By Priyansh Rastogi (@priyansh_tweet)
Summer of Bitcoin '21
In the years 2015-2017, it was really very easy to get bitcoin payments done with minimum fees, since the market was not very competitive.
But in the recent years, the bitcoin payments market has seen a lot of growth.
Hence more congestion. With this the fee market evolved. 📈
Number of Blockchain wallet users worldwide from November 2011 to July 11, 2021
Due to highly competitive market the fees grew exponentially.
But guess what, you could save fees by making good decisions.
But how do we do so? 🤔
Analyze the mempool!
mempool: a list of unconfirmed transactions in blockchain
And this is where mempool.space emerges.
Uptil now you might have heard of bitcoin block explorer.
Mempool.space is a bitcoin block and mempool explorer. 😎
A mempool explorer helps you to see the state of mempool and can be really helpful to estimate fees and transaction confirmation time.
Let's dive deeper. 🌊
Here you can see a queue of confirmed and unconfirmed blocks.
These are the unconfirmed ones. This is the visual representation of mempool we were talking about.
Let's analyze an unconfirmed block.
The transactions in this block have a median fee of ~2 sat/vB ranging from 1-605 sat/vB and currently it holds 1053 transactions.
This block will most probably be mined in the next ~10 minutes.
The state of the block changes until the block is mined successfully. Miners look for transactions with max fee as newer and newer transactions get into the mempool.
See, the median fee changes to 3 sat/vB.
And there its mined.✔️ Beautiful!
Now let's see how to read a mempool and estimate fees for our transaction. 🧐
Mempool.space suggests the fees based on the state of the current mempool.
It also has graphs showing the accepted fee trends in past and live incoming transactions size.
The chart itself represents the current mempool. The colored layers represent transaction fee rates.
As you can see above, the pink at the bottom represents unconfirmed transactions in the mempool with a 1 - 2 sat/vB fee rate.
In the layer above that, you see unconfirmed transactions with a 2 - 3 sat/vB fee rate. The layer above that, 3 - 4 sat/vB. And so on and so forth.
We can see that at time 21:06 the mempool was nearly empty and all 1 sat/vB transactions got accepted, but this was not the case 30 mins before.
Incoming transactions - shows the amount of unconfirmed transactions entering the mempool, measured in vBytes per second (vB/s).
So around 21:32 in this chart, we can see there was a sudden influx of unconfirmed transactions entering the mempool, around ~3,500 vB/s.
If we assume that each transaction is on average ~450 bytes, then the meter above tells us there are ~2 incoming transactions every second.
So now that you are girded with all this data, you can customize your fees accordingly. Once you’ve made the transaction, you can see its status using mempool.space. 😎
So until next time, Set your fees wisely 💸💪