Just sent 1BTC and charged .001 fee, why?

[420]

I'm used to the .0005 fees, why was I charged a tenth of a bitcent fee this time for sending 1BTC?

[gweedo]

https://en.bitcoin.it/wiki/Transaction_fees#Technical_info

[420]

https://en.bitcoin.it/wiki/Transaction_fees#Technical_info

I already searched that page and there's is no ".001" i used the search. no fee of that amount listed

[gweedo]

OK a couple of things, the coin is probably new, it has been recently received by you. OR you have a lot of inputs that need to be use to create that coin to be sent.

[Kluge]

https://en.bitcoin.it/wiki/Transaction_fees#Technical_info

I already searched that page and there's is no ".001" i used the search. no fee of that amount listed

There are a bunch of convoluted rules in place which calculate fees. Someone told me them all a couple months ago, but I've since forgotten them all. The fee is calculated based on current size of unprocessed transactions in queue, amount of coins in output addresses individually, and other fees based on how many confirmations the coins in your addresses have. Probably missing some rules, too. Most Bitcoin clients calculate the "minimum" fee for "typical" miners to process your transaction, adding up all the fees from previously-mentioned conditions. There are customized clients which allow you to bypass the "typical assumed minimums" if you want to manually calculate your minimum fee (for example, Eligius is often willing to process transactions for less than "typical" - though I believe doing a manual calculation assuming Eligius will eventually process it falls under the category of "penny smart, dollar stupid").

I've resigned to assuming they're all calculated magically and just do what the software tells me.  

[420]

Okay, stupid me, I was probably charged two .0005 fees, yeah new coins.

[DeathAndTaxes]

It isn't two fees but the mandatory fee for low priority tx is 0.0005 PER KB. 

If your tx (due to larger number of inputs) is >1024 bytes then it will round up to 2KB and thus 0.0005 * 2.   Note it is possible to create very large tx if you have a huge number of inputs.  10kb, 20kb, 50kb even and the mandatory fee imposed would be an equivalent multiple.

[madmadmax]

Hmm.. What is exactly the point of paying fees for transactions? Your transactions doesn't get a higher priority or will appear faster

[420]

Hmm.. What is exactly the point of paying fees for transactions? Your transactions doesn't get a higher priority or will appear faster

Built into the system are transactions fees so that eventually when the block reward is not worth mining there will be transaction fees that the block finder receives that will make it still worth mining, otherwise no new blocks would be created if no one wanted to mine and the transactions couldn't be stored and thus no more bitcoin

[DeathAndTaxes]

Hmm.. What is exactly the point of paying fees for transactions? Your transactions doesn't get a higher priority or will appear faster

1) Mandatory Fee:  If your tx is low priority (based on size and age) the client will require you to pay a fee.  If you override this then any node or miner which follows the same rules will drop your transaction and it will never confirm (or remain "lost" for days or weeks).  This is done as a DOS prevention mechanism.

2) Optional Fees:  They do make your transaction confirm faster.  Blocks are getting very large and to avoid higher orphan rates many pools are limiting the number of tx they take (especially free tx).  Have you ever seen 1,2,3 blocks go by and your tx sits at 0-confirms?  That is pools ignoring your tx in favor of ones with fees.  A small fee (i.e. less than a penny) can go a long way in ensuring your tx have priority.

[420]

Hmm.. What is exactly the point of paying fees for transactions? Your transactions doesn't get a higher priority or will appear faster

1) Mandatory Fee:  If your tx is low priority (based on size and age) the client will require you to pay a fee.  If you override this then any node or miner which follows the same rules will drop your transaction and it will never confirm (or remain "lost" for days or weeks).  This is done as a DOS prevention mechanism.

2) Optional Fees:  They do make your transaction confirm faster.  Blocks are getting very large and to avoid higher orphan rates many pools are limiting the number of tx they take (especially free tx).  Have you ever seen 1,2,3 blocks go by and your tx sits at 0-confirms?  That is pools ignoring your tx in favor of ones with fees.  A small fee (i.e. less than a penny) can go a long way in ensuring your tx have priority.

can the community as a whole just raise the fees then?

[TangibleCryptography]

Depends on which fee you are talking about.  

The mandatory fee is set by the client and in theory could vary depending on the client being used (although almost all clients follow the same rules as the Satoshi client).  This fee is unlikely to ever go up.  It has been reduced once (from 0.01 to 0.0005) and likely will be reduced as BTC:USD rises.  In times optional fees paid by users will make this fee less and less relevent.

The optional fee is set by each individual users.  Miners can't set a fee but they can refuse to include a tx with a fee "too low" or without any fee.  Nobody can ever require you to pay X.  It is more likely different users will pay different fees depending on the priority of the transaction.  If you are sending funds to an exchange to make a quick sale you are more likely to pay a large fee to be in the next block.  If you are paying a merchant who won't ship the product till tomorrow anyways a very low (or no) fee is likely sufficient.  

The average fees per transaction will probably rise however the rise IMHO will be very slow and fees while higher will still be very low compared to other payment systems.

[420]

Depends on which fee you are talking about.  

The mandatory fee is set by the client and in theory could vary depending on the client being used (although almost all clients follow the same rules as the Satoshi client).  This fee is unlikely to ever go up.  It has been reduced once (from 0.01 to 0.0005) and likely will be reduced as BTC:USD rises.  In times optional fees paid by users will make this fee less and less relevent.

The optional fee is set by each individual users.  Miners can't set a fee but they can refuse to include a tx with a fee "too low" or without any fee.  Nobody can ever require you to pay X.  It is more likely different users will pay different fees depending on the priority of the transaction.  If you are sending funds to an exchange to make a quick sale you are more likely to pay a large fee to be in the next block.  If you are paying a merchant who won't ship the product till tomorrow anyways a very low (or no) fee is likely sufficient.  

The average fees per transaction will probably rise however the rise IMHO will be very slow and fees while higher will still be very low compared to other payment systems.

but theoretically people can choose to not include it.
lets say for example in the future bitcoin difficulty is so high because of asic only 'hardcore' peeps can make a profit and they spend a large sum of money for the hardware. maybe in certain circumstances reduce the # of physical people controlling mining down to 50 or something, mining significant hashrate of the network and they all choose to only add high fees so people have to pay high fees or nothing is stored

[TangibleCryptography]

Well free market theory would indicate that is impossible.

So some cartel spends huge amounts of money to drive up the difficulty and makes a large number of miners quit.  They then start requiring high fees.  There is no action without a reaction.  The environment now is much lower difficulty and much higher fees = more profit per GH/s.  Those miners who were "forced out" can now mine profitably so they turn miners back on and undercut the high fee miners.

Some mechanism of "price discover" for fees is necessary but we likely are some ways away from it.  When the subsidy cut falls to 25 BTC per block fees will be more important  however 90% to 95% of revenue will still come from the subsidy.  The next subsidy cut in four more years will be more interesting and by the subsidy cut in eight years some fee "marketplace" will be important for the health of the network.   Still talking about issues 5-9 years out is kinda premature when you consider BTC isn't even 4 years old yet.

One other thing I would point out is not all miners may be directly profit driven.  MtGox makes money right?  They make money because BTC are traded.  In some hypothetical future where there is 100x as much BTC MtGox could be making 100x as much money.  What happens to that profits if some cartel kills of Bitcoin?  Wouldn't it be in MtGox interest to add hashing power to the network and accept free or low fee tx?   They profit when Bitcoin is healthy.   A cartel forcing excessive prices isn't healthy logically spending some of their profits to keep Bitcoin healthy makes sense.

You could even see something like a "priority merchant agency" form.  An agency where merchants pay dues and submit a list of their addresses.  They then contract with miners to give payments sent to those addresses high priority.   Instead of paying a fee per tx they would allow their customers to send "free tx" and pay miners a flat monthly fee.

[420]

Well free market theory would indicate that is impossible.

So some cartel spends huge amounts of money to drive up the difficulty and makes a large number of miners quit.  They then start requiring high fees.  There is no action without a reaction.  The environment now is much lower difficulty and much higher fees = more profit per GH/s.  Those miners who were "forced out" can now mine profitably so they turn miners back on and undercut the high fee miners.

Some mechanism of "price discover" for fees is necessary but we likely are some ways away from it.  When the subsidy cut falls to 25 BTC per block fees will be more important  however 90% to 95% of revenue will still come from the subsidy.  The next subsidy cut in four more years will be more interesting and by the subsidy cut in eight years some fee "marketplace" will be important for the health of the network.   Still talking about issues 5-9 years out is kinda premature when you consider BTC isn't even 4 years old yet.

One other thing I would point out is not all miners may be directly profit driven.  MtGox makes money right?  They make money because BTC are traded.  In some hypothetical future where there is 100x as much BTC MtGox could be making 100x as much money.  What happens to that profits if some cartel kills of Bitcoin?  Wouldn't it be in MtGox interest to add hashing power to the network and accept free or low fee tx?   They profit when Bitcoin is healthy.   A cartel forcing excessive prices isn't healthy logically spending some of their profits to keep Bitcoin healthy makes sense.

You could even see something like a "priority merchant agency" form.  An agency where merchants pay dues and submit a list of their addresses.  They then contract with miners to give payments sent to those addresses high priority.   Instead of paying a fee per tx they would allow their customers to send "free tx" and pay miners a flat monthly fee.

exactly what i was looking for. I just gave the a very unlikely case