Pls explain mining fee's to me

[MrLemon]

Hi folks, first post. Pretty savvy when it comes to the finance industry but an utter noob with regards to IT and cryptocurrencies.

So I wanted to dip my toe into the water, opened a Bitstamp account and sent a couple of bucks there just to test things.

I also created a couple of wallets and transferred my BTC from the exchange to those wallets. Amounts were in the .001 - to .01 BTC range, basically pocket change.
In the transaction details, the mining fees are shown and I understand that they are for the poor miners to survive (/s), but after that, I'm hitting a wall.


In one wallet I received .001 BTC and the transaction details show a mining fee of .0016 BTC, actually more than I transferred. My .001 BTC are in my wallet and confirmed and also from my Bitstamp account no extra fees were deducted.



Pls help me understand how mining fees are calculated, at which point in the transaction they are deducted and by whom and how it is possible that I paid no fee for all those tiny transactions.

Sorry for the noob questions, appreciate a flame - free answer

[1714983785]

1714983785

[DannyHamilton]

In one wallet I received .001 BTC and the transaction details show a mining fee of .0016 BTC, actually more than I transferred. My .001 BTC are in my wallet and confirmed and also from my Bitstamp account no extra fees were deducted.

It sounds like BitStamp paid that fee for you.

Pls help me understand how mining fees are calculated,

Mining fees are voluntary.  They are calculated by the person or software that is creating the transaction.  If you voluntarily pay a fee that is significantly less than what others are paying, you will likely have to wait a very long time for your transaction to be confirmed.  If you voluntarily pay a fee that is significantly more than what others are paying, you will likely have your transaction confirmed in the next block.

Most wallets and services monitor the other transactions on the network and attempt to pay a reasonable fee so that you don't pay more than necessary, but can still get your transaction confirmed quickly.

at which point in the transaction they are deducted

If you have an account with a service, then the service decides if or when to deduct money from your account.

If you are running your own bitcoin wallet, then the wallet will add the fees into the transactions that you send when it builds those transactions.

and by whom

The transaction is created by the person or software that is sending the transaction.  Whomever (or whatever) builds that transaction has control over how much fee to include.

and how it is possible that I paid no fee for all those tiny transactions.

It is possible to send a transaction with no fee at all.  In that case, it is likely to take a VERY long time for the transaction to confirm.

More often, if you are using a service, then the service may pay the fee for you.

[arnux]

The higher the priority the faster it will be confirmed. SO the higher the fee the faster your transaction will complete.

[MrLemon]

Thanks all for your efforts. You helped me a lot!

Is it common that exchanges pay the fees for micro transactions? I mean, this probably saved me a lot of hassle

I'm getting new wallets and ditch those that don't allow me to adjust my fees.


Thx again,

MrLemon

[Investorro1]

you can think of it like this.

You are standing on the street and need to get to the other part of town. You can go to a bus stop, sit on a bus and get there, but this probably can take a lot of time


You are standing on a railway station in Paris and you have a piece of paper that you need to be delivered in London. The difference is that all of the train passengers are couriers who deliver documents.
 In a centralized world, you would just go to DHL, pay a fixed fee and go away. This is how it goes usually, you don't mind how much was the actual cost of sending this document.

But in the blockchain, you actually can just stand in the middle of a train station with a poster:"Please deliver a piece of paper to London for $xx".
Every courier (miner) has a choice to grab your document with them. If you set a very high price, probably the first passing courier will pick up your document.
If you set a very low one, eventually you will get it delivered, but more probably on a weekend or at night, when there is not much business going.

Wallets with fixed commissions are like courier services. And for paper wallets, for example, you state the amount yourself.

But keep in mind, that in general transaction fee does not depend on the amount you want to send. Like the delivery for a piece of paper does not depend on the text printed on it. On small transactions, this can result in paying 10-25% commission.