees, but most relay nodes on the network will not accept such transactions and may blacklist your node. But Bitcoin is a decentralized system, and no one is stopping you from broadcasting these transactions to the network, and they were considered valid just a few years ago.

Blockchain Explorer does not show any transactions with zero fees in the last 24 hours. The minimum fee rate for real transactions on the blockchain (16,280 transactions) is $0.14. This seems to be the value of 0.00001 BTC per kilobyte, which is set as the minimum in Bitcore Core.

But still, in one day, one transaction with a commission of $0.02, two transactions with a commission of $0.08, etc., entered the blockchain.

Of course, for micropayments $0.02 is a lot. Especially if you have to wait for the money to be wired for several months. For normal micropayments, e-commerce in real business, it is better to use Bitcoin Cash (BCH). This is a well-known fork of Bitcoin, which split off in 2017. According to Blockchain Explorer , the average commission there is now 0.000022 BCH ($0.007).

Another working option that is used in retail, including offline, is the official Lightning protocol on top of the Bitcoin blockchain.

And to transfer money to another user without a commission , you can use internal transfers within the exchange, if you are both registered there.

To reduce the BTC commission, you can include transfers to several addresses in one transaction. And do not use the "smart" commission during a heavy mempool load.

*Note. The official Bitcoin Core client requires synchronization with the network, that is, checking the entire Bitcoin blockchain since the network was launched in 2009, which is now about 700 GB:

On an SSD, the process is several times faster than on an HDD.

All blocks need to be downloaded and checked, although only the last few gigabytes can be stored on the disk at any given time, so it will not take up much space (no more than 12-14 GB).

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