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Author Topic: Make sure to avoid wasting BTC for too high fees – step by step guide (Electrum)  (Read 206 times)
1miau
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September 08, 2019, 06:25:31 PM
Merited by suchmoon (4), Halab (2), o_e_l_e_o (2), DdmrDdmr (2), fillippone (2), ETFbitcoin (1), pooya87 (1), harizen (1), hugeblack (1), aundroid (1), tranthidung (1), dkbit98 (1), hd49728 (1), Uao (1)
 #1

Every Bitcoin transaction needs a transaction fee, so it is very important to keep it as low as possible while to ensure that the transaction arrives at the receiver in a timely manner. The speed of a transaction depends on how much fees you pay for it. These fees are indicated in Satoshi per byte (sat / byte). The higher the fee in sat / byte, the higher the likelihood that your transaction will be included in the next block. The miners select the transactions always according to the amount of transaction fees (sat / byte). This is logical, because the miners receive not only the block reward but also the transaction fees for all transactions included in the mined block.

Not every wallet allows you to adjust the transaction fees manually and even those who can do it have often very simplified default settings (and are too expensive). A good wallet that allows you to set transaction fees manually is Electrum.

After you've switched the settings, it is important to find out the optimal amount of transaction fees, which can be done on reliable and accurate websites. But at first you need to enable customized fees.

For this guide I'm using Electrum and the Mempool by Jochen Hoenicke.

So, you are only a few simple steps away from saving valuable Bitcoin:



1.

First, open your wallet in Electrum. For doing so you need to go to "Send" and there you’ll notice that the fee can be adjusted by default only via slider. This is in most cases already better than many other services, especially exchanges but still not perfect, because if you edit it manually you can save much more.






2.

To adjust the fee manually, click on Tools => Settings






3.

Then, a window will open up where you can activate a checkbox "Edit transaction fees manually". I would also activate "Replace-by-Fee" (RBF). This will make it possible to increase the transaction fee later, if you notice that the chosen fee for your transaction was too low. This can happen when the volume of transactions in the Bitcoin network suddenly increases.




If you have activated both functions, you can close the window.



4.

Now you’ll see a separate field for the amount of the transaction fee (in sat / byte) and you can edit it manually.



Finally, you’ll have to find out how much fees are necessary for your transaction. You can find it out when you follow the next steps:





5.
There are several ways to determine the current transaction fee. Maybe the best way right now is to have a direct look to the Bitcoin Mempool. The Mempool is not a pool where the best memes are collected, but it represents the Bitcoin transactions waiting for confirmation. So a full Mempool means a high fee to send the transaction quickly, because many transactions are waiting for confirmation and compete to get included in the next block (only those having the highest transaction fees are selected for the next block until it’s full), while an almost empty Mempool is optimal to get your transaction confirmed paying only a low fee.

A good picture of the Mempool can be found on the page of Jochen Hoenicke: https://jochen-hoenicke.de/queue/#0,24h

On the website you can choose different time intervals where you can analyze the Mempool. There are 3 different graphs in total:
- Unconfirmed Transaction Count (Mempool)
- Pending transaction fee in BTC
- Mempool Size in MB

For our consideration, the first and the last graph are suitable, while the last graph is more effective for our purpose, as it shows the actual size of the Mempool in MB. Because sometimes it happens that very large transactions (in bytes) are waiting in the Mempool, which are listed in the first graph as a single transaction but need a lot of size (because they have many inputs, for example or are many non-SegWit transactions)
But after all, the graphs are very similar:


Unconfirmed Transaction Count (Mempool):







Mempool Size in MB:





When you move your mouse across the graph, you can see which line represents how many satoshi per byte (sat / byte). This will allow you to estimate how much transaction fees you need to use for your transaction. You should also look back a bit in the past, how much MB of transactions was waiting the last few hours and whether the Mempool was generally emptied regularly. Then, it is reasonable to choose only a few satoshi per byte. Of course, it depends on how fast you have to send the transaction. If it is not necessary, it is advisable to wait or to send with a lower fee, which you think is realistic in the next few hours.

The big unknown variable is when the next block will be found. In rare cases, it may take more than an hour between two consecutive blocks. Then, many transactions accumulate which have to be included in the next blocks and until then a lot of time can pass. In addition, it is possible that many new transactions enter the Mempool in the meantime and if they have a higher fee than yours, they are included into a new block instead of your ones. So, there is also a risk of choosing a low transaction fee.


In addition, you should always check the transaction volume during past days. There are certain, frequently recurring patterns:




- After around 08:00 CET, the transaction volume tends to increase, around 23:00 the Mempool empties gradually (these times can vary, sometimes it’s starting earlier, sometimes later)
- Between 02:00 and 08:00 CET is the best time to send Bitcoin, when the Mempool is emptied regularly)
- Monday is often the busiest time
- During the weekend the Mempool is usually much emptier than during the week, even at rush hour


Keep in mind that these patterns may change at any time, especially when BTC is increasing in price, many users doing transactions, so the fees will most likely also increase.




And finally, a short example:

Currently it was 01:00 CET here (night) when I made the screenshot, the Mempool is showing the following picture (daily overview):


It was Monday, so the transaction volume during the day was very high as expected. But currently, the Mempool is now almost empty again. It can be assumed that it will be empty several times tonight as in the previous week and it’s still the whole night left.

If you look at the size of all transactions in the Mempool by moving your mouse across the graph, you will see that the last block wasn’t completely full (approx. 0.55 MB (normally more than 1 MB fits into a block)). At this point, I would choose 2 satoshi / bytes and the probability will be very high that this transaction gets already included in the next block.

And when you have a look at the graph you’ll also notice some transactions using a fee way too high… They had sent their transaction with more than 100 satoshi / bytes, although a fee of only 2 satoshi / byte would have been enough to get the transaction into the next block. ^^



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September 08, 2019, 06:44:01 PM
 #2

Very good guide for beginners and all other people that use Bitcoin and Electrum wallet!

Do you know any service that sends you notifications (email or other) when mempool is full and transaction fees are higher.

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September 08, 2019, 07:54:13 PM
Merited by hugeblack (1), 1miau (1)
 #3

Great guide. It's always better to look at the mempool directly that to rely on a website running an unknown script to predict what fee you should choose.

Do you know any service that sends you notifications (email or other) when mempool is full and transaction fees are higher.
I stumbled across this site a while ago: https://cryptocurrencyalerting.com/

It lets you set notifications for the mempool going above or below a custom set size in megabytes or number of unconfirmed transactions, as well as wallet notifications, price notifications, and some other stuff. They claim to support email, SMS, browser, push to mobile, and various other methods. You do need to open an account to use them, though.

I've never got round to testing it out, so I can't personally vouch for them. I would be interested to hear your experiences if you do sign up.

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September 08, 2019, 08:12:26 PM
 #4

Great guide. It's always better to look at the mempool directly that to rely on a website running an unknown script to predict what fee you should choose.

Do you know any service that sends you notifications (email or other) when mempool is full and transaction fees are higher.
I stumbled across this site a while ago: https://cryptocurrencyalerting.com/

It lets you set notifications for the mempool going above or below a custom set size in megabytes or number of unconfirmed transactions, as well as wallet notifications, price notifications, and some other stuff. They claim to support email, SMS, browser, push to mobile, and various other methods. You do need to open an account to use them, though.

I've never got round to testing it out, so I can't personally vouch for them. I would be interested to hear your experiences if you do sign up.
You are right the most cases of unconfirmed transactions is due to low fees during transaction which always lead to this, to get a transaction confirmed and delivered one need to use a active and high fees.

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September 08, 2019, 08:21:14 PM
Merited by o_e_l_e_o (1)
 #5

You are right the most cases of unconfirmed transactions is due to low fees during transaction which always lead to this, to get a transaction confirmed and delivered one need to use a active and high fees.
Well, actually o_e_l_e_o didn't said that and I guess he wouldn't say such a thing.  Cheesy

If the Mempool is almost empty there's no reason to set a high fee and that's why checking the Mempool will show you how much you need to pay to get the transaction confirmed...
It's also possible to have a fast transaction while paying a very low fee. That's why I've made the guide.  Wink

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September 08, 2019, 08:22:14 PM
 #6

I stumbled across this site a while ago: https://cryptocurrencyalerting.com/

It lets you set notifications for the mempool going above or below a custom set size in megabytes or number of unconfirmed transactions, as well as wallet notifications, price notifications, and some other stuff. They claim to support email, SMS, browser, push to mobile, and various other methods. You do need to open an account to use them, though.

I've never got round to testing it out, so I can't personally vouch for them. I would be interested to hear your experiences if you do sign up.

Thanks.
I know about this website.
I did test it myself before, and connected it with my Discord  channel.
It does have some restrictions for free version, and I received notification only one time.

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September 09, 2019, 01:56:11 AM
 #7

Here you go: Bitcoin Transaction Fees - Everything in one
By the way, I updated my OP with your topic.

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September 09, 2019, 03:10:28 AM
 #8

Quote
And when you have a look at the graph you’ll also notice some transactions using a fee way too high… They had sent their transaction with more than 100 satoshi / bytes, although a fee of only 2 satoshi / byte would have been enough to get the transaction into the next block. ^^

the values on this chart are aggregated size not the size at that s/b value. meaning when you see 0.294 MB in front of 2+ it means there are 0.294 MB transaction that pay a fee of 2, 2.1, 2.11,... 2.2, 3, ...,4... and so on fee. so when you see it says 0.556 MB in front of 1 s/b then it means if you had paid 1 satoshi/byte fee or less your transaction would have been confirmed in the next block. and 2 was overpay.

the reason why the last number (total) is 2.845 MB is that there are more transactions paying a fee between 0 and 1 and that is mainly because this is satoshi/byte instead of virtual byte and when you send a SegWit tx and you are paying for example 1 s/vb that is smaller in s/b.

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September 09, 2019, 03:59:55 AM
Merited by suchmoon (4), ETFbitcoin (1), pooya87 (1), hugeblack (1), 1miau (1)
 #9

If it is Electrum, you don't have to use that online chart.
That "mempool size in MB" chart is basically the same as Electrum's fee estimation (mempool setting) slider.
Preferences->Fees Tab->Fee estimation drop-down list: Mempool
failed_to_load

Then user just have to pay attention to the lowest possible fee for less than "1MB from tip" priority transactions.
Now it's currently "1sat/B": (Send tab)
failed_to_load.

Just make sure that your internet connection is fast for this to be accurate.

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September 09, 2019, 01:27:34 PM
 #10

This is a study[1] that shows how the fees change based on timezone and thus filter you the best times to send Bitcoin. I don't know if a site offers such services but it would be nice if someone knew a similar site.
If you find some time and the fees are low, don't forget to use this opportunity to Consolidate your small inputs!

[1] Bitcoin Fees Can Be Cheaper Depending on the Timezone

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September 10, 2019, 12:25:19 AM
 #11

Quote
And when you have a look at the graph you’ll also notice some transactions using a fee way too high… They had sent their transaction with more than 100 satoshi / bytes, although a fee of only 2 satoshi / byte would have been enough to get the transaction into the next block. ^^

the values on this chart are aggregated size not the size at that s/b value. meaning when you see 0.294 MB in front of 2+ it means there are 0.294 MB transaction that pay a fee of 2, 2.1, 2.11,... 2.2, 3, ...,4... and so on fee. so when you see it says 0.556 MB in front of 1 s/b then it means if you had paid 1 satoshi/byte fee or less your transaction would have been confirmed in the next block. and 2 was overpay.
Yes, finally I have paid 1 sat/byte more for my transaction than required.  Tongue
But it's not known while sending a transaction, when a new block will be found. It's possible that the block will be found 1 minute later or 20 minutes later. And in the meantime, the size of the mempool can increase especially with transactions paying more sat/byte than my transaction so that they will be included in a new block first.
So, I tend to set always 1 or 2 sat/byte more when in doubt. That's not much $ (also depending on the size of the transaction) but will increase the possibility to get the transaction into the next block.


If it is Electrum, you don't have to use that online chart.
That "mempool size in MB" chart is basically the same as Electrum's fee estimation (mempool setting) slider.
Yes, it's a nice tool and much better than the other two (Static / ETA). However, it's always useful to have a look at the Mempool to get an impression about the overall situation (a few hours) before. (If there are many transactions incoming or the mempool is getting emptier step by step.

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September 10, 2019, 12:36:15 AM
 #12

Additional with this, try also to use this website if you want to check current suggested feen in satoshi per byte:
https://coinb.in/#fees , you can also try some input there and you will see calculated fees.

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September 10, 2019, 05:20:01 AM
 #13

~
Yes, finally I have paid 1 sat/byte more for my transaction than required.  Tongue
But it's not known while sending a transaction, when a new block will be found. It's possible that the block will be found 1 minute later or 20 minutes later. And in the meantime, the size of the mempool can increase especially with transactions paying more sat/byte than my transaction so that they will be included in a new block first.
So, I tend to set always 1 or 2 sat/byte more when in doubt. That's not much $ (also depending on the size of the transaction) but will increase the possibility to get the transaction into the next block.

of course that is also what i would do to stay ahead of the curve.
but i was just pointing out how these charts work because i think it is easy to misinterpret them, i used to do it myself. specially since they are satoshi per "byte" not "virutal byte" and it causes some trouble with SegWit transactions you make.

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