Published On: Wed, Aug 30th, 2017

How Bitcoin Fees Work and Why They’ve Been So High

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Fees have been extraordinarily high this past week, and this article aims to clear up misconceptions and help users make smarter decisions in setting the right fees for their transactions.
$3 fee for a $5 transaction?
With the recent Bitcoin rally up into the mid $4,000’s there has been a huge influx of users that really don’t understand how Bitcoin works under the hood. And that’s okay, most people are here just for the investment. But more and more users are getting fed up with the fact that Bitcoin’s network fees have been so high, even for very simple low-cost transactions.

Unlike traditional financial institutions that charge fees for transactions, Bitcoins fees are NOT dependent on how much money you’re sending. The fees for sending $5 worth of Bitcoin can be the same as sending $5,000. Fees are not measured in dollar amounts, or even Bitcoin amounts. They’re measured by “satoshis per byte of data” or sat/byte.
One satoshi is the smallest denomination of a Bitcoin: 100,000,000 satoshis make up one Bitcoin.
Instead of paying for every Bitcoin you send, you pay for the amount of data in a block …

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