Transaction Fees

Imagine your wallet uses 100,000 satoshis you received earlier. A satoshi, or sat, is the smallest BTC unit. It sends 60,000 sat to the recipient and returns 38,000 sat to you. The remaining 2,000 sat is the fee. The funds used are called inputs; the new amounts for the recipient and your change are outputs. An ordinary transaction’s fee is the sum of inputs minus the sum of all outputs. It is not a separate payment to a special address: the miner can add it to the reward in the coinbase transaction, the first transaction in the block. [2] [3]

The cost depends on the space a transaction needs, not a percentage of the BTC sent. A wallet may assemble a small payment from many amounts received earlier; each additional input adds data. A large transfer using a single input can therefore cost less. The rate in sat/vB tells you how many satoshis you pay per virtual byte, the unit used to calculate size for fees. At 200 vB and 10 sat/vB, you pay 2,000 sat. Equal fee rates do not mean equal total fees when two transactions have different sizes. [1]

The recommended rate is an estimate based on pending transactions and past confirmations. Each node keeps its own Mempool, a local collection of pending transactions. When more people compete for limited block space, a previously sufficient rate may no longer buy a quick confirmation. Miners can also consider transactions that depend on one another. A higher rate makes your offer more attractive, but promises no particular block. Before sending, compare both the total fee and the estimated wait. An exchange’s withdrawal charge may also include its service price; it need not equal the network fee for your payment. [3]

Some wallets offer a fee increase. Replace-by-Fee (RBF) creates a replacement transaction spending at least one of the same inputs and offering a higher fee; acceptance depends on nodes’ rules. Child Pays for Parent (CPFP) instead spends an available output of the pending transaction in a new transaction with a higher fee. To collect that new fee, the miner must also include the earlier transaction, so it considers the whole package. You need control of the relevant funds and wallet support. This is not a universal way to speed up someone else’s payment, and neither method guarantees a confirmation time. [3] [4]

This detail helps when comparing wallet figures: virtual size is not always the number of stored data bytes. SegWit introduced transaction weight, where base data and the data used to verify signatures carry different weights. BIP 141 defines virtual size as weight divided by four, rounded up. You do not need to calculate this yourself for an ordinary payment. Just remember that the types of inputs and the transaction’s structure can change its size, and therefore the fee at the same rate. [1]