Bitcoin Forum

I finally figured out how the mempool and fees work and I've been watch the mempool constantly for a few days now. I have noticed lots people including ridiculously high fees. Like when 50 sat/vbyte is the minimum there were people including 6000 sat/vbyte. Or when 2 sat/vbyte would be enough like 30% of the people were setting there fees at 60 sat/vbyte. Why do people set their fees so unnecessarily high? Is it simply because of how default fees are set in wallets, by exchanges, or by services? If so, why do professional developers miscalculate the fee so poorly?

The higher you set the fee's once you have sent a transaction there is the chance that you will be first in line, meaning sending transaction will be faster, try to set your fee's at low and it will take hours or a day, that is the reason why they set fees at a higher one.

Did you not read what I said? There is no reason to set the fees at 50 sat/vbyte if you see that the mempool has less than 1 MB of <1 sat/vbyte and 0.5 MB of everything else. Then you can set a fee of 2-5 sat/vbyte and it will get confirmed in the next block with a high degree of probability. Setting fee at 50-60 or 80-90 sat/vbyte in that kind of scenario has no purpose other than flushing money down the toilet. Similarly when people set the fee at 600 or 1000 or 4000 as I have seen.

1 or 2 satoshi/vbyte is only used if you are using a non-custodial wallet and be able to manually choose your fee. On exchanges or services, to avoid client complaints and avoid pressure on their customer support, they often choose overkilling fee for their clients. It is very easily to be seen with 1 or 2 MB from the tip of mempool. The total size of each fee level from 1-2 MB of mempool tip is usually very thin.

https://jochen-hoenicke.de/queue/#1,2h. The size of fee from 140 sat/vbyte to 170 sat/vbyte is 0.003 MB (0.067 MB to 0.097 MB).

People choose low fee are from non-custodial wallet users and they have good practice and know how bitcoin transaction, mempool and fee works.

Use exchanges, merchants, services and don't care to choose options (if available: normal, average, fast but not all services have those fee options). Companies get profits from it and many services have their static fee, not dynamic fee. Static fee means it is fixed and they can reset it manually but after each reset, fee will be fixed again.

They do not miscalculate, not always at least. In the case of exchanges, they either set a priority fee to ensure the transaction gets confirmed on time or use a very high fee so they could profit by keeping some of it (it's most likely the former in this case).
Some non custodial wallet as well also pre determine the fee range, electrum mobile app for example doesn't allow users set the exact fee they wish to use but give a range from low priority all the way up, so it's not possible to go below a certain amount.

As long as there are people willing to pay higher than the minimum amount, services would increase their default fees so as to stay ahead of the crowd; much better users complain about the Bitcoin network than their service.

It's pretty much this. I always check out how congested the mempool is before deciding on a fee.

As for the developers miscalculating the fees, I think it's mostly the case that they intentionally significantly increase the fees for UX purposes. Because the last thing they want is people complaining(and blaming the wallet specifically) why their transaction isn't confirmed yet even if the wallet indicated that the tx would be confirmed in an hour or so. Pretty much to prevent negative feedback on Google Play or on Apple App Store lol.

They want their transaction to get confirmed fast and they will probably have good amount of money that they don't care much about fees being paid, ofc there are exceptions and it usually happens cause they don't know how fees work.

I was about to comment this.

But I'll just add something: OP is in the pretext that the only variable in calculating the priority fee is the average mempool size.
In reality, clients consider more variables like how many block it took for a transaction in a specific fee range to get mined, etc.
The reason is it's hard to predict the network, there may be a surge of transactions after your transaction was broadcast making your "1mb-from-tip" transaction become "5-mb-from-tip" before the next block is mined.

It'll be better or worse than "mempool estimation" depending on the implementation and network condition.
Given that, some estimation methods usually overpay when the average mempool size is high then became small in a very short period.

-typo-

It is not possible to talk about other people's intentions but I could guess:
1. Bad wallets or tools that are analyzing mempool and calculating fees in a wrong way or have some sort of bug that ends up reporting false fees (under/over min priority).
2. Malicious tools that intentionally suggest much higher fees to inflate the fee users pay such as bitcoinfees.earn.com
3. Users who don't want to take any risk for their transaction to be stuck if fees went higher so they overpay intentionally like traders who want to transfer their bitcoin to exchange as fast as possible.
4. Users who don't yet grasp how transactions work, what priorities are, what X MB from tip means, etc. so they end up under/overpaying.

People are lazy and ignorant. I’m glad I’ve for the most part been very responsible with my fees over the years. I imagine given Bitcoin’s once in a lifetime investment return, I could have easily lost tens of thousands of dollars being unwise with tx fees.

One of the best references I’ve found for estimating necessary tx fees is the bottom graph here: https://jochen-hoenicke.de/queue/#0,24h

It depends on you if you want to rush and get your funds immediately go increase the transaction fee but if you just have more time lower the transaction fee.

High Tx fee = More faster
Low Tx fee = Takes time to process

This is just the basic concept also sometimes even you have a lower transaction fee let's say 50 sats or lower than that and if you check on mempool there are low unconfirmed transactions there is a chance that your Tx will process immediately.

It is not. You don't understand bitcoin transaction and mempool. 1 block can take any unconfirmed transactions at any rate of fee if the total size up to 1 MB from the bottom chart https://jochen-hoenicke.de/queue/#0,24h

If the total size of mempool is 0.9 MB and there are unconfirmed transactions with fee from 1 sat/vbyte to 150 sat/vbyte, they will all be confirmed by a next block if mempool won't rise to more than 1 MB. By that explanation I meant unconfirmed transactions with fee 1 sat/vbyte or 150 sat/vbyte will get immediate confirmation (only one block of waiting)

Check it immediately, next confirmed block, transactions (unconfirmed with fee from 3+ to 400+ sat/vbyte) will probably be confirmed all.

I'm adding this as visual for akirasendo17. There is no need to set a 50 sats/vbyte when mempool is less than 1 mb. Maybe you can set 2 to 5 sats/vbyte in anticipation of more incoming transactions but to say setting a higher fee will result in faster confirmation without looking at the size of the mempool first is wrong.
https://i.ibb.co/1f3gT4G/memp.png (https://imgbb.com/)
- https://mempool.space/

I doubt they miscalculate. I believe that's intentional. They want their users to have the best experience as possible and that includes instant processing of transactions.

As you know, many of the new bitcoiners are still noobs when it comes to these technical topics and are probably lazy to even read. If these exchanges and custodial wallets sets fees lower than the current highest or optimal fee, the chances are they will be bashed by their users for being slow.

That is indeed the best you can use. Don't rely on other sites, but check the status of the mempool yourself. The only alternative to the jochen-hoenicke.de site would be https://coinb.in/#fees. It usually suggests lower fees than the competition.

When people suggest the jochen-hoenicke site, they usually always add the link that shows the status for the last 24 hours. I am not exactly sure why that is. It seems more logical to use this one https://jochen-hoenicke.de/queue/#1,2h and check the mempool status for the last 2 hours. Why would I care what the mempool looked like 10 or 15 hours ago. I should be concerned how it looks like now. 10 hours ago it could have been full or empty, and now we could have the opposite.

One block can actually contain more than 1 MB of transactions. I saw a recent post by another user on the forum a few days ago that linked to a block that had 2.4 MB of transactions. The https://jochen-hoenicke.de/ site actually displays the values in vMB. One block can take up to 1vMB from the total amount as shown on the last graph on https://jochen-hoenicke.de/queue/#1,2h.

Here by o_e_l_e_o (https://bitcointalk.org/index.php?topic=5296071.msg55741715#msg55741715)

---

That time when I run data, I skipped non-2020 years so I don't get the point he discovered. In 2020, there is no block with too high size (up to ~1.4 MB), you can see in the box plot.

With the rise of BTC, block size has maintained stably at high figures, especially in November (higher median value and the interquartile range is narrower). The median value over months is somewhere around 1.3 MB.

Although I used to recommend https://www.coinb.in/#fees a lot, recently I have found https://mempool.space/ to be better.

I prefer using the 8 hour graph, as seeing the trend over more than 2 hours can be relevant. If the mempool was empty 8 hours ago and has been steadily filling up since, then I would aim near the tip to get confirmed within the next couple of blocks. Conversely, if the mempool was 30MB larger 8 hours ago and has been steadily emptying since, then I know I can aim a good bit below the tip and still be likely to confirm in a reasonable time.

Yeah, the confusion here is people don't specify when they are talking about bytes or vbytes, and confusingly, Jochen's site displays bytes while the text at the bottom explains he is actually using virtual bytes. The least ambiguous way of discussing it is to say that a block can take 4 million weight units.

In visual aspect, I would like to choose joe-hoe site than mempool.space.

Jo-hoe site is built with very nice colors and I can see difference of fee rates from cold to hot. Hot colors are fee rates to be cautious and should avoid as much as possible.

Mempool.space mixed colors from hot to cold then hot again (from low fee rates to higher fee rates). It is very bad visually.

Jo-hoe site gives 3 charts, more information but honestly I mostly use the bottom chart.

IIRC. There's a cut if you're using a common exchange wallet or popular online wallets like blockchain.com. They do get a portion of the fees of the users' fee that's why sometimes it's quite high.

And for some reason, other people are not technically oriented about the fees. So whichever is suggested, they don't mind to customize it.

1. With most if not all exchanges, you can't even set your own withdrawal fees. The withdrawal fees are pretty much constant and are rarely changed.

2. Blockchain.com doesn't take cuts on transaction fees.

People are mostly using wallets that don't have manual fee settings or they just don't use this option and they are sending coins with default fee.
It's not so complicated to check out mempool before sending anything and use wallets like Electrum or Wasabi that have this option.
Few days go I sent bitcoins that confirmed fast, paid fee around $0.02, and default fee would be two or tree dollars.

Of course it's it's always within a range as you've already establish @ OP
But then, I won't call it ridiculously high because, it's based on the users besides, some wallets like the ELECTRUM WALLET do well to inform or warn you when the fee is abnormally high so, if you still go for it, it's up to you.

For some, they may not understand the volume as to how many vbyte their transactions would be occupying and as such, would just proceed anyway while others, they might know but, still don't seem to care. This could be due to how urgent they want the transaction to be confirmed or perhaps, the fee is just too small to their person.

Correct, that is the one! Nice work finding that.

What do you like about mempool.space in particular? The low/medium/high priority suggestions or something else?

I am aware that each node has its own mempool, but it's interesting to compare the info mempool.space shows when it comes to the total mempool size and the number of unconfirmed transactions, and the data jochen-hoenicke has. While writing this, mempool.space shows a mempool size of 18MB and over 26.000 unconfirmed transactions. At the same time, jochen-hoenicke only has a mempool size of 14MB but about the same number of unconfirmed bitcoin transactions - +26.000. Why the difference?

That is reasonable thinking, unless a sudden spike of transactions occurs just around the time when you broadcasted your transaction with lower fees when you saw the mempool emptying during the last 8 hours and it keeps going upwards. But looking at the 2 hours graph wouldn't help in such a situation either.   

That now brings in a new actor in the game. So we have MB, vMB, and now weight units. That might become overwhelming for the average joe.

Ignorance does contribute heavily to this issue of outrageous fees. I was a victim as until few weeks back I had no idea there was an additional options of lowering my fees on the electrum wallet more than what the default settings recommend. Before I got informed, I was using the default option which cost more. Most times the users are to be blamed as a little research and question asking (like I did) could be the only way to stay updated.

Also the app developers need to make some information a little more visible and not always hidden. They should realize that most crypto users are noobs in one or two ways therefore they shouldn't expect them to pick up get fast in understanding their wallets.

Finally some of this fees are done intentionally by users wanting to get their transaction confirmed ASAP. Scenarios like this can't be avoided as not everyone can have the patience to wait for hours to get their transaction confirm especially when it's an urgent one.

Yeah, they are generally pretty accurate and better than just suggesting a single flat fee to newbies who can't read the mempool for themselves yet. I also like their real time block counter display.

Virtual size and raw size. Jochen uses virtual size exclusively. Mempool.space uses virtual size in their graph, but uses raw size in their "Mempool Size" counter on their landing page.

Of course, any estimation of fees is only going to be an estimation since things like this can happen, but mempool trends can still be a helpful indicator.

Does anyone know how to setup the minimum fee in the electrum while sending the coins. If we set the very low fee, how long will it take for the coins to reach the destination.
These are some common questions which everyone wants to know about them so they feel comfortable lowering the tx fee.

You can either change the slider to "static" and slide it all the way down to 1 sat/vbyte, or you can enter the advanced preview and manually enter the fee of 1 sat/vbyte.

Depends entirely on the state of the mempool and when the next blocks are found. It could be as fast as less than a minute, or it could take weeks. At present, 1 sat/vbyte would put you 25 MB from the tip, so it would likely be well in to the weekend at a minimum before you would be confirmed.