Bitcoin Forum

How does it work?
From the wiki I've read that it will go to the miner who mined the coins you're transferring. What will happen if the miner is not online?

So who then receives the transaction fee?
Thank you.

The miner receives the transaction fee. The miner will be online: they need to be online in order to mine.

Incidentally, for receiving bitcoins in general it doesn't matter whether you're on- or off-line. You still receive the bitcoins you were sent. The network "knows" that you now have the coins. It's a bit like checking your account balance at an ATM - you still have the money in your account, even when you aren't at the ATM, and you can still receive money in your account, even when you aren't at the ATM.

You make a transaction, add a fee. Naturally, the transaction will be added to a block that will eventually be processed by a miner (pool, solo, doesn't matter). The fee bumps the priority of your transaction data, pushing your transaction at the top of the queue (admitting there are only fee-less transaction waiting in the queue). Whichever miner that revolves the block holding your transaction in will receive the fee.

So all the network confirms the transaction, transaction fee only makes you to the top of the queue and even if at that time the miner is offline it will receive the transaction. Is it correct?

Not exactly. The miner will confirm the transaction and receive the transaction fee at the same time. The miner has to be online in order to mine. A miner that is offline won't be mining, and won't receive the transaction fee.

You might be confusing the P2P network, that propagates the Bitcoin data, to the miners, people that willingly provide computing power (seperate from the one spent within the P2P user pool) to solve new blocks. As things are, there could be only 1 person connected to the P2P nodes while there are hundred's of miners deciphering blocks at the same time. The fee goes to the miner who resolved the block holding your transaction data, making the transaction "effective". Then the P2P network will handle the confirmations.

As for miners going "offline", the concept is that the difficulty for solving blocks is adjusted to the computing power used to solve blocks, in order to maintain an average speed of 6 blocks resolved an hour. So admiting lots of people stop mining, the difficulty would eventually be readjusted so that the few people left mining would keep up the 6 blocks/hour quota.

The act of the "network" confirming the transaction is actually the act of a single miner finding a block.  A "block" is really just the confirmation of the transactions contained inside.  Thus, if you as a normal user include a transaction fee in your payment to Random Service A, in approximately ten minutes or less, some other online hard-working miner will confirm that transaction in the block he/she solves.  That person will receive the transaction fee that you paid, and Random Service A will receive the remainder of the balance you sent.

You are correct in that including a fee does improve your chances that your transaction will be included in the next block.  This is because it is entirely up the miner itself whether or not to accept transactions that don't include a fee.  At the current moment, I'd say that most miners (and pools) are willing to accept any transactions regardless of whether there's a fee or not, though already we are starting to see some very minor delays.  In the future, it is expected that because the reward-per-block diminishes over time, that eventually it will be the transaction fees that will motivate miners to continue mining, rather than the actual reward. 

Sorry, then I'm afraid I didn't understood something in how bitcoin p2p system does work.

Previously I thought that miners solve some difficult problem, when they solve it - they generate some bitcoin amount. When in your transaction you use part of that generated bitcoin amount the payment fee goes to the miner who generated that bitcoin amount. Now you're saying that payment can go to another miner who is online now and mining.

I have launched bitcoin client for few days and mining constantly with about 2.5Mhashes/s, with this speed the calculator says that I'll have  some bitcoins mined in more than a year, now it seems that electricity costs are higher than those mined bitcoins. Does it mean that if I continue mining I might receive from time to time payment fees?

No, I don't think that's what Richochet said, and I think Ricochet's explanation (and your previous understanding) is correct.

Payment - the 50 BTC and any transaction fees - only goes to the miner who solves the difficult problem.

If you continue mining you might generate a block (solve a difficult problem). If you do, you'll receive 50 BTC. You may also receive a transaction fee. You won't receive any transaction fees unless you generate a block.

You will only generate a block if you are online and mining.

The question is about motivation, should I keep running bitcoin client with mining enabled or not? I think the more people run their clients the better for the network, but does the network motivates somehow people to keep their bitcoin clients running?

Originally there was a strong motivation to have mining enabled, as the cpu requirements to generate a block (and thus win the 50BTC+fees bounty) were minimal. These days, there's SO many computers out there mining (and using custom mining tools that use the GPU instead of CPU which is far more efficient) that on my 3-year-old PC the average time between block generations using the native client is some 1500 days! Even with a GPU miner it worked out to be 1 block every 120 days.

If you've got a reasonably new PC, run a GPU miner and connect to a mining pool, you may find that you can mine a few hundred coins per year in the background and that's certainly worth it to enough people that some of the mining pools out there are doing over 100Ghps. By comparison my GPU was doing 27mhps, and my cpu was doing 4!

You really shouldn't be mining if you're only getting 2.5 Mhash/sec, unless your power requirements are incredibly low.

Even if your electricity costs are fixed, and even if you don't care about wasting megawatts on creating less value than you've destroyed in the process, consider the time cost to you of maintaining the software for as long as it will take to generate a block. You'd be far better off taking that time and performing some sort of useful service, and getting paid in bitcoins.

As has been said in many places elsewhere, Bitcoin is not about mining! Mining is one way to get it, but (except for gamers or professionals) it is probably not the best way to get it. The best way to get it is to trade goods or services.

The question is not about making money, the question is about maintaining the network, basing entire network only on miners is bad because real serverless p2p networks are better with more permanently online members, so that the network will be more resistible to attacks.

I have no problem with wanting to help, out of loyalty or kindness or whatever motive. But why help in this particular way? Why not, say, save the money you would have spent on electricity and donate it to the team developing the Bitcoin software? Or, if you do want to help specifically by strengthening the network, pay someone else to mine who is in a position to do it more efficiently, like ArtForz. There are many ways to use your money to benefit Bitcoin, why pick such a grossly inefficient one?

I'll say it again, some people who mine do so because their conditions negate the effects of consuming electricity.  Most are people who live in small efficency apartments heated only by electro-resistive heating, and have neither the room nor the resources to set up a rack of machines, but do have a decent gaming class video card.  Some people live in areas with below average costs of electricity, and have a comparative advantage as a result.  By definition, roughly half of the bitcoin network exists in places with below average electric costs, but some can be very low.

Cool. Is Megawatt one of those people? He's said nothing to indicate that he is.

Not sure if I read it right but say someone wanted to send another person 20 BTC. If transaction fees occur where does it come from. Would the person get 19.99 BTC or would 20.01 BTC come from the senders account?

The latter.