Lower fees, 0-conf and ElectrumSV

Rethinking fees

Up to this point, most wallets have been paying 1000 satoshis per kilobyte as a transaction fee. However, we now see other wallets talk about setting their fee rate to 500 satoshis per kilobyte.

Fancy web button with presumed miner arrangement for their users!

Nodes and default values

There are several limits that are directly relevant to this in the BitcoinSV node software.

The default fee rate for transaction relaying.
The default fee rate for miners picking transactions for a block.

The free money on the table theory

Let’s say we set our fee rate to the bare minimum, 250 satoshis per kilobyte. What’s the worst that could happen? Let us think it through.

Our glorious 0-conf future

Even if there are miners who do not mine these transactions and leave this money sitting on the table, eventually one of those other miners will pick it up. People have been saying it for a while now, there’s nothing wrong with 0-conf. If it takes several blocks for our transaction to get mined, then that is fine. If we really wanted it mined in the next block we can all opt to pay the appropriate fee rate to ensure it.

Final thoughts

The more that I think about it, the more I believe that it is in the best interests of ElectrumSV users to pay as low a fee as possible. For now you might start with 500 satoshis per kilobyte, but the more adventurous might try 250 satoshis per kilobyte. The more of our money we put on the table at this rate, the costlier it is for miners to leave it there for the next one — the who will actually mine it in their block and take that “free money”.

The wrong model

What you all will have thought of while reading this article, is that we are still using the wrong model. We are after all, going to be creating mutual transactions as a payer with a payee, and the payee will be broadcasting it. It will be in their interest to either have miner arrangements or ensure the fee rate is set high enough that the transaction will be mined promptly enough to suit their needs.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store