Why Does the Fee for BTC Transactions Increase and What Awaits Us in the Future?

In order to transfer coins from one wallet to another, it is necessary to pay a fee. It goes to those miners who process this transaction. But it is worth noting that the size of this fee is not always unvarying. For example, in 2010, transactions were almost free, and in December 2017, one transfer cost 30-50 US dollars. Of course, it was possible to send the transaction for free, but then it would take several days for it to be confirmed. In this article, we will explain why we need fees on the Bitcoin network, why they are increasing and what to expect in the future?

What is the fee for a bitcoin transaction?

As you know, Bitcoin works on blockchain technology. This means that its network consists of a chain of blocks that are generated by miners. Each of these blocks contains information about confirmed transactions. That is, if the transfer record was included in the block, then it has already been confirmed and successfully completed.

In the early years of Bitcoin, there were few participants in its network, so there were few transactions. But already then there were detractors who wanted to destroy the work of the still young system. At that time, hackers launched attacks on blockchain coins by instantly sending hundreds of thousands of transactions. Since the network bandwidth of Bitcoin is 7 operations per second, it, naturally, hung, because of such an influx of data. Just in order to avoid such attacks, the developers introduced the fees for conducting transactions. It was 0.0001 BTC per 1000 bites of data (1 KB). It should be noted that ordinary users did not feel it at all, but it became a stopping factor for hackers since such attacks would require considerable financial expenses on their part.

But to make such a system work, it was necessary to enter a priority for transactions with fees. The principle of “live queue” was no longer suitable for it. For this reason, the developers decided to empower the miners with the ability to independently choose the transactions that should fall into the block primarily. Well, to ensure that transactions with fees were in priority, the developers decided to give a commission fee to miners. This means that transfers with fees began to enter the blockchain earlier than free transactions. When there were few transactions in the network, the waiting time was short – about 15-30 minutes, but with the growing popularity of the coin, the situation changed not for the better.

How is a fee for a BTC transaction charged?

The fee is taken from the sender’s wallet in excess of the transfer amount. For example, a person wants to send 0.3 BTC transaction and put a fee of 0.0004 BTC, then 0.3004 BTC will be withdrawn from his account. In most wallets, users have the opportunity to independently indicate the amount of fee. There are also so-called “recommended” fees, which with a high probability guarantee the addition of a transaction to the registry in the near future. The size of the final transfer fee also depends on the “weight” of the transaction source code, which is measured in bites. Translations can be simple (about 400 bites) and complex (about 1000 bites).

Why does the BTC transaction fee increase?

As it was mentioned above, in our time the number of Bitcoin network members is much more than for example in 2010, respectively, the number of transactions has increased many times. Therefore, a long line is formed from transfers that have been initiated by users but have not yet entered the registry. In this case, the miners have the right to choose the transactions that they want to add to the registry first of all. For this reason, a user who wishes to complete a transaction as soon as possible is forced to additionally motivate the miner to choose exactly his transfer from the huge queue. And how can this be done? True, by offering him a higher fee than other users.

In the queue for confirmation of transactions, there are always people who need to make an urgent payment and users who can wait. The paradox is that the longer the queue, the more people who want to complete the transaction as soon as possible. Therefore, each of them begins to gradually increase the cost of the fee, which ultimately leads to its rapid growth. That is why other users are simply forced to rely on this unjustifiably high market commission otherwise, they risk not transferring money at all.

The last time such a scenario was observed in December 2017. At that time, Bitcoin reached its historic maximum of 20 thousand US dollars and there was a huge amount of people willing to make a transfer. Therefore at that time, astronomical commissions were recorded.

What will happen to the size of the fees for a BTC transaction in the future?

It is quite logical to assume that the amount of commission in the Bitcoin network will only increase in the future, as the number of active users will only increase each year. But it is worth noting that there is just a grain of truth.

The fact is that this problem was obvious for developers for a very long time, so they have been working hard to solve it for several years. One of the ways out of this situation is –  Segregated Witness or abbreviated SegWit. If not to go to depth, using this technology will increase the bandwidth of the Bitcoin network. Due to SegWit, one block will be able to contain a greater number of transactions, respectively, they will be processed faster.

At the moment, SegWit technology is integrated with only a few crypto resources, and its implementation proceeds at a very slow pace. But it is worth noting that the number of such services is constantly growing, so there is hope that the throughput of the Bitcoin network will increase in the near future, and the commission amount, respectively, will decrease.


Different groups of developers from around the world are actively working on other solutions to this problem. Therefore, there is a hope that they will be able to succeed in the future, and the blockchain of the first cryptocurrency will have high bandwidth. But it is quite difficult to make any predictions since this equation has too many variables:

  • the rate of the popularization of Bitcoin among the masses;
  • the number of resources that will implement SegWit technology;
  • the speed at which they will switch to SegWit;
  • the number of possible hacker attacks on the Bitcoin blockchain.

It is impossible to calculate all these numbers today, for this reason, we can only follow the events.

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