Transaction Fee

A transaction fee is what you pay miners to include your Bitcoin transaction in a block. Mechanically, it's the difference between the sum of input values and the sum of output values - whatever you don't explicitly send to an output, the miner who confirms the transaction collects.

Fees are quoted as a rate, not a total: sats per virtual byte (sat/vB). A larger transaction costs more in fees at the same rate. Typical transaction sizes:

• Simple P2WPKH (1 input, 2 outputs): ~140 vB
• Taproot (1 input, 2 outputs): ~110 vB
• 2-of-3 multisig: ~250 vB
• Consolidations with many inputs: 500+ vB

At 10 sat/vB, those would cost 1,400 / 1,100 / 2,500 / 5,000+ sats respectively. Real fees vary wildly depending on network congestion.

The fee market dynamics:

• Low-congestion periods. Fees drop to 1-3 sat/vB. Most transactions confirm in the next block at that rate.
• High-congestion periods. Fees spike. During the early-2024 Ordinals mint surge, next-block fees occasionally touched 500+ sat/vB.
• Estimator-driven defaults. Your wallet uses fee estimation to pick a reasonable rate. Most wallets get this right; you can override if you understand the trade-off.
• Fee bumping (RBF, CPFP) is available if you underpaid and got stuck.

Long-term, transaction fees become the incentive for miners. Today they're ~3-10% of block reward revenue; as the block subsidy halves toward zero around 2140, fees become 100% of it. The fee market that exists today is a small preview of the fee market Bitcoin needs to sustain its security post-subsidy.

See live mempool fee bands on the Node page or in the Mining rabbit hole §6.