The concept of Bitcoin Transaction fee calculation | Beginner’s Guide

Simply everyone knows that the amount of fee that we pay for the transaction of Bitcoin is known as the bitcoin transaction fee.


Sometimes we saw that for the same amount of the Bitcoin transaction we need to pay different-different amounts and different-different time of confirmation even with high fees.

 The reason behind this factor is not simple .

Here two types of reasons works behind this factor of high and low fee .

  1. High traffic of transaction: when lots of transaction going on in the Bitcoin then a type of traffic generate and that leads into time taking process to confirm a transaction

And in that case, we need to pay a high fee to confirm more fastly. Here system works like “pay high confirm first”, So in high traffic, we need to pay high to give priority for the confirmation of the transaction.

      2)  Input & Output of amount of Bitcoin :

           Here it will not be easy to understand the logic

Of input and output of the transaction of Bitcoin      

      Because it is small technical thing to Understand .

First of all you need to skip the misconception

amount of transaction fee depends upon the amount of Bitcoin that we want to transfer”

Here it is only depends upon input and output .

Here what will be input? Clearly that, from how many addresses you got that amount of Bitcoin that you want to transfer to another.

In simple way we can explain with another consideration :

In Case first: if you have 100$, and this amount of money you received from  3 people and want to transfer to another people then, you will pay the fee for this amount of money in the following way

1$ per input  i.e 3$ ( because you got this money from three people )

And 1$ per output i.e 1$ ( because the fees assign for sending money is 1$ per output )

Now the total fee you will pay for the transaction of 100$ will be 4$ .

Similarly we can take another example

Case second: if you have 100$, and this amount of money you received from only 1 person.

Now if you want to send this money then fees will be only 2$ i.e 1$(input by one person) + 1$ ( output fee to another person )

So here we saw that for the same amount of the money the transaction needed to pay different-different amounts of a fee.

Note: Here I just take an example of $, instead of Bitcoin so that readers can easily understand the real concept of calculation of the fee.

Readers can find Average fee assigned for a particular transaction in current time according to traffic and I/O at bitcoinfees.

Also Read : Best Wallet for Bitcoin | Most trusted Bitcoin Wallet