problem with bitcoin payment fees

[RexBrocki]

Hello Everyone,

I'm having a weird problem with bitcoin fees.

I am attempting to transfer a balance of .40132441 from one of my early wallets (original bitcoin client, ver 0.6.3 beta) to another (I'm consolidating before upgrading... unless that's a bad idea?).

Being a proper cheapskate (my parents grew up during the great depression... if you don't know what that means, you're lucky), I first attempted to send the transaction for free.  Predictably, no soap.

I then went back into wallet settings and reset the fee to the lowest auto-generated amount of .001 bitcoin, adjusted the send amount to match, and tried again... and then the fun began.

This time a little screen popped up saying that "This transaction exceeds your balance when the fee of .00125 bitcoins is included."  So I went back and changed the send amount again to accommodate the extra .00125 bitcoins... and this time, the little screen demanded .0025 bitcoins, or twice the original fee!

This pattern continued with ever-increasing fees demanded until it had reached .025 bitcoins, twenty times the original fee, when the only different screen appeared, saying "This transaction is too large.  You can still send it by adding a fee of .0095 bitcoins."  Anyone who is perplexed by the question of why the software would demand .0095 bitcoins when the offered fee was already more tyhan two-and-a-half times as much... congratulations!  You're now almost as confused as I am!

After that single blip, the messages resumed their previous pattern of larger and larger fees requested, until I called a halt at .2378 bitcoins, which is over $40 by this morning's fix, and over half the balance of the ruddy wallet!

I then went and discovered that my original username ("TheVoiceofLiberty," if anyone remembers me) has somehow wandered off into cyberspace over the last six months, so I'm back to the newbie forum with my right name.

The operating system is Microcrap Windblows XT, build 3 (Yes, I know, and I'm already using ubuntu on the eventual destination machine, but these two old POS's would probably break down and cry if I attempted to upgrade them!).

Any ideas, anyone?

Thanks in advance

[DannyHamilton]

The fee that the wallet is requiring is dependent on the size of the transaction in kilobytes.  As you change the amount you are sending, you alter the number of inputs that are necessary to send that amount, and therefore the size (in bytes) of the transaction.

The Bitcoin-Qt wallet does a really poor job of creating a transaction that will allow you to send your full balance in a single transaction, especially when your wallet consists of a huge number of miniscule "dust" outputs.

I could probably calculate a transaction for you that would optimize the fee while allowing you to send the entire remaining amount (or the vast majority of it), but to do so I'd need a list of all the unspent outputs in your wallet.

You can generate a list of unspent outputs if you enter the following into the "Console" (found in the "Debug Window" of the "Help" menu).

Code:

listunspent

[RexBrocki]

I am immensely grateful... but the only two things on my "help" menu are "about," and "about Bitcoin QT."

[DannyHamilton]

I am immensely grateful... but the only two things on my "help" menu are "about," and "about Bitcoin QT."

Ah, I missed the part where you said you were currently running ver 0.6.3 beta.

I don't think the "Console" window was added until 0.7.1

There are still ways to get a list of unspent outputs, but it is a bit more difficult.

[DeathAndTaxes]

There is no need to consolidate a wallet before upgrading the client.  It serves no purpose.  The issue is that the critical resource in the blockchain is space (not value).  Your wallet likely has a huge number of very small transactions (dust).  The wallet will pick inputs for the tx in an attempt to minimize fees.  As you send more and more that means the tx gets larger and larger (size not value).  Eventually you hit a point where all that is left is spammy garbage inputs (like hundreds of 0.00000001 BTC).

A couple thoughts:
a) there is no need, value, or reason to "consolidate" a wallet.
b) try to avoid engaging in "spammy" tx.  If you mine then make your payouts from the pool larger (i.e. get one 0.1 BTC payout a day instead of 10 0.01 BTC payouts). 
c) Add some more coins to your wallet.  Due to the way that Bitcoin works having more funds than you need to the wallet means on average you are going to pay less in fees (client can pick larger inputs, and smaller inputs become older reducing required fees).

[DannyHamilton]

a) there is no need, value, or reason to "consolidate" a wallet.

Doesn't it reduce the UTXO, and improve the spendability of the funds that are in the wallet?

b) try to avoid engaging in "spammy" tx.  If you mine then make your payouts from the pool larger (i.e. get one 0.1 BTC payout a day instead of 10 0.01 BTC payouts).

And complain to merchants/services that pay in spammy transactions and refuse to patronize their service.

[DeathAndTaxes]

Doesn't it reduce the UTXO, and improve the spendability of the funds that are in the wallet?

It does reduce the UXTO however the problem is current rules don't give an individual an incentive to do so.

As far as spendability.  Not really.  You are simply paying the fee now vs potentially paying a fee in the future.  Depending on other inputs, coin age etc it is possible the min mandatory fee will be lower or non-existent in the future.

[DannyHamilton]

- snip -
As far as spendability.  Not really.  You are simply paying the fee now vs potentially paying a fee in the future.

If I have a wallet that has 20 outputs each valued at 0.1 BTC, I'd have to wait 10 days to spend any of them fee-less.  In the mean time, EVERY transaction I create will require a 0.0005 BTC fee.

So, If I wanted to send 5 transactions during that 10 days, I'd end up spending 0.0025 BTC in fees.  Meanwhile, due to the change from each of those transactions, I'd end up with several even smaller outputs that will require even longer before they are spendable. Meaning after the 10 days is up, I'd still have required fees.

Now, if I consolidated the 20 outputs, I could pay a single 0.0005 BTC fee, and end up with a single 1.9995 BTC output in my wallet.  About 12 hours later this output would be available to be spent without fees, and the resulting change would again be a large output (the difference between 1.9995 and the amount spent).  Assuming the amount spent was less than 0.9995 BTC, the change would also be spendable fee-less within a day.  You could spend around 0.1 BTC every day for 10 days on that single 0.0005 fee used for consolidation.

[alyssa85]

If I have a wallet that has 20 outputs each valued at 0.1 BTC, I'd have to wait 10 days to spend any of them fee-less.  In the mean time, EVERY transaction I create will require a 0.0005 BTC fee.

Does that mean that if you have a lot of small credits in your wallets ("dust" I think you called them!), you should wait ten days before doing anything? Why ten days - is that the time it takes for the small inputs to get confirmed by all the nodes in the network?

Sorry if this is a stupid question, but I'm new and I don't really understand the point of the fees at all.

[kingofmoon]

I still don't understand why it cost more to SEND something if you have more transactions going IN to your wallet.
Why does the system care where I got the money from (as long as they are verified)?

if I want to send 1 BTC why does it matter if I accumulated my "wealth" by 5000 or 5 transactions? This hurt business that sell t-shirts over people selling gaming computers then, since they have more transactions with less money coming in.

[DannyHamilton]

If I have a wallet that has 20 outputs each valued at 0.1 BTC, I'd have to wait 10 days to spend any of them fee-less.  In the mean time, EVERY transaction I create will require a 0.0005 BTC fee.

Does that mean that if you have a lot of small credits in your wallets ("dust" I think you called them!), you should wait ten days before doing anything? Why ten days - is that the time it takes for the small inputs to get confirmed by all the nodes in the network?

Sorry if this is a stupid question, but I'm new and I don't really understand the point of the fees at all.

There are a few conditions that trigger a fee requirement.

If a transaction is larger than 10 kilobytes, then you need a fee per kilobyte.

If any output of the transaction is less than 0.01 BTC then you need a fee.

If the "priority" of the transaction is too low, then you need a fee.

Assuming that your transaction is smaller than 10 kilobytes, and that all outputs are larger than 0.01 BTC, the calculated "priority" will determine if a fee is required.

Priority is determined by both the value and age of the inputs.  Generally one "bitcoin day" is enough to avoid a fee.

As such, 2 bitcoins aged a half day, or 4 bitcoins aged a forth of a day, or a half bitcoin aged 2 days, would all be enough to avoid the fee.

Since I used 0.1 BTC (one tenth of a bitcoin) in my example, as the value of the inputs, they'd need to age ten days to get a high enough priority.  Meanwhile after consolidating them, you'd have a single input valued at nearly 2 bitcoins, so it'd have a high enough priority in just over 12 hours.

If you have inputs valued at 0.00000001 BTC (frequently received from SatoshiDice), they'd have to age for 10,000,000 days before they could be individually spent without a fee.

If you add larger outputs to your wallet, they can be spent combined with the smaller outputs to arrive at a higher average priority.

[DannyHamilton]

I still don't understand why it cost more to SEND something if you have more transactions going IN to your wallet.
Why does the system care where I got the money from (as long as they are verified)?

if I want to send 1 BTC why does it matter if I accumulated my "wealth" by 5000 or 5 transactions? This hurt business that sell t-shirts over people selling gaming computers then, since they have more transactions with less money coming in.

It only hurts if the amount being spent is so small as to be considered "spam" by the network.

The problem is that spending more outputs results in larger sized transactions (in terms of bytes).  Those bytes take up space in the blocks that the miners are creating, and there is a limited amount of space available in each block (currently 1 megabyte). So block space is valuable to the miner.  They total fees they can earn for a single block depends on the fees paid per byte of transaction size by those sending transactions.

[kingofmoon]

I still don't understand why it cost more to SEND something if you have more transactions going IN to your wallet.
Why does the system care where I got the money from (as long as they are verified)?

if I want to send 1 BTC why does it matter if I accumulated my "wealth" by 5000 or 5 transactions? This hurt business that sell t-shirts over people selling gaming computers then, since they have more transactions with less money coming in.

It only hurts if the amount being spent is so small as to be considered "spam" by the network.

Amount being spent you say, is that spent by the people buying t-shirt or the t-shirt company?

Also you said;
"If you have inputs valued at 0.00000001 BTC (frequently received from SatoshiDice), they'd have to age for 10,000,000 days before they could be individually spent without a fee."

So for example;
 I have a few of those 0.00000<something> transactions is there any hope for me to ever be able to spend bitcoins without having to pay a few? Or are was my first day in bitcoin world with a lot of small transactions messing it up for the rest of my life?

[Birdy]

I don't know if it's aviable for your old version, but I use coin control to be able to select what coins are sent.

https://bitcointalk.org/index.php?topic=144331.0

So for example;
 I have a few of those 0.00000<something> transactions is there any hope for me to ever be able to spend bitcoins without having to pay a few? Or are was my first day in bitcoin world with a lot of small transactions messing it up for the rest of my life?

You can bundle them up with bigger transaction using this coin control.
I'm still dust cleaning in my wallet whenever I have to send something xD

[DannyHamilton]

Amount being spent you say, is that spent by the people buying t-shirt or the t-shirt company?

Yes.  As I said, as long as the total size of a transaction is less than 10 kilobytes, and the value of every output is larger than 0.01 BTC, and the priority of the transaction is greater than the equivalent of 1 bitcoin day, the transaction can be attempted without fees at the moment.  It doesn't matter who's doing the spending, only that the "spam filter" fee requirements aren't exceeded. Fee requirements are likely to change in the future as the exchange rate increases (it has changed in the past).

On the other hand, as bitcoin gains popularity, the available space in a block will become more valuable.  As such, even if the "spam rules" don't require a fee, it may become nearly impossible to get a confirmation without a reasonable fee.  It's possible that by then there will be third-party services that will provide methods for transferring bitcoin value off-blockchain.

Also you said;
"If you have inputs valued at 0.00000001 BTC (frequently received from SatoshiDice), they'd have to age for 10,000,000 days before they could be individually spent without a fee."

So for example;
 I have a few of those 0.00000<something> transactions is there any hope for me to ever be able to spend bitcoins without having to pay a few? Or are was my first day in bitcoin world with a lot of small transactions messing it up for the rest of my life?

Well, as the exchange rate for bitcoins increases, the fee requirements are likely to be reduced.  In the meantime, you could create a backup of your current wallet (to recover in the future after the outputs have aged and the fee requirements are reduced), and start a new wallet.  You could also (as has already been mentioned by "DeathAndTaxes") send a single larger output to the wallet.  Over time, as the "dust" ages, the wallet may occasionally include it with the larger output to "consolidate" it.  Meanwhile the wallet will use the larger output for transactions and simply ignore the tiny ones.

[alyssa85]

birdy - I just had a look at your coin control thread (thanks to you and DannyHamilton  - you've cleared up a lot of things).

Is it possible to use the coin control thing on a wallet in blockchain.info?

[Birdy]

birdy - I just had a look at your coin control thread (thanks to you and DannyHamilton  - you've cleared up a lot of things).

Is it possible to use the coin control thing on a wallet in blockchain.info?

I don't think so :/
It's an addition to the qt-client.

[5120-01-518-6126]

Not trying to be flip here, but if I understand the end-game for deflationary currencies like Bitcoin, then the value of even small "denominations" will become so great as to be almost unspendable.  If that's true, then you probably won't use Bitcoins to buy T-shirts, instead, you'll use your Bitcoin holdings as collateral for the loan to buy a T-shirt manufacturing business.

[DannyHamilton]

Not trying to be flip here, but if I understand the end-game for deflationary currencies like Bitcoin, then the value of even small "denominations" will become so great as to be almost unspendable.  If that's true, then you probably won't use Bitcoins to buy T-shirts, instead, you'll use your Bitcoin holdings as collateral for the loan to buy a T-shirt manufacturing business.

Sure but what about your nanobitcoins?  How long do you suppose it would take for deflationary forces to affect the value of bitcoin to the point that nanobitcoins are too valuable to be spent for everyday purchases?

[5120-01-518-6126]

Not trying to be flip here, but if I understand the end-game for deflationary currencies like Bitcoin, then the value of even small "denominations" will become so great as to be almost unspendable.  If that's true, then you probably won't use Bitcoins to buy T-shirts, instead, you'll use your Bitcoin holdings as collateral for the loan to buy a T-shirt manufacturing business.

Sure but what about your nanobitcoins?  How long do you suppose it would take for deflationary forces to affect the value of bitcoin to the point that nanobitcoins are too valuable to be spent for everyday purchases?

Ah, got it -- forgot how many digits there were after the decimal point.  So consolidaters will be balanced by spenders, and transaction fees will grow.  Thanks for the calibration.