How to avoid transaction fees

[Bit_Happy]

BTC fees were slashed not too long ago; They are extremely fair for most transactions.
Currently, BTC is not usable for tiny payments: Will that ever change?

[Lauda]

Why would you want to avoid such a small fee?

[bryant.coleman]

Why would you want to avoid such a small fee?

What if the transaction is more than 100KB in size. Will anyone pay a transaction fee of 10 m BTC for transferring 25 mBTCs?

[Bit_Happy]

Why would you want to avoid such a small fee?

What if the transaction is more than 100KB in size. Will anyone pay a transaction fee of 10 m BTC for transferring 25 mBTCs?

What is/could be inside the 100KB?
If you value the chance to securely transfer the data...

[DarwinNexus]

OP, I hope you understand why transaction fees are beneficial to the BTC system...

[bryant.coleman]

What is/could be inside the 100KB?
If you value the chance to securely transfer the data...

If a person spends a lot of time to collect mBTCs and uBTCs from various faucets, he will be left with a small BTC amount which is quite big in transaction size. And if the guy only have some 0.2 BTC or 0.3 BTC with him, he won't be too happy to pay half of that amount in transaction fee.

[Bit_Happy]

What is/could be inside the 100KB?
If you value the chance to securely transfer the data...

If a person spends a lot of time to collect mBTCs and uBTCs from various faucets, he will be left with a small BTC amount which is quite big in transaction size. And if the guy only have some 0.2 BTC or 0.3 BTC with him, he won't be too happy to pay half of that amount in transaction fee.

OK, I see:
If a person spends a lot of time.....small BTC amount...
They can set a "custom fee" of 0.00005 (for example)
They might have to wait a while, but it will eventually go through.

[smooth]

If you are careful and patient you can collect small inputs into larger outputs without paying fees.

You might have to be very patient though, since the threshold for an input to a high priority transaction is roughly one BTC-day, so a 0.001 input would need to mature for 1000 days.

Of course at that point you are also betting the rules won't change in the next 1000 days.

[bryant.coleman]

OK, I see:
If a person spends a lot of time.....small BTC amount...
They can set a "custom fee" of 0.00005 (for example)
They might have to wait a while, but it will eventually go through.

That is a good option. But it would have been even better, if we could somehow find-out the default transaction fee before we actually make the transaction (i.e to find out how much is the transaction size in KBs). Right now, if we are paying the default transaction fee we can find it out only after the coins are sent.

[BitOnyx]

You can't avoid transaction fees. Nothing is for free and there would be even cost of electricity to pay.

Only way we could get rid of transactions fees would be constant donations. Such idea though could be a bit unstable.

[Dabs]

The client tells you what the transaction fee would be if you input less than what it thinks you should send.

You can avoid transaction fees by following the rules.

A transaction may be safely sent without fees if these conditions are met:

    It is smaller than 1,000 bytes.
    All outputs are 0.01 BTC or larger.
    Its priority is large enough

50,000 bytes in the block are set aside for the highest-priority transactions, regardless of transaction fee. Transactions are added highest-priority-first to this section of the block.

Then transactions that pay a fee of at least 0.00001 BTC/kb are added to the block, highest-fee-per-kilobyte transactions first, until the block is not more than 750,000 bytes big.

[Bitcoin Magazine]

OP, I hope you understand why transaction fees are beneficial to the BTC system...

they help paint BTCitcoin as a "professional" system rather than play money.

[Brangdon]

How can we avoid transaction fees?

Fees are necessary to discourage spam and denial of service attacks.

If it weren't for that, we could eliminate fees by making the currency inflationary forever. Miners could be rewarded at a rate of, say, 1% of minted coins per year. In effect, everyone would be paying them to validate transactions through the devaluation of their held coins. Some economists prefer this model because they think the inflation encourages spending which encourages economic activity and wealth-creation. (Others dislike it because it encourages consumption, and because of edge effects where-by you can't set interest rates to below zero.)

Alternatively, the actual costs of mining could be reduced by switching to a proof-of-stake system. Then we wouldn't need ridiculously powerful computers to mine on, and ridiculous amounts of electricity to run them. You'd still need some way to discourage denial of service attacks, though.

[bryant.coleman]

You can't avoid transaction fees. Nothing is for free and there would be even cost of electricity to pay.

Agreed. But as the time progresses, the transaction size will increase. After 2-3 years, the average transaction will be 20KB or 30KB. The fees will become quite heavy then.

[innocent93]

You can't avoid transaction fees. Nothing is for free and there would be even cost of electricity to pay.

+1

[DeathAndTaxes]

You can't avoid transaction fees. Nothing is for free and there would be even cost of electricity to pay.

Agreed. But as the time progresses, the transaction size will increase. After 2-3 years, the average transaction will be 20KB or 30KB. The fees will become quite heavy then.

Why would the average tx be 30K.  The average tx today is ~600 bytes and isn't projected to increase.

[andrewbb]

Wow.  Lots of arguments for a perpetual fee.  See my post above for avoidance of such.

[DeathAndTaxes]

Wow.  Lots of arguments for a perpetual fee.  See my post above for avoidance of such.

So replace a tiny fee for a much larger one?  Even if the system is feasible on a large scale (unlikely), there will still be counterparty risk.  You are trading direct counterparty risk with the risk of the assurance entity.  Still from a fee standpoint it would be a massive step back.  Your third party reinsurance entity isn't going to take risk for no gain.  Their reassurance fee would have to cover the costs of verify entities, establishing their credit worthiness, protecting against fraud, and covering the % of transactions which are defaulted on.  Fees are very low 0.1 mBTC per KB.  On a 1 BTC transaction that is 0.01% of transferred amount.  Can a third party reduce that cost significantly?  I would say no.

Bitcoin fees are very low 0.1 mBTC per KB.  On a 1 BTC transaction which is under 1KB that is 0.01% of transferred amount.  There are a couple of things which "could" reduce this further in the future. 

Currently miners ranks fees by the ACTUAL FEE / ACTUAL TX size.  The client however rounds up to the nearest full KB when paying fees.  This means that a user interested in minimum fees is overpaying what would be required by a miner with the same requirement.   For example say a typical miner requires a fee of 0.1 mBTC per KB and fees less than that are treated as non-paying.  With average tx being 600 bytes this means a fee of only 0.06 mBTC is needed (0.06 mBTC *1000 / 600 bytes) to be above the 0.1 mBTC threshold required by the miner.  Right now the client would round the 600 bytes up to 1KB and add a fee of 0.1 mBTC to the tx which is 0.04 mBTC more than required.  From a miner's perspective the tx has a fee of 0.167 mBTC per KB.

The client should be modified to make the fee paid based on actual tx size not rounded up to the nearest KB.  Miners already use this methodology for ranking tx for inclusion in the next block so it makes little sense for the client to use a different methodology when deciding on the fee paid.    

The fee required for relaying by v0.9 nodes has been reduced 90% to 0.01 mBTC per KB.   The client doesn't yet allow paying a fee that low (when a fee is required).  This is done intentionally to ensure that when the client does allow that there will be enough nodes which will relay those tx to avoid them being "stuck".  Future versions of the client will also allow creating at this reduced fee level.  

If you combine those two changes it would reduce the fee required to relay an average 600 byte transaction to a mere 0.006 mBTC (600 sat) or roughly ~0.3 US cents per tx.  Now relaying doesn't mean a miner will include it in the next block.  Some (or significantly all) miners may require a higher fee however those two changes will for the most part take the client and nodes out of the fee decision process (with a negligible mandatory requirement on low priority tx to ensure the network is safe from DDOS attacks).  It will be important for miners to be more open with their fee requirements so that users can make a better decision on what fee (if any) to pay.

  

[Bit_Happy]

I try to always pay < 1% in fees.
This is usually not a big problem.