Lower fees, 0-conf and ElectrumSV
Do you like paying two to three times as much in transaction fees? If other people are paying less, why should you pay more just because you use ElectrumSV? You operate your own wallet, and there is no hosted service that all your transactions are broadcast through, but why should you be treated less? I don’t think that you should.
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.
Why shouldn’t ElectrumSV users pay this too, and for that matter, why shouldn’t they pay even less!
Nodes and default values
There are several limits that are directly relevant to this in the BitcoinSV node software.
One limit is the minimum fee rate at which transactions are relayed. If the fee rate is at least this high, and it’s currently 250 satoshis per kilobyte, then the transaction should make it to the miners. I expect it is reasonable to say that most nodes a transaction will pass through to miners, will never change this.
Another limit is the fee rate which miners use to select the transactions that they will mine in their blocks. I’ve seen one miner state in the last couple of days that their block mining fee rate is actually 1000 satoshis per byte. But by looking at the Bitcoin SV node source code, we can see the default is now 500. I broadcast a transaction with a fee rate of 500 satoshis per byte, and that miner actually mined it.
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.
The transaction should be relayed to miners, as it meets the relaying limit. The miners will have it in their mempool. Eventually a miner will see these transactions sitting there and mine them, as it is free money. As long as they are generally straightforward payments and not abominations of scripting potential that cost too much to mine, the miner should be incentivised to bundle them into a block. There are already at least two unknown miners who are anecdotally mining transactions at this minimum fee rate.
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.
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.
Do not fret. Our P2P future is close, and getting closer.