Bitcoin is the first crypto asset that entered the internet world and it comes into use because of its attractive & strange qualities.
One of the strange things in Bitcoin is its transaction fees system, which is totally different from the existing transaction fees system of traditional banking services.
Key Points Of This Article
1) Mechanism of the bitcoin fees system
2) Idea to calculate transaction fees
3) Methods to lower the transaction fees
- Segwit wallet
- Betch address enabled wallet
- Bitcoin Lightning Network
Mechanism of bitcoin fees system
The transaction fees system in Bitcoin network transactions is independent of the amount of bitcoin that means no matter whether you want to transfer 1 Bitcoin or 10000 Bitcoin.
Transaction fees depend upon the number of inputs & output of transactions.
Suppose you have 1 Bitcoin and you received from 5 people and now you have to transfer this amount of 1 bitcoin to another person. So now total input and output is equal to 6
5 input + 1 output = 6
The higher the number of input and output, higher will be the transaction fees
Simple Idea to calculate transaction fees
Now transaction fees per byte depend upon the traffic on the blockchain network.
Suppose we have to perform this transaction of 1BTC on segwit bitcoin network and according to present time fees per byte is 512 Satoshi ( may be changed according to traffic, time, transaction type legacy segwit or bech network).
So for this transaction, we have to pay a total of 6×512 = 3072 Satoshi or 0.00003072 BTC
Alternatively, we can check the estimated price through this block link
At this link, we need simply to enter the type of transaction & number of input and output.
Ideas to lower the transaction fees
We can pay lower fees than what we need to pay according to the current situation of the network.
Suppose we have to pay 1 Bitcoin and the fee needed to pay is 10000 Satoshi then alternatively we can pay 4000-5000 Satoshi. Such types of transactions will surely get executed in the block of the bitcoin network but probably it may take a long time to confirm. But surely it will be confirmed with 99.99% probability.
There are few options that can help a user to facilitate transactions at very low fees.
Use of Segwit Wallet
Segwit network-enabled Bitcoin Wallet are better option to make transactions at average low fees. While very low fees can’t be achieved at the Segwit network according to the current time price of Bitcoin. Examples of best segwit enabled Bitcoin wallets are Ledger Nano S, Trezor, Exodus, Electrum, Segwit Address.
Use of Betch Address enabled wallet
There are few wallets which support Betch Address. Betch addresses are the best option to achieve low fees on chain networks.
We can get Betch address facility of Bitcoin at Electrum, mycelium, and also in Bitcoin core.
Use of Bitcoin lightning network based wallet
There are few crypto services ( exchanges specially) which give an option of Bitcoin lightning network concept use. Through bitcoin lightning-based wallet services we can transfer at very high speed and very low-cost fees.
For example in the present time zebpay wallet India gives facility to transfer Bitcoin (zebpay wallet to zebpay wallet only) which is based on the bitcoin lightning network. To understand the system of Bitcoin lightning network concept click here.
Read also: What is Bitcoin wallet?
Wallets