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. Now let's start by making your wallet easier to surf through by using shortcuts. Now click on view on the top right corner and click the shortcuts you want as shown in the image below. In this guide I selected all of them.
2. Now on older versions of Electrum, you can edit fees manually on Electrum through the tools and preferences menu, however on the most recent version you can't. The only way to customize your fees is to actually attempt a transaction. Now all you have to do is fill in the required wallet address and amount then proceed to hit
pay. The window below should appear.
3. Now you will notice that you can only adjust the fee via the slider which is not good enough. To be able to edit your fees manually click on the icon indicated in the image below.
4. Now if you successfully completed step 3, the mini window bar below with checkable settings should appear.
5. Now all you have to do is select the options you prefer for your transactions. However make sure to select
Edit fees manually .
6. Now you will notice that in addition to the slider you now have two check boxes for editing fees as shown in the image below. With the box highlighted in green below, you can edit fees by manually typing your desired fee rate in sat/byte. While with the box highlighted in red you can fill in how much fees you want to pay in BTC or mBTC.
7. 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:
There are several ways to determine the current transaction fee.
Of which one way is to check ;
Mempool Observer Topic and observe possible fees by the
FeeBuddy bot.
Another nice 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 / byte 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 / byte, although a fee of only 2 satoshi / byte would have been enough to get the transaction into the next block. ^^
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