Why does Bitcoin charge per transaction?

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Because it is in fact "almost free". The transaction fee charged by the bitcoin protocol is so small that it basically doesn't matter when compared to standard banking fees.

This measure is in place for several reasons, including:

Promoting mining. Mining requires expensive hardware and miners expect to receive some sort of compensation for contributing to the network. This is necessary to keep the bitcoin network decentralized, secure, reliable and fast. This is where this fee ends up: in the hands of miners that confirm your transactions. Avoiding spam. Anybody could decide to write a bot that sends very, very small fractions on a very short delay in order to spam the network, as a form of DoS. This fee makes these kinds of attacks very expensive, because if you transfer, let's say 30 euros, the fee could be 0.01 cents. But if you transfer 1 cent, the fee is still 0.01 cents, making the fee not a percentage but a fixed quantity which gets more expensive as the amount...
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You are confusing validation with confirmation.

When you spend / credit your card, VISA etc. validate you have the card and then send a signal back to the register saying "its all good, give the guy his coffee"

However, there is a 3 month period where the transaction could be reversed on a whim and the merchant would not actually receive the money for your coffee. This is called a chargeback.

Finally, after 3 months or so, the money is deposited to the coffee shop's account.

With bitcoin, you scan a qr code with Bitpay / Coinbase, and within 1-2 seconds a green check mark pops up saying "it's all good, you can give the guy his coffee"

However, if a person with enough technical ability, and the drive to steal a coffee wanted to put their mind to it, there are some ways that they can attempt to swindle the store with some custom wallet software or an accomplice who has administrator access to a large mining pool. Most of which are easy to detect...

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Home » Bitcoin Transaction & Fees: Everything you need to Know

If you try to send Bitcoin to another person for the first time, you shall notice that you have been charged a bit extra than the usual amount. Suppose you send 5 Bitcoins to X. The transaction will cost you a bit more than 5 Bitcoins. That extra amount is termed as ‘Fees’ for a Bitcoin Transaction. So, it costs you 5 Bitcoin + Fees.

Same happens during trading bitcoins with any other altcoins. You will get charged a bit more than the usual traded amount.

Now, when I transacted with Bitcoins or sold it for altcoins for the first time, this question came to my mind that what are those fees? Why do they get charged? And exactly how much is the fee for a cryptocurrency transaction? Moreover, how to reduce the amount of fees charged?

So, being a complete newbie, I did a thorough research and dug up kind of interesting stuff! It is really fascinating how this entire system works. In this post, I would...

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This page is for frequently asked questions that do not yet appear in the main FAQ.

It's also a place for questions in progress, so feel free to ask new questions, or answer and/or refine existing answers.

Ask your question here:

How much electrical energy per transaction is projected?

Answered Questions

How does it work (for non-geeks)

Why can't somebody just create a version of the software that gives you extra bitcoins?

When you spend some bitcoins, the software on your machine has to prove to the software running on everybody else's machine that those bitcoins are valid.

How does it do that? Well, it is a little bit complicated; you've got to understand how bitcoins are created, and how they are traded.

First, how they're created: 25 bitcoins are created approximately every 10 minutes. Everybody who is trying to create bitcoins is in a race to try to find those 25 bitcoins; they are really hard to find, but,...

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MultiBit is one of the unsung heroes of the bitcoin world. The desktop bitcoin wallet software, launched three years ago, recently surpassed 1.5 million downloads and, in fact, Gary Rowe, one of two core developers on the project, puts the estimate at more like 1.8 million this month.

Now he and development partner Jim Burton are about to start charging tiny fees for using it.

One of the things that must have helped MultiBit a lot was being listed on bitcoin.org. The wallet is one of five desktop wallets listed on that site, and is outpacing at least some of them.

CoinDesk reached out to the bitcoin core development team to ask how many people have downloaded BitcoinQT, the reference implementation of the bitcoin client, but received no response. Electrum, one of the other five wallets, also failed to respond.

What we do know is that Blockchain, the downloadable mobile wallet that also has an online counterpart, has just over 1.6 million users. This...

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If you’re reading this post I assume that like many others, you sent a bitcoin transaction and was kind of confused as to why it’s still listed as “unconfirmed” or “pending” after a few hours or so.

I mean Bitcoin transactions are supposed to be instant right?

In this post I want to try and explain in a very basic way how a Bitcoin transaction works and why the fee that you attach to each transaction has a crucial role in how long it will take the transaction to go through the network.

Here’s what happens when you send Bitcoins to someone

Whenever you send someone Bitcoins, the transaction goes through different computers running the Bitcoin protocol around the world that make sure the transaction is valid. Once the transaction is verified it then “waits” inside the Mempool (i.e. in some sort of a “limbo” state).

It’s basically waiting to be picked up by a Bitcoin miner and entered into a block of transaction on the Blockchain. Until it is picked...

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The latest versions of our wallet now use a dynamic fee structure (which you can read about here) to determine appropriate fees for your transactions, so some of the information in this post no longer applies.

If you have a pending transaction that is taking an abnormally long time to confirm, it may be due to network congestion. To find out more about how network congestion can affect your transaction, check out this article in our Support Center.

This is a Blockchain Quick Bit, where we cover the basics of a topic, or product, to help you understand it better. This Quick Bit is intended to help you learn about bitcoin transaction fees. Bitcoin transaction fees are one of the many benefits for consumers and merchants to utilize bitcoin, and is an attractive aspect of the digital currency. Currently bitcoin transaction fees can average to around .04 cents USD (or 0.0001 BTC) per transaction.

Bitcoin transactions are in place as an incentive to miners when...

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The landscape for Bitcoin continues to intrigue and be unpredictable. This is especially true when it comes to Bitcoin transaction confirmation time and fees. We’ve had a lot of feedback over these past months as transactions sometimes have not been as close to instant (~10 mins) as one may have hoped when sending payments over the Bitcoin network. Industry pioneer, Erik Voorhees sums up these points in his excellent blog post.

The source of increased fees and confirmation times is a result of the popularity of Bitcoin — this is evident both in the rising price and number of bitcoin transactions. It is clear that balancing growth and sustainability of the Bitcoin network is still a work in progress. How this scaling debate plays out between software developers working on the protocol, miners, and vested interests is yet to be seen.

For CoinJar itself, our part in the industry landscape is that of on-boarding users and providing them an interface to Bitcoin. A...

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Intro

The holiday season is upon us, a time for good will, cheer, and commerce. The end-of-the-year is an excellent time for small businesses to reflect on how they can make transactions easier and faster. Retailers in the past twenty years have seen a wave of innovation from online shopping to consumer analytics. I would argue that the 2016 holiday shopping season is a good time for businesses to check out another game-changing technology- bitcoin.

What is Bitcoin?

Bitcoin is a digital currency. It is like a dollar, but without the Federal Reserve. Bitcoins are decentralized and don’t belong to a bank or a nation-state. Transactions are verified by peer-to-peer networks on the internet. If you are looking for a more technical definition, check out bitcon’s faq.

What Problem does Bitcoin Solve?

Bitcoin solves many issues for small business owners. Some of the more pressing problems include cash flow, and reduction in transaction...

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If you have sent a bitcoin payment in the last couple of weeks, you may have noticed that your transactions are taking much longer than expected to confirm.

We have received your emails.

Since, like the Bitcoin network, we are currently working through a backlog, we want to thank you for your patience. With the high volume of questions we're getting about delayed payments, we decided it would be best to write a short explanation about what's happening with many bitcoin transactions right now.

Transactions on the Bitcoin network itself aren't controlled or confirmed by BitPay, but by the bitcoin miners which group transactions into "blocks" and add those blocks to the Bitcoin "blockchain" – the shared historical record of all transactions. When a transaction has been added to a block six blocks ago, it's considered a done deal.

Currently, bitcoin network traffic is unusually high due to increasing demand for transactions per block. Block sizes are...

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Why Use Bitcoin? Here are few reasons!

When any cheque has been transferred from one bank to another, the bank usually holds the check for some period of a time. This is because no banks can trust whether the amount is really available or not. In the same sense, international wire transfers will also take a long time.

By comparing these, bitcoin cryprtocurrency transactions are fast, the transactions can be instantly taken. However, if there are zero confirmation transactions or only 10 minutes can be required to get transactions confirmed if merchant inquiries it.

Zero Transactions: ( where merchant assume the risk of accepting to that transaction which hasn't been confirmed by bitcoin blockchain)

It’s Cheap:

However, a Credit card transactions are also instantaneous. But the merchant has to pay for that privilege. In some cases, these merchants will charge for debit card transactions too. But bitcoin transaction involves with minimal fees, in...

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Bitcoin was created to function as peer-to-peer electronic cash. Whether you are spending or accepting bitcoin as payment it is prudent to understand how a transaction works.

Bitcoin transactions are messages, like email, which are digitally signed using cryptography and sent to the entire Bitcoin Network for verification. Transactions are public and can be found on the digital ledger known as the blockchain. The history of each and every bitcoin transaction leads back to the point where the bitcoins were first produced.

Bitcoins Exist as Records of Bitcoin Transactions

We define a [bitcoin] as a chain of digital signatures. Each owner transfers [bitcoin] to the
next by digitally signing a hash of the previous transaction and the public key of the next owner
and adding these to the end of the coin. A payee can verify the signatures to verify the chain of
ownership.

—Satoshi Nakamoto, Bitcoin Whitepaper

It’s worth mentioning here...

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You can send Bitcoin using your Cubits Wallet in only a few steps:

Go to the Send Money page on your Cubits Account Enter or scan the address of the person you wish to send Bitcoin Enter the amount of Euro or Bitcoin you wish to send Press the “Send Money” button

Your transaction status may be pending for one of two reasons:

You performed a Buy or Sell operation using funds not immediately available on your Cubits account. The transaction will be pending until we receive confirmation from your bank. You performed a large transaction that must be verified by the Cubits Team.

Once you have submitted a Bitcoin transaction it cannot be cancelled. Bitcoin transactions are instantaneous - once the funds have been moved into another address Cubits cannot access the transferred Bitcoin.

Internal transactions completed between Cubits users will not be visible on the blockchain. For instance, if a Cubits Wallet user...

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Frequently Asked Questions

Is this safe? Is this Secure? This feels like a scam?

This is very safe, and completely secure. We have been providing Bitcoin/credits to providers and advertisers around the country since backpage lost its ability to process credit cards. No one would go through all this trouble, of setting up a website, paying hosting fees, merchant fees, advertising, and much more, just to rip off a person for $10. You can find thousands of great reviews for us, no bad. Furthermore, Backpage.com themselves are now working with us to help us process bitcoin/credits for you. They would not do that if we are not legitimate. You can email them at support@backpage.com and ask about us. It does take a LONG time to get a response from them, but, we have a great relationship with them.

Still not convinced? Try just a small purchase. Just 5 credits. Use a gift card, setup a new backpage account just for the test. You will see it is way better,...

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Once again, transaction malleability is affecting the whole network of Bitcoin. In general, it can cause so much confusion above anything else and end up apparently having two the same transaction up to the point that the following block is mined. It can be perceived as follows:

The original transaction has never confirmed. One more transaction having the same coin amounts going to as well as from similar addresses, showing up. This contains another transaction ID.

Most of the time, this another transaction ID will validate and in some block explorers you’ll be able to see notices about the first transaction which was a double spend or maybe being not valid.

Eventually however, only one exchange, with the right quantity of Bitcoins being transferred ought to affirm. If no exchanges affirm, or beyond one affirm, at that point this most likely isn't specifically connected to exchange malleability.

In any case, it was seen that there were a few exchanges sent...

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Card 7 of 17

Why does the Bitcoin network use such a crazy scheme to process transactions?

The Bitcoin network's process for maintaining the blockchain, the shared record of all Bitcoin transactions, might seem unnecessarily complex. But it accomplishes something that no other payment network has accomplished before: guaranteeing the integrity of the system without a central authority.

Until Bitcoin came along, computer scientists working on digital cash were bedeviled by the double-spending problem: how to ensure that the owner of a digital coin didn't defraud the system by spending it twice. Before Bitcoin, the only known way to solve the problem was for a central authority to approve a transaction before it was considered final.

Bitcoin is the first electronic system to solve the double-spending problem in a completely decentralized fashion. If someone tries to spend the same bitcoin twice, the network refuses to add the second transaction to...

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Every Bitcoin transaction is subject to a fee paid by the sender. In contrast to bank fees charged at either a flat rate or as a percentage of transaction value, Bitcoin fees are based on the amount of data needed for encoding. Understanding this system is not difficult, but its nuances and non-intuitive nature confuse many Bitcoin users, new and experienced alike.

Understanding transaction fees can save you both money and time. This guide describes how the Bitcoin transaction fee system works and how to use it effectively.

An Expensive Payment

Fees usually account for a small share of a Bitcoin transaction. But sometimes a fee can approach or even exceed the amount being transferred. Let's consider a hypothetical case in which transaction fees seem to go haywire.

Alice runs a successful blog. At the end of each post, she displays a QR code to accept Bitcoin donations. Once every month, Alice sweeps the accumulated balance from the...

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Please let me clarify.

the fees listed below are current as of the date of this post.

Fees for sending bitcoin

We don't charge a fee to send bitcoin out from your bitcoin wallet on any amount over 0.0001 BTC.
(Sending over 0.0001 bitcoin is free) The TX fee paid to the bitcoin miners is paid for you by Coinbase

If you send less than 0.0001 BTC, then there will be a mandatory TX fee added to pay the bitcoin miners. We won't pay the bitcoin TX fee when you send less than 0.0001 BTC.

Sending bitcoin from one Coinbase wallet to another Coinbase wallet is always free (no fee) no matter how little bitcoin you send.

There is no fee for receiving bitcoin.

Fees for sending and receiving fiat currency (USD, EUR, CAD, etc) to your Coinbase account.

Fee's for buying/selling bitcoin -- converting fiat currency to bitcoin

1%
There maybe a minimum fee of up to...

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With the increasing transaction volume the competition between transactions have been increasing as well. While a miner fee was not always necessary, they are currently.
As miner prioritize transactions based on their fee in comparison to the space they will take up, the transaction fee should be chosen according to the transactions size.

The Mycelium bitcoin wallet uses an Fee Estimator which provides a Fee for a transaction to be included within the next X blocks,
the following dynamic Miner Fees can be selected within the wallet:

LowPriority, to be included within the next 20 Blocks, ideally within the next 3hrs20mins. Will default to 0.08 mBTC/kb if no estimation is available. Economy, to be included within the next 10 Blocks, ideally within the next 1hr40mins. Will default to 0.15 mBTC/kb without an estimation. Normal, to be included within the next 3 Blocks, ideally within the next 30mins. Will default to 0.2 mBTC/kb without an estimation. Priority,...
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Frequently in popular descriptions of Bitcoin and in the user interfaces of wallet software, a distinction is made between “confirmed” and “unconfirmed” transactions. What is the difference?

At a high level, a transaction is only confirmed when it is permanently included in the Bitcoin blockchain. The blockchain is a ledger of all transactions in the history of Bitcoin. It is append-only, meaning new data can be added to the end of the ledger, but data can never be removed once included. This ledger is necessary to prevent double-spending, which is a key technical challenge in designing any cryptocurrency.

How Bitcoins are Transferred

Recall that if Alice “owns” some quantity of bitcoins, this really means she knows one or more cryptographic keys which have been designated as the controller of those coins in a transaction on the ledger which transferred the coins to Alice. In order to transfer the coins to another entity, Alice will use these keys to produce a...

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Last updated: 20th February 2014

Bitcoin is a relatively new form of currency that is just beginning to hit the mainstream, but many people still don't understand why they should make the effort to use it.

Why use bitcoin? Here are 10 good reasons why it’s worth taking the time to get involved in this virtual currency.

It’s fast

When you pay a cheque from another bank into your bank, the bank will often hold that money for several days, because it can’t trust that the funds are really available. Similarly, international wire transfers can take a relatively long time. Bitcoin transactions, however, are generally far faster.


Transactions can be instantaneous if they are “zero-confirmation” transactions, meaning that the merchant takes on the risk of accepting a transaction that hasn’t yet been confirmed by the bitcoin blockchain. Or, they can take around 10 minutes if a merchant requires the transaction to be confirmed. That is far faster...

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The bitcoin developers are about to reduce the transaction fees on the bitcoin network tenfold, thanks to the relatively high value of the digital currency.

Transaction fees are small amounts paid to send bitcoin transactions around the network (think of them like postage stamps) and to get miners to confirm them by including them in a mining block. They're paid in satoshis (tiny amounts of bitcoins), which means that as the price of bitcoin rises, the transaction fees get higher.

Recent fluctuations in the bitcoin world may have set the price yo-yoing, but that doesn't mean that it isn't doing relatively well. The CoinDesk Bitcoin Price Index is still hovering in the $540 range at the time of writing, a little over six times the price last July, when the Index was first introduced.

The core developers first started discussing the possibility of slashing transaction fees for the coin around three months ago, in this post on the mailing list. At the time,...

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People often claim that with Bitcoin “you can send money between any two points on earth for free”. While that is true in some cases, sometimes a transaction fee is required. The fee, when it is required, is usually worth less than 40 US cents.

The fees go to the miners to incentivise them to keep mining, which in turn keeps the Bitcoin network secure. They already get a reward of 25 XBT for each block they mine, but this reward halves every 4 years. The plan is that as the block reward diminishes over the time, it will be replaced by transaction fees.

So what decides when you have to pay, and how much?

Well, like everything else in Bitcoin, the fee structure is built into the network rules, which are defined as “what the reference client does”. When you attempt to send coins using bitcoin-qt (the current reference client), it goes through the following steps:

1. Pick which coins to spend

The client has to decide which of your coins to...

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On Monday, bitcoin prices hit a record high at $2,100 per coin. On Wednesday, the cryptocurrency hit another milestone at $2,416 a coin. On Thursday, it peaked at $2,690. But if you ask Wences Casares, CEO of bitcoin wallet Xapo and member of PayPal’s board of directors, that’s nothing: bitcoin could hit $1 million per coin in the next five to 10 years.

“Put 1 percent of your net worth in bitcoin and forget about it for 10 years,” Casares advised during the Consensus 2017 conference in New York this week.

“The biggest mistake [would] be to buy more bitcoin than you can afford to lose. The biggest mistake is [also] not to own any bitcoin,” Casares said.

It’s a bold claim, surpassing predictions by Snapchat investor Jeremy Liew and Blockchain CEO Peter Smith, who said bitcoin would hit $500,000 by 2030. Still, the digital currency has gained 60 percent just this month and is up 185 percent for the year; maybe these predictions aren’t so bold after...

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Bitcoin

Ultimate guide to Bitcoin

Bitcoin Trading – The Ultimate Guide

Written by: David Waring

Detailed explanation of bitcoin and how it is traded

5 / 5 stars

At the time when this guide was written, January 2014, the price of one bitcoin stood at $913, down slightly after reaching an all-time high of over $1,200 earlier in December. The new cryptocurrency came a long way from trading below $4 just two years ago. Major online and offline retailers are starting to add the new currency as a payment method. But what exactly is bitcoin?

According to a recent Bloomberg poll, only 42 percent of Americans correctly identified bitcoin as a virtual currency. Six percent thought it was an iPhone app.

Bitcoin is a peer-to-peer digital currency launched in 2009 by ‘’Satoshi Nakamoto’’. Satoshi worked on the project alone for 2 years before releasing the code to the public. He disappeared shortly after creating the...

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