Mastering Blockchain - Second Edition

Transaction fee

Transaction fees are charged by the miners. The fee charged is dependent upon the size and weight of the transaction. Transaction fees are calculated by subtracting the sum of the inputs and the sum of the outputs.

A simple formula can be used:

fee = sum(inputs) - sum(outputs)

The fees are used as an incentive for miners to encourage them to include a user transaction in the block the miners are creating. All transactions end up in the memory pool, from where miners pick up transactions based on their priority to include them in the proposed block. The calculation of priority is introduced later in this chapter; however, from a transaction fee point of view, a transaction with a higher fee will be picked up sooner by the miners. ...