Transaction Fee Question

[striker11111111]

Hi, new to bitcoin here

After much hassle (sent my first wire to Mt.Gox just before they went down), I finally have some money in Mt.Gox. I bought about 10 BTC to test. I tried to send 0.01, 0.1 and then 1 BTC to my friend, but every time, it came up and said something along the lines of "error: This transaction is over the size limit" and I was then forced to pay a fee of 0.0005 BTC. What does this mean and why am I being charged this fee? How can I get around this?

Please let me know. THanks in advance for anyone who decides to help.

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[flailing Junk]

I am getting the same thing. Guess it being a "completely optional fee to process transactions more quickly" was a line of BS.

[TiagoTiago]

Over the size limit? That doesn't sound right...the mandatory fee is for very small transactions ('cause they would clutter the network more than  be useful; so a fee is charged to avoid people spamming the network)

[USSJoin]

Over the size limit? That doesn't sound right...the mandatory fee is for very small transactions ('cause they would clutter the network more than  be useful; so a fee is charged to avoid people spamming the network)

Nope, I can confirm the problem (I was sending a few small transactions today). The string is just wrong in the source-- I'll go file a bug.

[flailing Junk]

I have tried everything from a tenth to a millionth of a bitcoin with the same message and no transaction if I don't pay the fee. Who the hell decided that it would be .0005 anyway? What is is going to be in the future? Nothing makes sense about this unless it is a vagary of the client that I am using, and then only slightly less of a WTF.

[TiagoTiago]

There is already at least one thread about the decision to change the fee from 0.01 down to 0.005 (instead of leaving it to choice or using a different value or  using a different minimum amount as threshold to start charging fees)

[flailing Junk]

There is already at least one thread about the decision to change the fee from 0.01 down to 0.005 (instead of leaving it to choice or using a different value or  using a different minimum amount as threshold to start charging fees)

I don't see it. Who made the decision?

[striker11111111]

There is already at least one thread about the decision to change the fee from 0.01 down to 0.005 (instead of leaving it to choice or using a different value or  using a different minimum amount as threshold to start charging fees)

So does this mean that there will now be a mandatory charge on all BTC transfers???

[TiagoTiago]

There is already at least one thread about the decision to change the fee from 0.01 down to 0.005 (instead of leaving it to choice or using a different value or  using a different minimum amount as threshold to start charging fees)

I don't see it. Who made the decision?

https://forum.bitcoin.org/index.php?topic=7749.0

There is already at least one thread about the decision to change the fee from 0.01 down to 0.005 (instead of leaving it to choice or using a different value or  using a different minimum amount as threshold to start charging fees)

So does this mean that there will now be a mandatory charge on all BTC transfers???

It's supposed to only be for the smaller ones from what i understand

[Yatta99]

How about a real world analogy to try to explain this?

Lets say that you have a new checking account with a bank. The bank is willing to let you write checks for free provided that the check is for $1 or more (although they wouldn't turn down a small donation if you are so inclined). For checks under $1 the bank imposes a small fee of 5 cents (for example) per check. This is to prevent a bunch of people, that are excited with their new accounts, from clogging up the system by writing a bunch of one cent checks to each other.

There's a bit more than that to it, but that's the basic idea.

[striker11111111]

OK Yatta, that makes a lot of sense, but what is the threshold? How small is too small? I tried 1 BTC still got charged. And in this case, how do all those small-volume exchanges (like bitmarket.eu where people sell 1-2 bitcoins at a time) work? Everyone pays a fee?

[TiagoTiago]

1 BTC shouldn't trigger the mandatory fee, somthing isn't right...

[flailing Junk]

How about a real world analogy to try to explain this?

Right, but bitcoin is supposed to be decentralized. I should be able to offer a transaction fee and miners should be able to accept or reject it. Not a arbitrary fee coming out of nowhere. 

[Yatta99]

Don't know what the threshold is, but as I stated, the amount is just part of the equasion. The number of confirmations on the specific amount that you are sending also plays a part in the fee structure. What I know to be true (while I don't know exact numbers):

- under a certain amount (an amount that is less than 1 BTC) there will always be a small transaction fee charged. Even if you have transaction fees set to 0.00 in your client. This is a different transaction fee.

- anything over that amount is free provided that it has enough confirmations relative to it's size. No, I do not know the size to confirmation ratio that's used.

For example (with made up numbers):

You receive a payout of 1 BTC from mining and you go and try to buy something for .75 BTC. If the 1 BTC that you are trying to spend only has 3 confirmations then you will pay the fee. If you wait until it has 15 confirmations then there will not be a fee.

More clearer?

[bcforum]

How about a real world analogy to try to explain this?

Right, but bitcoin is supposed to be decentralized. I should be able to offer a transaction fee and miners should be able to accept or reject it. Not a arbitrary fee coming out of nowhere. 

There are a couple problems with the transaction fee system.

1) The standard client refuses to post a transaction unless an arbitrary minimum fee is paid. Anyone with a modicum of programming ability can change the client to fix this.
2) The standard mining client appears to accept transactions into a block independent of the fee paid.
3) If the miners ever decided to NOT accept zero fee transactions, there isn't any way to cancel a transaction or spend the coins again (for example in a duplicate transaction that added a fee) You are stuck with a transaction that won't complete and can't be cancelled

The protocol should be modified to allow adding a fee to a transaction after the fact (by either end) and miners should stop accepting transactions that do not pay a transaction fee.

[striker11111111]

Don't know what the threshold is, but as I stated, the amount is just part of the equasion. The number of confirmations on the specific amount that you are sending also plays a part in the fee structure. What I know to be true (while I don't know exact numbers):

- under a certain amount (an amount that is less than 1 BTC) there will always be a small transaction fee charged. Even if you have transaction fees set to 0.00 in your client. This is a different transaction fee.

- anything over that amount is free provided that it has enough confirmations relative to it's size. No, I do not know the size to confirmation ratio that's used.

For example (with made up numbers):

You receive a payout of 1 BTC from mining and you go and try to buy something for .75 BTC. If the 1 BTC that you are trying to spend only has 3 confirmations then you will pay the fee. If you wait until it has 15 confirmations then there will not be a fee.

More clearer?

Crystal Clear. Once I got some more confirmations, I was able to send even 0.01 BTC w/o any fee.

[boaz2020]

Wow. This clears up so much for me.
The error message displayed in the UI is quite erroneous.

I was confused about the size of the transaction being too large as well.

Thanks Yatta99!

[johnnycomelate]

I get that error alot as well.  You need to wait a few minutes because it has some kind of a limit on the number of transactions you can make in a given time without paying the fee.  I have no clue what the limits are but they are there.  If you wait it will eventually allow the transaction for free.