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How does TxFee work?

If I send BTC I have to pay a fee in relation to the size of my tx – so far so good. But what happens with this fee?

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The following content was written by 1337leet on February 15, 2018, 04:31:49 PM in the thread How does TxFee work?. All content is owned by the author of the bitcointalk.org post. (original)


Hey there,

if I send BTC I have to pay a fee in relation to the size of my tx – so far so good. But what happens with this fee?

If some miners find a block they get rewarded from the block with new Coins – so where are my TxFees?

Are they lost? Are they for the system? Are they for the miners?

The following content was written by ranochigo on February 15, 2018, 04:35:43 PM in the thread How does TxFee work?. All content is owned by the author of the bitcointalk.org post. (original)


if I send BTC I have to pay a fee in relation to the size of my tx – so far so good. But what happens with this fee?

If some miners find a block they get rewarded from the block with new Coins – so where are my TxFees?

Are they lost? Are they for the system? Are they for the miners?
They are given to the miner whose block has your transaction inside.

Miners can claim the transaction fees by including the block reward + transaction fee to an address in their coinbase transactions. They can choose to claim less than that but they cannot exceed it.

The following content was written by 1337leet on February 15, 2018, 04:44:42 PM in the thread How does TxFee work?. All content is owned by the author of the bitcointalk.org post. (original)


Does this mean, that if a miningpool finds a block the one person who actually found the block will get the block reward (depending on how much work he did) + all the tx fees from the block?

The following content was written by DannyHamilton on February 15, 2018, 04:47:44 PM in the thread How does TxFee work?. All content is owned by the author of the bitcointalk.org post. (original)


Does this mean, that if a miningpool finds a block the one person who actually found the block will get the block reward (depending on how much work he did) + all the tx fees from the block?

No.  It means that when the mining pool builds the block, the mining pool will decide what to do with the block reward (subsidy plus fees).  Then the person that actually solves the block will broadcast it.  The mining pool will then pay out to everyone according to the rules of the mining pool.

The following content was written by 1337leet on February 15, 2018, 04:55:43 PM in the thread How does TxFee work?. All content is owned by the author of the bitcointalk.org post. (original)


So it’s just

((block reward + tx fees) / number of total shares) * number of rendered shares


Means that the “block reward” is block reward + tx fees?

So there are not only 12,5 BTC per found block but also the tx fees in addition?

The tx fees are also divided to all the miners?

The following content was written by DannyHamilton on February 15, 2018, 05:00:27 PM in the thread How does TxFee work?. All content is owned by the author of the bitcointalk.org post. (original)


So it’s just
((block reward + tx fees) / number of total shares) * number of rendered shares

Each pool has their own rules about how to share the revenue.  You’d have to check with the specific pool.

Means that the “block reward” is block reward + tx fees?

Correct.

To avoid confusion, you can call the 12.5 BTC a “block subsidy”.

Then the block reward is block subsidy + transaction fees.

So there are not only 12,5 BTC per found block but also the tx fees in addition?

Effectively, yes.

However, technically, neither the subsidy NOR the fees are “found”.  They are simply assigned in a transaction that the block builder includes in the block when they build it.

The tx fees are also devided to all the miners?

That depends on the rules of the pool.
Each pool has their own rules about how to share the revenue.  You’d have to check with the specific pool.


The following content was written by 1337leet on February 15, 2018, 05:09:47 PM in the thread How does TxFee work?. All content is owned by the author of the bitcointalk.org post. (original)


Ok, thank you very much, I got it now.

But why do we need tx fees if the miners will get the block reward? Isn’t this enough?

Is this process designed for the time when all blocks are found or the block reward is so small that miners won’t work anymore because their reward is too low?

How much is the tx fee reward per block approximately? So how much tx fee is added to the subsidy? Just to get an idea if it’s just 0,0001 BTC or more like 1 BTC per Block in total of all tx fees?

And btw – how are transactions transfered once all blocks are found?

The following content was written by ranochigo on February 15, 2018, 05:32:18 PM in the thread How does TxFee work?. All content is owned by the author of the bitcointalk.org post. (original)


But why do we need tx fees if the miners will get the block reward? Isn’t this enough?
No. The block subsidy isn’t going to last forever, else the coin cap would be infinity.
Is this process designed for the time when all blocks are found or the block reward is so small that miners won’t work anymore because their reward is too low?
Yes.
How much is the tx fee reward per block approximately? So how much tx fee is added to the subsidy? Just to get an idea if it’s just 0,0001 BTC or more like 1 BTC per Block in total of all tx fees?
It depends on a block by block basis. Check the block explorers and you should get an idea. Miners can choose what transactions they want to include and the transaction fees can be ridiculously high sometimes, especially if there are loads of unconfirmed transaction.
And btw – how are transactions transfered once all blocks are found?
Transactions are still transferred through internet (probably). Transactions would still be included in the blockchain by the mining process in the future, same thing.

The following content was written by DannyHamilton on February 15, 2018, 05:48:00 PM in the thread How does TxFee work?. All content is owned by the author of the bitcointalk.org post. (original)


Ok, thank you very much, I got it now.

But why do we need tx fees if the miners will get the block reward? Isn’t this enough?

There is a limited amount of space in a block.  The miner needs to decide which transactions to include in the block.  The transaction fee is a way for the transaction sender to provide an incentive for the miner to choose the transaction.  You don’t have to provide a fee if you don’t want to, but since the miner is profit motivated, they will choose the transactions that DO provide a fee unless they have extra space or they feel very charitable.

Is this process designed for the time when all blocks are found
– snip –
And btw – how are transactions transfered once all blocks are found?

There is no such thing as “all blocks found”. As long as bitcoin exists, there will continue to be more blocks.

or the block reward is so small that miners won’t work anymore because their reward is too low?

The fees will slowly replace the subsidy as the main source of revenue for the miners.  Approximately every 4 years (exactly every 210,000 blocks) the subsidy is cut in half.  Eventually the subsidy will be less than the fees.  Then (in about 110 more years) the subsidy will disappear completely, but mining (block building and solving) will continue to earn the fees.

How much is the tx fee reward per block approximately?

That depends on how much the transaction senders are willing to pay.  It changes with time.  For example, the average fees in the most recent 5 blocks is 0.39829937 BTC per block, while the average fees in 5 blocks chosen randomly from December 25 (blocks 501000 through 501004) was 6.30986372 BTC per block.

So how much tx fee is added to the subsidy?

The transaction senders choose how much fee they want to include.  The miner then chooses the fees that pay the highest fee per byte (or block weight) until the block is full.  If people are paying higher fees, then the miner gets more revenue.

Just to get an idea if it’s just 0,0001 BTC or more like 1 BTC per Block in total of all tx fees?

As bitcoin becomes more popular, there are more transactions.  As there are more transactions, the senders offer higher fees to get their transactions confirmed.  This increases fees overall.  If the fees get too expensive, then people stop using bitcoin.  The reduction in use means less transactions which means it is easier to get a transaction into a block. Therefore, people pay less fees.  Eventually the fees get cheap enough that more people are willing to pay them. This increases the number of transactions. It is likely that the fees and transaction volume will bounce around a bit until it reaches some equilibrium.  It is not currently known where that equilibrium will be.  The people will decide for themselves as the system develops and matures. I expect that the total fees will be higher a few years from now than they are right now.

The following content was written by 1337leet on February 15, 2018, 06:13:11 PM in the thread How does TxFee work?. All content is owned by the author of the bitcointalk.org post. (original)


All right, thank you guys very much Smiley

The following content was written by madhavanmalolan on February 16, 2018, 08:04:36 AM in the thread How does TxFee work?. All content is owned by the author of the bitcointalk.org post. (original)


Just to add to the discussion …
Transaction fees is collected by the miner. This becomes much more important once the mining rewards caps out (in year 2134). From that point on the only source of income for the Miners will be this transaction fees

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Legal

Korbit charged for excessive customer data collection

Korbit, a well-known cryptocurrency exchange, has been charged and fined over “collecting excessive personal data” from at least one of its customers.

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Korbit, a well-known South Korean Cryptocurrency exchange, has been charged and fined over “collecting excessive personal data” from at least one of its customers. 

Korbit is a South Korean company that is heavily vested in the cryptocurrency market. The brand is owned and operated by Korbit Inc, a company located in Gangnam-gu, Seoul, South Korea. The brand commenced operations in 2014 after securing huge financing from several venture capitalists.

Korbit performs the following cryptocurrency-related services:

  • Cryptocurrency trading for the local South Korean market.
  • Fiat to cryptocurrency exchange services using the South Korean Won (KRW) as the fiat currency of choice.

South Korea has a large cryptocurrency trading market, largely populated by local players and companies who moved there when the Chinese ban on cryptocurrency trading came into effect. By providing the local and regional market the opportunity to use the local currency to purchase cryptocurrency tokens or secure cryptocurrencies for trading purposes, Korbit fulfills a large need.

So Korbit is a very well-known exchange, and they get fined for a matter like that has been a matter of talk between crypto experts.

A Small But Significant Fine

According to Yonhap, a news agency, “ They have been charged USD 4000 for this by a government watchdog for ordering a customer who had attempted to activate a dormant account on its platform to upload a photograph of their national ID card.”

The court took the case before the Personal Information Protection Committee. Then they met in a plenary session to rule on the case. The crypto exchange Korbit argued that it needed proof of a photo ID to prevent financial crimes such as voice phishing scams, adding that account users could begin trading immediately after activating dormant accounts.

But the committee overruled their argument and decided in favor of the user in question, claiming that none of Korbit’s other “big four” crypto exchange rivals (Upbit, Bithumb, and Coinone) required photo ID submission activate such accounts.

The committee ruled that mobile phone verification would have been sufficient in this instance. The exchange was guilty of violating the “principles of minimum personal information collection” specified in the Personal Information Protection Act, which was passed last year.

The decision made was absolutely correct because there was no point for them to ask for full ID verification. Mobile verification was acceptable, and the demand for photo ID verification was completely useless.

Korbit Jumps Into NFT Craze

In the meantime, Korbit has also started selling these days popular non-fungible tokens (NFTs) for a hit South Korea drama series. Per EDaily, Korbit struck a partnership deal with the production company Studio Dragon, the creator of the drama Vincenzo, a mafia-themed series starring Song Joong-ki that aired on the cable network tvN earlier this year.

The deal will see the company sell 100 limited edition official pieces of art based on the show on a first-come-first-served basis on July 21.

Korbit stated that it plans to create more NFT items for “other popular dramas” produced by Studio Dragon.

The company also said and showcased one of the items it plans to sell – an NFT featuring an iconic lighter used by the main and titular character in the drama, also distributed by the streaming giant Netflix.

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Bitcoin

Bitcoin Core 22.0 To Add Hardware Wallet Support

Bitcoin Core will start to support connection with Hardware Wallets with HWI library. New options for hardware wallets will be added to the settings.

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The latest version of Bitcoin Core v22.0 will add support for hardware wallets. It will start to support connection with Hardware Wallets with HWI Python library. The overall interface of the wallet will change in the latest version and new options for hardware wallets will be added to the settings and then we will be able to create a new wallet with our connected devices.

It is pretty good news and bitcoin users are looking forward to giving this wallet a go as soon as it releases.

Bitcoin Core can be launched with -signer=<cmd> where <cmd> is an external tool that can sign transactions and perform other functions. For example, it can be used to communicate with a hardware wallet.

Among other changes, Bech32m (witness v1) addresses are now supported for most RPC calls. Adjustments were made to the RPC calls for banning, network, and peer information. It no longer supports MacOS versions older than 10.14 “Mojave”.

22.0 Release Notes Draft

Below is a copy of the relevant section of the release notes that mentions the signing feature.


GUI Changes

External signers such as hardware wallets can now be used. These require an external tool such as HWI to be installed and configured under Options -> Wallet. When creating a new wallet a new option “External signer” will appear in the dialog. If the device is detected, its name is suggested as the wallet name. The watch-only keys are then automatically imported. Receive addresses can be verified on the device. The send dialog will automatically use the connected device. This feature is experimental and the UI may freeze for a few seconds when performing these actions.

Example of Usage

Although this tool is hosted under the Bitcoin Core GitHub organization and maintained by Bitcoin Core developers, it should be used with caution. It is considered experimental and has far less review than Bitcoin Core itself. Be particularly careful when running tools such as these on a computer with private keys on it.

When using a hardware wallet, consult the manufacturer’s website for (alternative) software they recommend. As long as their software conforms to the standard below, it should be able to work with Bitcoin Core.


What does the HWI library do?

The primary use of HWI is to discover hardware wallets that are connected via USB ports. It uses the udev project, which means that Windows is not supported. It only works for macOS and Linux. Fortunately, HWI and hardware wallet support are optional in Bitcoin Core. It will continue to function normally if HWI is not installed.

HWI is a command-line program that reads commands from the terminal and sends them to the device. The device behaves as if a human is entering physical input to it and executes the commands the same way it would be done manually. It also has a Python API, which makes it easier to add an HTTP API in the future if desired by the project maintainers.

Supported Devices

The following hardware wallets are compatible with most commands of HWI:

  • Ledger Nano X
  • Ledger Nano S
  • Trezor Model T
  • Trezor One
  • BitBox01
  • BitBox02
  • KeepKey
  • Coldcard

HWI has a support policy that states that hardware wallets must use as much open-source firmware as possible. Closed-source parts are acceptable if they are required by a non-disclosure agreement (NDA). Closed-source firmware is tolerated if the vendor provides active support for it, but the hardware wallet support will be dropped if the vendor stops maintaining HWI support for their hardware wallet. Also, if the hardware wallet stops receiving security updates, HWI support for it will be dropped if security vulnerabilities are found.

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Mining

Meet The Large Companies Investing In Antminers

Why are these companies only buying large quantities of Bitmain Antminer hardware, and how do they receive them?

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Along with Gryphon and Hut 8 Mining Corp, many other companies invest in bitcoin miners. There’s a reason why Bitmain Antminers are some of the most popular in the world. All of these invest in Bitmain mining hardware only. Gryphon is a minor mining operation compared to some of the more prominent players, but they all have a role to play. We will discuss TeraWulf first.

TeraWulf

TeraWulf is a new mining company based in the United States purchasing 30,000 miners from Bitmain with plans to have greater than 3 Exahashes (EH/s) of Bitcoin Mining power, which is some serious power that would put it in the top 10 mining pools in terms of hash rate. 

TeraWulf is soon to have a Nasdaq Listing; it agreed to merge with Ikonics, an imaging tech company whose stock is traded on Nasdaq. The newly merged company will trade under “WULF”.

TeraWulf is an example of a medium-sized operation, who has also placed its trust in Bitmain to provide mining hardware.

TeraWulf has a long-term goal to mine Bitcoin with more than 90% Zero-Carbon energy. It has around 50 megawatts of electricity capacity, with long-term plans to increase this to 800 Megawatts by 2025. This would enable a hashrate of more than 23 EH/s. It is ambitious, as it would be in the top 5 of hashrate.

TeraWulf’s low-carbon commitment is a sign of the times with concerns about the carbon footprint of the Bitcoin blockchain. Players the size of TeraWulf can make a difference in the carbon footprint of Bitcoin and help set trends.

Core Scientific

Core Scientific is a mining company in North America. It has recently completed a buy of 112,800 ASIC mining rigs from Bitmain. Core Scientific provides hosting services for miners alongside its operations bought S19 Pro, S19j, and S19j Pro miners intending to double its fleet of miners. Core Scientific can also repair Bitmain mining machines that are under warranty, thus offering Bitmain Warranty services in North America.

Core Scientific intends to use half of the machines it has ordered for its mining operations. They will use the other half to fulfill contracts with existing mining clients.

The large 112,800 shipment and future ones of similar magnitude will help Core Scientific more than double its share of Bitcoin’s hashrate. Core scientific currently has approximately 5% of the current Bitcoin Hashrate. They intend to increase this to 12$, according to their CEO Kevin Turner.

Turner’s forecast aligns with the growing presence of North America in the Bitcoin mining sphere. 

Along with Core scientific, Gryphon, and TeraWulf, other mining companies are looking to expand their operations, such as Marathon, Riot, and Blockcap.

Kevin does not expect the trend of big players investing in the mining space to stop soon, and new prominent players are continuing to enter the game. 

Kevin stated that larger numbers of publicly traded companies, large family companies, and hedge funds are looking for trustworthy mining operations in North America. Kevin believes that the United States is interested in being a leader in digital assets, despite other countries being early adopters before the United States was.

Marathon Patient Group

Marathon is another significant player in the Bitcoin mining industry, based in Las Vegas. They mined no fewer than 196 Bitcoins in 2021, worth over $11 million at current prices. Marathon has planned to expand its mining operation to have no fewer than 100,000 miners online by 2022. Marathon’s hold more than 5,000 Bitcoin. Marathon received an order in Q1 of 2021 for 1,300 Bitmain S19 Pro mining rigs.

Marathon will have ongoing shipments from Bitmain throughout 2021, with a plan to have over 100,000 online by January 2022. Marathon’s total network hashrate is estimated at 10.3 Exahashes per second by then, putting them in the top 10. The company used stock offerings and other financings to invest in the latest Bitmain hardware.

Marathon has planned its high-speed expansion to keep up with other big names in the mining industry. The new machines coming online in 2021 after heavy demand has caused the Bitcoin difficulty to skyrocket due to the flood of hashrate. Bitcoin difficulty is the algorithm that keeps the supply of bitcoins and the Blockchain’s growth constant despite the varying market conditions.

The CEO of Compass Mining, Whit Gibbs, commented on Marathon’s “mammoth” ASIC order. He mentioned he feels that this trend of increasing hashrate and difficulty shows no signs of slowing in 2021 and that it should track with Bitcoin’s price.

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