Transaction fees

[rasgbonyo]

When a block is found by a pool, transaction payments from verification of online transactions (0.00001 BTC) are added to the block so that the block is more than 25 BTC. Who does this addition? the blockchain or the pool operator.

How will the blockchain know how much to add. If it is the pool operator then it means some "revenue", however small, is being generated all the time.

Is it possible to mine just for the fees?

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[unholycactus]

When a block is found by a pool, transaction payments from verification of online transactions (0.00001 BTC) are added to the block so that the block is more than 25 BTC. Who does this addition? the blockchain or the pool operator.

How will the blockchain know how much to add. If it is the pool operator then it means some "revenue", however small, is being generated all the time.

Is it possible to mine just for the fees?

Fees are added to the 25BTC and are given to whoever finds the block

[rasgbonyo]

Yep, figured that out. WHO adds? blockchain or pool operator

[jonnybravo0311]

Yep, figured that out. WHO adds? blockchain or pool operator

Neither.  People who send transactions add a fee when they send that transaction.  When a block is found all transaction fees are added and included with the block reward.  Not all pools distribute those fees back to miners.  Some keep them.

[-ck]

Pool operators choose what transactions they'll include in their block candidate work.

[kano]

Some pool operators use the standard bitcoin to decide - like me

Other pools (like eligius) black list addresses coz they think gambling sites are a ddos on bitcoin
and add hidden rules about what transactions they will ignore ...
and had agreements with companies like MtGox to accept their transaction through a special interface ...
(and send their miners blocks with empty transactions to speed up their slow pool software ...)
who knows what they will black list next ...

If you mine to a pool, consider if they have hidden agendas and hide what they do, or are open and use the standard bitcoin rules

[tspacepilot]

Is it possible to mine just for the fees?

Consider this as well: once all the 21 million bitcoins are distributed, there won't be any coinbase in the new blocks and at that point, the miners will indeed be mining only for the fees.

[rasgbonyo]

Is it possible to mine just for the fees?

Consider this as well: once all the 21 million bitcoins are distributed, there won't be any coinbase in the new blocks and at that point, the miners will indeed be mining only for the fees.

I am beginning to understand it. So during mining the transactions will be piling up then when a block is found the pool operator decides to add to the block.

OK, I am going to start my own pool. Which is the best pool software?

[kano]

Is it possible to mine just for the fees?

Consider this as well: once all the 21 million bitcoins are distributed, there won't be any coinbase in the new blocks and at that point, the miners will indeed be mining only for the fees.

I am beginning to understand it. So during mining the transactions will be piling up then when a block is found the pool operator decides to add to the block.

OK, I am going to start my own pool. Which is the best pool software?

Hmm ... think of it this way:

OMG I can start a small airline and make millions in profit each year.

... and yet almost no one seems to do that ... I wonder why

[rasgbonyo]

Is it possible to mine just for the fees?

Consider this as well: once all the 21 million bitcoins are distributed, there won't be any coinbase in the new blocks and at that point, the miners will indeed be mining only for the fees.

I am beginning to understand it. So during mining the transactions will be piling up then when a block is found the pool operator decides to add to the block.

OK, I am going to start my own pool. Which is the best pool software?

Hmm ... think of it this way:

OMG I can start a small airline and make millions in profit each year.

... and yet almost no one seems to do that ... I wonder why

Ah, but I do have the planes. (Have my own servers in a reputable hosting centre and spare rack space).

OK, what else do I need? Go on, tell me -- best pool software is...

[zetaray]

The transaction fees are calculated by the pool when they decide to add the transactions into a block they are trying to mine. The fees are not specified by a number tagged on to a transaction. It is actually the difference between the inputs and outputs, the unused amount of the inputs.

[Meuh6879]

fees in 2014 : 0,0001 BTC
fees in 2015 : 0,00001 BTC


what is the problem ... ?
ask at the bank to have the same level of depreciate service cost to ... view what they answer ... 

[Meuh6879]

Is it possible to mine just for the fees?

yes, in ... the year 2140 : https://en.bitcoin.it/w/index.php?title=Controlled_supply&redirect=no

[rasgbonyo]

Is it possible to mine just for the fees?

yes, in ... the year 2140 : https://en.bitcoin.it/w/index.php?title=Controlled_supply&redirect=no

Does that mean that if I solo-mine and don't get a block I will get transaction fees?

[JayCrypto]

Is it possible to mine just for the fees?

yes, in ... the year 2140 : https://en.bitcoin.it/w/index.php?title=Controlled_supply&redirect=no

Does that mean that if I solo-mine and don't get a block I will get transaction fees?

I guess that if you are solo-mining and not find the block, you will get no fee, no btc too. 

[jonnybravo0311]

Is it possible to mine just for the fees?

yes, in ... the year 2140 : https://en.bitcoin.it/w/index.php?title=Controlled_supply&redirect=no

Does that mean that if I solo-mine and don't get a block I will get transaction fees?

You get nothing unless you solve a block.  Assuming the block is not orphaned, you get the full block reward (currently 25BTC) and all the transaction fees for every transaction included in the block you mined.

[tspacepilot]

Is it possible to mine just for the fees?

Consider this as well: once all the 21 million bitcoins are distributed, there won't be any coinbase in the new blocks and at that point, the miners will indeed be mining only for the fees.

I am beginning to understand it. So during mining the transactions will be piling up then when a block is found the pool operator decides to add to the block.

OK, I am going to start my own pool. Which is the best pool software?

It's not about "deciding" to add a block.  If you're mining, you are in a race with many other people to "add a block".  This answer has more detail:

The transaction fees are calculated by the pool when they decide to add the transactions into a block they are trying to mine. The fees are not specified by a number tagged on to a transaction. It is actually the difference between the inputs and outputs, the unused amount of the inputs.

So the fees are in there when you find a block.  As the mining computer (or pool), you get to keep the difference between inputs and outputs in the transactions which are in the block.  You can make decisions about which transactions to try to include in the block as you go looking for a block and receiving transaction broadcasts on the network.

About starting your own pool, you're going to be in tough competition.  Since you're just learning the very basics here right now, it's doubtful that you're ready to compete with the big players out there.  But nice enthusiasm tho!

[jonnybravo0311]

It's not about "deciding" to add a block.  If you're mining, you are in a race with many other people to "add a block".  This answer has more detail:

The transaction fees are calculated by the pool when they decide to add the transactions into a block they are trying to mine. The fees are not specified by a number tagged on to a transaction. It is actually the difference between the inputs and outputs, the unused amount of the inputs.

So the fees are in there when you find a block.  As the mining computer (or pool), you get to keep the difference between inputs and outputs in the transactions which are in the block.  You can make decisions about which transactions to try to include in the block as you go looking for a block and receiving transaction broadcasts on the network.

About starting your own pool, you're going to be in tough competition.  Since you're just learning the very basics here right now, it's doubtful that you're ready to compete with the big players out there.  But nice enthusiasm tho!

Zetaray makes a very good point, and I've bolded it to add some emphasis.  We constantly talk about including fees with our transactions, and that higher fees tend to lead to transactions being included in blocks sooner.  The reality is that the fees are nothing more than the difference between the inputs and the outputs.  For example, if I use two inputs of 1BTC each and my output is only 1.05BTC then I have generously given 0.95BTC as a fee to whoever includes my transaction in a block.  Unless you're creating your own raw transactions, that stuff is hidden from you.  You just say, "Send XX BTC to some address and pay YY BTC as a fee for doing it."

[rasgbonyo]

It's not about "deciding" to add a block.  If you're mining, you are in a race with many other people to "add a block".  This answer has more detail:

The transaction fees are calculated by the pool when they decide to add the transactions into a block they are trying to mine. The fees are not specified by a number tagged on to a transaction. It is actually the difference between the inputs and outputs, the unused amount of the inputs.

So the fees are in there when you find a block.  As the mining computer (or pool), you get to keep the difference between inputs and outputs in the transactions which are in the block.  You can make decisions about which transactions to try to include in the block as you go looking for a block and receiving transaction broadcasts on the network.

About starting your own pool, you're going to be in tough competition.  Since you're just learning the very basics here right now, it's doubtful that you're ready to compete with the big players out there.  But nice enthusiasm tho!

Zetaray makes a very good point, and I've bolded it to add some emphasis.  We constantly talk about including fees with our transactions, and that higher fees tend to lead to transactions being included in blocks sooner.  The reality is that the fees are nothing more than the difference between the inputs and the outputs.  For example, if I use two inputs of 1BTC each and my output is only 1.05BTC then I have generously given 0.95BTC as a fee to whoever includes my transaction in a block.  Unless you're creating your own raw transactions, that stuff is hidden from you.  You just say, "Send XX BTC to some address and pay YY BTC as a fee for doing it."

I see. So that transaction fee is added on to a block which contains 25 Bitcoins already to make it 25.95 BTC. So unless that block is mined your transaction is not "approved" ?

[jonnybravo0311]

I see. So that transaction fee is added on to a block which contains 25 Bitcoins already to make it 25.95 BTC. So unless that block is mined your transaction is not "approved" ?

Sort of... let me try to explain it a bit more clearly.

People are constantly creating transactions to move coins around.  These transactions contain inputs and outputs.  The inputs are what you as the sender are combining together to come up with the desired amount of coin you wish to send.  The outputs are the receiver(s) of those coins and change addresses.  The difference between the inputs and the outputs are the fees.

Using my example above, I had two inputs, each of 1BTC and only one output for 1.05BTC.  Because there was 0.95BTC leftover, that becomes what we refer to as the fee.

Now, pools - and individual miners if they're going at it solo - are taking some number of those transactions, and attempting to find a hash that satisfies the network difficulty, so that those transactions can be added to the public ledger known as the blockchain.  When a miner is successful in doing so, a new block is created and added to the chain.  The reward for creating that new block is the generation of 25 brand new coins.  Additionally, because there is a difference between the inputs and outputs (in our example, 0.95BTC), that is also awarded as part of that transaction which creates the 25BTC.  So, assuming our transaction was the only one included in a block, the end result you would see by looking at the blockchain is a block with TWO transactions.  The first transaction is the 25.95BTC of generated coins, the second is our transaction sending 1.05BTC.

There really is no "approval" here, but rather "confirmation".  Your transaction, once it gets included into a block becomes confirmed.  Those 25.95BTC are referred to as generated coins and you must wait 101 confirmations before they become spendable coin.

Make sense?