Whats the fee for?

[Organized]

Hi

I use bitcoin since ~20 minutes and I am generating coins (nothing yet, but I think they will come). In the options there is a fee of 0.01 recommended. I read the FAQ and found no answer, so: whats this fee for?

If I have a fee of 0.01 and I send 100 BTC to someone else, does the one who generates the block of the transaction get 1 BTC (100 * 0.01)? Is my idea right?

Best Regards
Organized

[1713556799]

1713556799

[1713556799]

1713556799

[1713556799]

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[kiba]

You will probably never generate a bitcoin unless you joined a pooled mining effort.

Even so, you will find it 50 times easier to simply sell goods and services for bitcoin. Very few people can mine profitably, anyway.

[Cryptoman]

I use bitcoin since ~20 minutes and I am generating coins (nothing yet, but I think they will come). In the options there is a fee of 0.01 recommended. I read the FAQ and found no answer, so: whats this fee for?

If I have a fee of 0.01 and I send 100 BTC to someone else, does the one who generates the block of the transaction get 1 BTC (100 * 0.01)? Is my idea right?

The fee is an "incentive" to process your transaction.  At this time, your transaction will almost certainly get processed without a fee.  However, in the future, as returns from generating decline, transaction fees will be a important component of node compensation.  A 0.01 BTC fee is a straight fee, not a percentage.

[ribuck]

Woo hoo! I just generated and won my first fee, all of 0.02 BTC. Feels good, though.

[theymos]

A 0.01 BTC fee is a straight fee, not a percentage.

It's per kilobyte of transaction size.

[ShadowOfHarbringer]

A 0.01 BTC fee is a straight fee, not a percentage.

It's per kilobyte of transaction size.

Yeah but i wonder why does it say that transaction size is 1K if currently one transaction takes averagely ~275 bytes of storage ?
Does it take more bandwidth than storage or what ?

[Anonymous]

I feel like a communist if I dont contribute so I  include a tx fee with every payment.

It helps support the network and makes me feel less like a socialist lol.

[jgarzik]

Yeah but i wonder why does it say that transaction size is 1K if currently one transaction takes averagely ~275 bytes of storage ?
Does it take more bandwidth than storage or what ?

Don't read it too literally.  The fee is per kilobyte, but that does not dictate or say anything about transaction size.

The actual formula is

Code:

     nBytes = number of bytes in your transaction (e.g. 259 bytes or whatever)
     CENT = 1000000
     nMinFee = (1 + nBytes / 1000) * CENT

("CENT" is a multiplier used to convert a fixed-point decimal number, such as 50.44 BTC, into a 64-bit number of "nanocoins", 5044000.)

So, nMinFee==0.01 for small transactions.

[Cryptoman]

So you're saying that it's an integer division and therefore all transactions less than 1K are free?  What affects transaction size, and what causes it to go over 1K?

[theymos]

The minimum fee is 0.01, and increases for larger transactions.

For a 999-byte transaction:
nMinFee = (1 + 999 / 1000) * CENT
nMinFee = (1+0) * CENT
nMinFee = 0.01 BTC

For a 1000-byte transaction:
nMinFee = (1 + 1000 / 1000) * CENT
nMinFee = (1 + 1) * CENT
nMinFee = 0.02 BTC

The UI text should say that most transactions are under 1K and would therefore need a fee of 0.01.

What affects transaction size, and what causes it to go over 1K?

Number of inputs, mostly. Compare the sizes (shown on each page) of these two transactions:
http://blockexplorer.com/tx/19573c608543d95b193ebaf0de2c0c4fd299732f878233f6ea5b5c15a9bf85ff
http://blockexplorer.com/tx/b13bc77ca994479bb8fdc69d9e119163c8d41773cc148c9f82fcb67f78f3d108