Next Bitcoin Core Version to Include ‘Smarter’ Transaction Fees

(CoinDesk) Bitcoin Foundation Chief Scientist Gavin Andresen has outlined the
details of new floating transaction fees to be included in the code of
the next Bitcoin Core release.

In a new post on the official Bitcoin Foundation blog, Andresen
stated that the updated code will enable “smarter” fees that account
for the length of time it takes to confirm transactions on the bitcoin
network. Ultimately, the new code will determine transaction priority,
making sure that transactions confirm more efficiently.

Andresen cited needless complexities within bitcoin’s transaction fee
code as the reason for the update. These complications result in
inconsistent and time-consuming confirmation periods. He wrote:

“Instead of using hard-coded rules for what fees to pay,
the [new] code observes how long transactions are taking to confirm and
then uses that data to estimate the right fee to pay so the transaction
confirms quickly – or decides that the transaction has a high enough
priority to be sent for free but still confirm quickly.”

Furthermore, the new code enables transaction senders to configure
how much priority they want their transaction to receive. In some cases,
users may opt to have as many as six blocks pass before the first
confirmation is received.

Currently, the Bitcoin Core code can lead to headaches for those who
send large bitcoin transactions. As Andresen explained, the new code
eliminates some of the hurdles that slowed down transactions in excess
of 1,000 bytes in size.

Transactions sent for free also run into problems under the existing
framework. The code that determines priority for free transactions
automatically places them at a disadvantage in the network. This results
in a significant increase in confirmation times.

Andresen wrote:

“The current situation is even worse for free,
high-priority transactions: the hard-coded ‘high-priority’ constant is
much too low, so transactions sent for free can take a very long time to
confirm.”

By making changes to Bitcoin Core, Andresen said, users can rely on
more effective transaction fee determinations within the bitcoin
network.

Andresen went on to dismiss the idea of small, fixed transaction
fees, citing the behavior of miners – and their preference for high-fee
transactions – as reasons to avoid such an approach. Notably, he said
there was no desire within the bitcoin development community to
institute fixed fees.

Fees should rise in the future as miners sign and confirm larger transaction volumes in the months and years ahead, he wrote:

“I expect to see transaction fees rise until a good
solution for optimizing the propagation of blocks across the network is
deployed, because I expect transaction volume to increase and I don’t
think miners will include more transactions in their blocks until
somebody fixes the ‘bigger blocks take longer to broadcast’ problem.”

Ultimately, he concluded, developers need to tackle this problem and
develop new code that enables a more efficient and healthy transaction
process.