Bitcoin[note 5] is a payment system invented by Satoshi Nakamoto,[note 6] who published the invention in 2008 and released it as open-source software in 2009. The system is peer-to-peer; users can transact directly without needing an intermediary.:4 Transactions are verified by network nodes and recorded in a public distributed ledger called the block chain. The ledger uses its own unit of account, also called bitcoin.[note 7] The system works without a central repository or single administrator, which has led the US Treasury to categorize it as a decentralized virtual currency. Bitcoin is often called the first cryptocurrency, although prior systems existed.[note 8] Bitcoin is more correctly described as the first decentralized digital currency. It is the largest of its kind in terms of total market value. Bitcoins are created as a reward for payment processing work in which users offer their computing power to verify and record payments into the public ledger. This activity is calledBitcoin transactions are sent from and to electronic bitcoin wallets, and are digitally signed for security. Everyone on the network knows about a transaction, and . www.investopedia.com/terms/b/bitcoin.asp DEFINITION of Bitcoin Bitcoin is a digital currency created in 2009. It follows the ideas set out in a white paper by the mysterious Satoshi Nakamoto, whose trueI have the bitcoin-qt client running on Ubuntu 12.10 and I see a transaction fee box in the preferences, but I am unsure of what it actually means - the wiki is overly complex, and I am unable to find another help website about this. Can anyone give a easy to understand explenation of a minimum transaction fee. Do I have to pay it, or the sender? Etc. What that field does is always add at least N BTC fee to every transaction. When sending a transaction, the Bitcoin.org client will do a computation and insist on a fee to be paid if it determines the transaction will not be processed promptly unless a fee is paid. Not all transactions require a fee. If the amount of the payment is not small or the coins are not newly received (or both), then you can likely send a transaction using the Bitcoin-Qt client without paying a fee. But there s always a chance that without paying a fee that your transaction will not be processed in a timely manner, as it is up to the miner or pool operatorWhat is Bitcoin? Who created Bitcoin? Who controls the Bitcoin network? How does Bitcoin work? Is Bitcoin really used by people? How does one acquire bitcoins? How difficult is it to make a Bitcoin payment? What are the advantages of Bitcoin? What are the disadvantages of Bitcoin? Why do people trust Bitcoin? Can I make money with Bitcoin? Is Bitcoin fully virtual and immaterial? Is Bitcoin anonymous? What happens when bitcoins are lost? Can Bitcoin scale to become a major payment network? Is Bitcoin legal? Is Bitcoin useful for illegal activities? Can Bitcoin be regulated? What about Bitcoin and taxes? What about Bitcoin and consumer protection? How are bitcoins created? Why do bitcoins have value? What determines bitcoin’s price? Can bitcoins become worthless? Is Bitcoin a bubble? Is Bitcoin a Ponzi scheme? Doesn t Bitcoin unfairly benefit early adopters? Won t the finite amount of bitcoins be a limitation? Won t Bitcoin fall in a deflationary spiral? Isn t speculation and volatilityWhenever I send bitcoins from one wallet or one exchange to the next there is always a fee. This makes sense with the exchange sites, they are just collecting the fee so they can make a living. What about the open source wallets that I ve installed on my computer? Surely, nobody is collecting my bitcoins because my transactions are too long! So, is the fee part of the Bitcoin algorithm? Do the coins that are confiscated in the fee go to Bitcoin miners? Also, when does the fee start? I noticed, if I send like 0.05 bitcoins there is no fee, but if I send 0.1 bitcoins there is a fee. What if I just sent 0.05 bit coins twice? Or is it if they are in the same block I will get a fee, so I d have to send them twice (and 10 minutes apart)? Transaction fees are voluntary on the part of the person making the bitcoin transaction, as the person attempting to make a transaction can include any fee or none at all in the transaction. On the other hand, nobody mining new bitcoins necessarily needs toHi, Who gets the transaction fee that specified in the software? And does it really speed up transactions? Will You (the sender) pay(s) it (and decide(s) how much), and the one who generates the block, which your transaction is in, gets the fee.
Afaik it won t really speed it up in the current situation, but as soon as bitcoin becomes more popular it will help proceeding transactions faster. Thank you very much, I ve been thinking about reading up on it since I ve been seeing people talk about it as the next reason to mine after the reward goes from 50 to 25 BTC. Is there any incentive at all to pay transaction fees if the block size is less than its maximum size? If the block is less than the maximum size, won t all transactions be included in the block regardless of fees paid? Some miners are not putting transactions in if there is no fee. I presume this is to incentivise fees. There s a default fee policy implemented in the default client that says that the space for freePeople often claim that with Bitcoin you can send money between any two points on earth for free . While that is true in some cases, sometimes a transaction fee is required. The fee, when it is required, is usually worth less than 40 US cents. The fees go to the miners to incentivise them to keep mining, which in turn keeps the Bitcoin network secure. They already get a reward of 25 XBT for each block they mine, but this reward halves every 4 years. The plan is that as the block reward diminishes over the time, it will be replaced by transaction fees.
So what decides when you have to pay, and how much? Well, like everything else in Bitcoin, the fee structure is built into the network rules, which are defined as what the reference client does . When you attempt to send coins using bitcoin-qt (the current reference client), it goes through the following steps: 1. Pick which coins to spend The client has to decide which of your coins to use to make up the payment amount. Each time youThe bitcoin developers are about to reduce the transaction fees on the bitcoin network tenfold, thanks to the relatively high value of the digital currency. Transaction fees are small amounts paid to send bitcoin transactions around the network (think of them like postage stamps) and to get miners to confirm them by including them in a mining block. They re paid in satoshis (tiny amounts of bitcoins), which means that as the price of bitcoin rises, the transaction fees get higher. Recent fluctuations in the bitcoin world may have set the price yo-yoing, but that doesn t mean that it isn t doing relatively well. The CoinDesk Bitcoin Price Index is still hovering in the $540 range at the time of writing, a little over six times the price last July, when the Index was first introduced. The core developers first started discussing the possibility of slashing transaction fees for the coin around three months ago, in this post on the mailing list.
At the time, developer Mike Hearn mentioned.