Where Do all good Bitcoin Transactions land?

If you are a father, you can no doubt relate to a “waiting room.” How many hours spent drinking coffee, pacing the floor, biting fingernails and if you partake – smoking cigarette after cigarette?

It’s not just fathers who play the waiting game; if you look around, you’ll see you are not alone. Moms, Dads, brothers, sisters, aunts, uncles, and friends often gather as well. All experience the same “anticipation” as they wait. (And in some incidences wait, and wait and wait.)

Although that waiting is so much fun, it’s not the kind of wait we are on about here. Ok, what “wait” are we referring to then? The Mempool wait.

Allow me to explain a Mempool:

To give the skinny on a Mempool: A Mempool is simply a waiting area for all Bitcoin transactions.

When you purchase Bitcoin, you have had to wait – no doubt – for the purchase to arrive at it’s intended destination. Sometimes that wait is short, and other times, it seems like it will never come.

When a transaction broadcasts into a Network, it is first “verified” by all available Nodes in the network. (these are computers participating in a system} from all over the world. (usually, but not always, we must wait until the transaction is verified six times for it to reach the receiver)

Nodes are typically different sizes (measured in MB), meaning; they can store varying amounts of “unconfirmed transactions.” And this explains why each node has its unique rendition of a block and why we see blocks with different quantities of transactions.

Once the transaction passes through the verification process, it is then picked up by a “full node” operated on a network of computers. It then sits as an “unconfirmed transaction,” or waiting area called a Mempool (shortened from Memory Pool) until it is picked up by a ” miner,” then included in the next block.

What Decides When a Transaction is Picked up by a Miner?

To keep Nodes from crashing due to an overload of transactions in their Mempool, the Node will start prioritizing by the amount of fee attached to the deal using an Incentivized system. Naturally, the higher prices paid in fees will result in quicker inclusion times since the miners want to earn the most they can. Miners receive their pay by the charges associated with the transactions, so to ensure your transaction is included quicker, it is wise to pay a higher fee.

An Incentivized system presents a problem. Miners will naturally seek to include the transactions with the higher fees first, rather than confirming the one with lower fees. If you pay no costs at all, you risk miners viewing your transaction as a “spam transaction” and taken out of the Mempool entirely.

The issue with this Incentivized system is two-fold:

  • Lower fees can result in longer confirmation times – this is not to say that your transaction will never be confirmed. However, it can take hours and even days longer. (on average 48 hours if not rejected)
  • Micro-transactions are all but impossible. Say, for instance, you want to buy a coffee, pay for a taxi, or even pay for parking. You could end up paying more in fees than the actual costs, so it is not practical and makes no sense to use Bitcoin in this way.

BIP 35 Explained:

BIP 35 (Bitcoin improvement #35) allows an outside Node to access another’s Node with intentions of:

  • Allowing Lite Wallets (SPV clients) learn what transactions are before they are confirmed and included in the next block.
  • Allowing miners to download the list of transactions awaiting confirmation and search out those with higher fees so they can begin their work.
  • Allowing remote diagnostics to be run.

Important because the faster the transactions are included in the next blocks, the better the user experience will be.

Something that is not wanted is a “traffic jam,” which will result if the number of new transactions comes in faster than those cleared and included in blocks go out to the Blockchain.

Once a Node accepts a block from a miner, those transactions are then removed from the Node. This removal results in a drop in the size of the Mempool.

Keep in mind if the size of most Mempool’s is about 3 MB, it would mean transactions would have to wait a couple of blocks for inclusion in the next available block; because each block is about 1 MB in size. So it would take three confirmations to clear the whole Mempool IF no new transactions were coming in.

What can be done if you want to speed your transaction through the Mempool?

  • Pay a higher fee prior to broadcasting the transaction to ensure miners are “incentivized.” (this would be my choice, as I have not tried and therefore have no success history with the other two avenues)
  • Some wallets like Electrum will allow you to use RBF (replace by fee), which will enable you to rebroadcast a transaction to replace the other one and with a higher price fee paid.
  • Some Mining Pools allow you to speed up your transaction process for a fee or picked up or on a first-come, first-serve basis.

Mempool is an integral part of the Bitcoin system. They allow us to “see” if there are traffic jams, which would cause a time delay in the overall processing of our transactions and higher fees paid.

About the author

Gail holds one of the most challenging role in the Compumatrix Leadership: Membership. She ensures that that members and potential members enjoy the benefits of being part of the Compumatrix community.

Comments

  1. Good explanation of how some of the inner workings of the block chain are handled. We all wonder why some days it takes 8 cents to send $100, yet yesterday I sent $10 and the fee was 66 cents. Because things are BUSY on the block chain.

    Thanks Gail.

  2. I had some transactions stuck in the mempool when things were going crazy in 2017. It was very concerning for the future of transactions. I was concerned that the costs of transactions were going to become an issue in the future. When the lightning network was being developed, I was hopeful once again.

  3. I am so glad to know about mempools now! No wonder it takes so long for my Bitcoin transactions to go through when I am buying and selling Bitcoin on the coinbase platform. I am glad I have this knowledge because I will probably opt to pay a higher fee so that miners have the incentive to prioritize my transaction over other people’s transactions.

  4. More crypto currency vocabulary words to add to my brain. It is always good to learn more about things related to the company I am a part of. I like things to get done quickly. I do not like to wait so it is good to know that for a slightly higher fee; my Bitcoin transactions can be prioritized above other people’s transactions.

  5. I just love your blogs, they are jam full of wonderful information that I can use now and in the future and it helps to understand the whole process much better. I especially like the part of getting a transaction to go through a little faster by paying a little more and it may be worth it to you if what you are doing you can not afford to wait for hours or days, also if we need to jog are memory we can always fall back on these blogs and look up important info if needed.
    thank-you so much for all your hard work with Compumatrix.

    1. Thank you, Tim. I’m happy they help. This seems to be a way to help inform our members about certain aspects of our business that was lacking an avenue before. I enjoy writing blogs and am truly pleased that they help in some way. If there is anything you wish for me to blog about just let me know, please. thanks!

  6. I have known about Blockchain mempool but did not quite understand how it worked.
    I did notice that if you pay a little more on those fees, things got moved faster, especially when transactions (TX) markets flooded the Blockchain pool or mempool. But unless that transaction is of importance and there is no time waiting, I suggest doing so (wait) for lesser TX traffic because it could cost a higher fee price just to get out of the pool.

    1. Hey Coky, I have had to pay to get in a pool but never had to pay to get out…lol Seriously, I guess it would depend on how badly you needed the transaction to go through as to whether you are willing to add more fees. I can imagine some would need it ASAP so would be willing to add more in fees. I do like knowing that is possible!! Thanks for this Blog, it helps me understand!!

  7. Thank you for explaining what a Mempool is and how it works. I did know about them but not much. This I am sure will help all of us to decide if we want to add more fees to rush up the transaction or if we can just wait a bit on it. I appreciate it!

  8. Problems related to slow times for processing of transactions on the blockchain will be overcome in due time. Those slow processing times, along with high fees, are some of the biggest barriers to the complete adoption of bitcoin by businesses around the world. But ingenious solutions are being researched and some of them are already being tested and refined at the moment. The future of blockchain and cryptocurrencies is very promising.

  9. I also thank Gail for a great blog with a good understanding of the whys and wherefores of the mem pool and how through some negotiating factors and literally the free market aspect of the blockchain –it is fun to look at the intricacies of the inner workings and it really is true in not just blockchains but in business in general — learn how to keep your business in the fast lane and keep your focus —

  10. Thank you so much for the information. Slowly (but surely) I am beginning to understand the Mempool and in turn understand miners and then understand the blockchain; someday I may even understand Mimblewimble (not today) and hopefully someday everything crypto will begin to make sense. I am very optimistic and very grateful to you for explaining Mempool in a very easy to understand way. Wow I knew someday I might understand the blockchain and because of your article there is a light at the end of the tunnel.

  11. Like all the good stuff that shows up in the blogs, here is another bit of very useful information. I too use Coinbase and lately they have moved my transactions quickly. I switch over to Blockchain once I commit to see how many are ahead of me. As you follow the tickets you can see that the transactions with smaller numbers are a lot slower.

    Over the next year or so even with more people using Bitcoin, the processing systems will like pick up speed. This is a very fast moving train we hopped on. Very soon our program will have us adjusting our seatbelts. “Knowledge gained is knowledge used.” Thanks Gail.

  12. i read this posting again and it makes more sense each read — I understood the principle of the more you pay the faster you go thru this type of crypto transactions but now I have a better understanding of how to put this part with other parts of the overall transactions — there is so much involved and it goes back also to the less ability peeps have to access your transactions the safer you are — so it makes sense that pay more and get your transactions thru faster and get out of limelight — speed is important —

  13. I guess the age-old adage is still valid. You get what you pay for, in this case, transactions going through the mempool. That is a good thing when you have a purchase to go through the blockchain, and you are looking for it to appear in your wallet, etc., now. Paying the higher processing fee is what I would do. What does this say for those doing the mining? Like us, they need to make their money count, and this is their method of making an income. Thank you, Gail, for knowledge about the mempool. Having you break down the process of our digital processing makes it more understandable.

  14. I chose the transaction fees based on how soon I want to see my transaction completed and how much I’m sending. I have had to adjust my transactions on occasion to lower fees so more Bitcoin will be sent. This is when I have a limited amount of BTC on hand and I’m trying to buy as much as I can with it.

  15. Excellent explanation of the Mempool, Gail! I remember in 2017, the Mempool filled and the transaction fees went way up. That’s when many Bitcoin users learned about the Mempool, the hard way! Small transactions were suddenly expensive and took hours, or even a full day, instead of 10 to 20 minutes, to confirm.

    It made no sense to send amounts less than $100.00 worth of Bitcoin, because the fee would be, for example, $5.00 worth of Bitcoin. That fee amount would stay the same if you sent $10.00 worth of Bitcoin or if you sent $100.00 worth of Bitcoin. That meant sending $10.00 worth had a 50% fee, yet sending $100.00 worth only had a 5% fee.

    Sending $200.00 worth drove the percentage down to 2.5%. I reiterate that the fee was the same $5.00 worth of Bitcoin, regardless of the amount of Bitcoin being sent in the transaction.

  16. There is so much happening in the cryptoworld that it is good to see a blog that explains basic concepts in a very clear way. Thank you for that Gail. It is always good to knon that there are people in Compumatrix that has the ability to explain so I can broaden my knowlegde about the cryptoworld.

  17. Gail thank you for the tutorial on Mempool. This has helped me visualize the BTC transaction process. I agree with the other members who commented about opting to pay the higher fee to the miners for prioritizing my transaction. However, I don’t remember seeing these options in the exchanges. I’ll have to look a little closer.

  18. This tutorial is an eye-opener and brings a lot of clarity regarding the processing of bitcoin transactions. it is preferable to send big amounts of bitcoin and paying the fees for getting funds accross, faster. Mempool is certainly a help and Gail has once again educated us about another new option of how to speeden up and secure payments.

  19. Thank you, Gail for another crypto term – mempool – added to my vocabulary. Your article helped me visualize the inner workings of the blockchain when a transaction is being processed. I know I need to read this again for stronger understanding and be able to explain it to newbies. It is also good to know that things are being done to help address surge in transaction fees during high-traffic situation.

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