Does layer 2 help?

[Mia Chloe]

Lately I decided to explore the MEMPOOL.i came across some relatively small transactions which occupied  large block spaces therefore making the fees big.I also saw a couple of blocks on the meme pool some were large amounts of Bitcoin transactions but had very low transaction fees which is accountable to the small block space they occupied.I am aware of how to use the time factor to my favour. how is it possible to make your transactions occupy the smallest block space possible so as to reduce your transaction fees. Will using the layer 2 reduce block space?

[EL MOHA]

how is it possible to make your transactions occupy the smallest block space possible so as to reduce your transaction fees.

The first two things to do manually is to use a native segwit (bc1q) for your transaction as this has been the best compare to other address formats. This is achieved because the digital signature is what actually occupies space of the block during a transaction (around 60% space). The segwit removes/separates this signature data from the main transaction saving up the space for more transactions and that is why it is assumed that the block size has categorically increased from 1Mb to 4Mb while using this address format

The second thing is to make sure to use the smallest possible inputs and outputs, because as the more the inputs and outputs the more the fees. The transaction fee is always calculated by the number of inputs and also possible outputs. You can reduce the UTXOS to used as input through consolidating your address or change addresses.

When you have multiple inputs for transaction and probably lesser number of outputs then the use to Pay-to-taproot addresses (bc1p) is advice to been use and if it it’s the the other way of having multiple outputs and less inputs then the native or version 0 segwit is advice and also for transactions with almost same number of outputs and inputs.

[Mia Chloe]

how is it possible to make your transactions occupy the smallest block space possible so as to reduce your transaction fees.

The first two things to do manually is to use a native segwit (bc1q) for your transaction as this has been the best compare to other address formats.

I intended on using P2SH  or Bech32 SEGWIT because I am aware legacy addresses incure more fees .is it set to use layer 2 in default

[EL MOHA]

how is it possible to make your transactions occupy the smallest block space possible so as to reduce your transaction fees.

The first two things to do manually is to use a native segwit (bc1q) for your transaction as this has been the best compare to other address formats.

I intended on using P2SH  or Bech32 SEGWIT because I am aware legacy addresses incure more fees .is it set to use layer 2 in default

I would advice the use of Bech32 segwit because it is like the upgrade of the P2SH. The only advantage of P2SH addresses then was it is compatible with old version Softwares but right now almost everyone and every software uses the native segwit (Bech32), so there is no advantage again of using the former

[Beerwizzard]

The transaction size also depends on the number of inputs and outputs. If you have many inputs you can reduce their number by combining then to a single transaction and sending to your own address, this will give you a single input and reduce the size of transaction.

You can check it via transaction size calculator: https://bitcoinops.org/en/tools/calc-size/

[dzungmobile]

The transaction size also depends on the number of inputs and outputs. If you have many inputs you can reduce their number by combining then to a single transaction and sending to your own address, this will give you a single input and reduce the size of transaction.

It is consolidation for your small inputs which should do only when mempool is clear and you can take advantage of low fee rates to consolidate. Consolidation is your preparation for future transactions especially when mempools are more loaded or overloaded, hence you have to broadcast your transactions with higher or expensive fee rates.

If you need to move your coins, it will be fee wasting if you consolidate your inputs to another address of yours before making another on chain transaction to addresses of someone else.

[Doan9269]

Lately I decided to explore the MEMPOOL.i came across some relatively small transactions which occupied  large block spaces therefore making the fees big.I also saw a couple of blocks on the meme pool some were large amounts of Bitcoin transactions but had very low transaction fees which is accountable to the small block space they occupied.I am aware of how to use the time factor to my favour. how is it possible to make your transactions occupy the smallest block space possible so as to reduce your transaction fees. Will using the layer 2 reduce block space?

You're combining two and very important aspect together here, talking about the transaction fees, this only has to do with how the mempool itself is being congested or not, transaction fee is not base on the crypto amount being sent, you have to observe this from the mempool through your own personal interest, when it's less congested the fee rate is reduced because there's less competition for the blockspace.

Considering the layer 2 protocols you mentioned, this was implemented to make bitcoin bulk transaction more faster and cheaper, it was introduced after the issue of scalability becomes a threat to the network, just as you can now use the lightning network or a mining pool to help fasten your transactions with lesser rate and at fastest time, miners set the fee rates and the network confirmed the transaction under it protocols, block size does not determine your transactions fee, we consider blockspace to get each transaction occupied on every mined block.

[joniboini]

intended on using P2SH  or Bech32 SEGWIT because I am aware legacy addresses incure more fees .is it set to use layer 2 in default

Not sure what you mean by "set to use layer 2 by default" when you mentioned about address type. What do you know about layer 2 btw? Maybe you're mixing things up here. When people mention layer 2, most of them refer to things like Lightning Network, Liquid, etc. It has nothing to do with legacy address or Bech32. CMIIW.

[FinneysTrueVision]

Using layer 2 means that your transactions don't occupy any blockspace. The blockchain is only used to opening/closing channels or pegging in and out of a sidechain. Once you are on a second layer your transactions happen off-chain and have no impact on the Bitcoin mainnet but you will still have to pay a small fee to routing nodes or validators.

For cheaper on-chain fees using Bech32 Segwit and Taproot are the best options. It depends on your specific use case which is most optimal but in the long term I believe Taproot is the better choice.