How to speed up a Bitcoin transaction

How to speed up a Bitcoin transaction

Bitcoin payments are gaining momentum in popularity. In November 2021, Bitcoin's value soared to an all-time high of around $69,000. A record transaction volume was recorded in August 2023, with over 610,000 operations processed in a single day.

However, the more people want to perform a Bitcoin transaction, the greater the load on the system that supports its operation. Consequently, users may encounter certain issues. It's crucial to understand that Bitcoin and other cryptocurrencies operate on a special technology called blockchain. This consists of cells or blocks of information, each capable of containing only a limited amount of data—in Bitcoin's case, up to 4 megabytes.

Therefore, situations sometimes arise when too many people want to execute Bitcoin transactions simultaneously. These transactions enter a special queue known as the "mempool". In some instances, to have a transaction processed, one might have to wait several days until it gets included in a block.

A Brief Introduction to Bitcoin

Bitcoin's history began on October 31, 2008, when an individual or group under the pseudonym Satoshi Nakamoto published a white paper titled "Bitcoin: A Peer-to-Peer Electronic Cash System", outlining the operational rules of the system. On January 3, 2009, the genesis block of Bitcoin was mined, bringing 50 bitcoins into existence. The first exchange rate for Bitcoin was set on October 5, 2009, at 1,309 bitcoins for one dollar. The first known commercial transaction using Bitcoin occurred on May 22, 2010, when Laszlo Hanyecz in the United States exchanged 10,000 bitcoins for two pizzas, marking Bitcoin's entry into the real world. By February 2011, the value of one Bitcoin had reached parity with the US dollar, and interest in Bitcoin continued to grow from there.

What attracted users to Bitcoin? Decentralization and anonymity. The operational principle is straightforward: details of each Bitcoin transaction are verified by network participants known as miners. These transactions are recorded in special blocks that subsequently form a chain, known as the blockchain, accessible to all participants of the Bitcoin network. Miners are rewarded for their verification work by transaction fees paid by the sender. The size of this fee directly influences the speed of the transaction processing.

Elements Affecting Bitcoin Transaction Speed

Transaction Fee

Users have the choice to manually set the transaction fee or use the system's suggested fee. In the blockchain, blocks are a constant size, and transactions vary in byte size. Miners favor transactions with a better fee-to-size ratio. To understand this better, see our guide on blockchain network fees.

Network Traffic

A spike or drop in transaction demand can cause delays, as Bitcoin processes up to 7 transactions per second. Miners prefer transactions with higher fees during block formation. Real-time network traffic can be checked on analytics platforms like Blockchair.

Block Size

The fee increases with transaction size. The norm is to pay a minimum of 0.0005 BTC for every 1,000 bytes, hence larger funds transfer higher the network priority. These factors are crucial in speeding up transactions. With the increasing adoption of Bitcoin, the network occasionally experiences congestion, leading to slow transaction processing times. To address these issues, several enhancements have been proposed and implemented. Segregated Witness (SegWit) was introduced to reduce the size of transactions, allowing more to fit in a block. The Lightning Network is another innovation designed to facilitate instant payments with lower fees, operating as a second layer on top of the Bitcoin blockchain. These improvements are critical for Bitcoin as it evolves to become a more efficient digital currency.

Methods to Accelerate Bitcoin Transactions

Increasing the Transaction Fee

The optimal Bitcoin transaction fee is calculated by multiplying the transaction's byte size by the transfer price for one byte in satoshis (there are 100 million satoshis in one Bitcoin). The "weight" includes about 10 bytes for the transaction itself, plus the size of all inputs (around 148 bytes each) and outputs (about 34 bytes each). The price per byte in satoshis escalates with the demand for transactions.

For example, if a transaction weighs 374 bytes at 138 satoshis per byte, the fee would be 51,612 satoshis or 0.00051612 BTC, which is $5.16 if Bitcoin's value is $10,000.

Replace-by-Fee (RBF)

If miners find the Bitcoin transfer fee insufficient, they may delay confirmation. However, the fee can be increased with the RBF feature supported by popular wallets. RBF lets you replace an unconfirmed transaction with a new one with a higher fee, incentivizing miners with the combined fees of both transactions.

Child Pays for Parent (CPFP)

This method, unique to Bitcoin, translates to "child pays for parents". A new transaction, the "child", spends BTC received from a previous unconfirmed "parent" transaction. Its fee must be higher, incentivizing miners to confirm the new, more profitable transaction, which necessitates confirming the old one first, thus speeding up the entire batch. A Bitcoin wallet that supports CPFP is necessary to use this method. Many wallets, including Exodus, and Trezor, offer this functionality.

Priority Increase

To expedite Bitcoin transactions, they're advanced to the top of the mempool by:

  • Avoiding small sum transfers at standard fees, as they're processed last;
  • Using digital signatures (multisig) to assert the payment's reliability to the blockchain system;
  • Sending open transactions through a trusted server, exposing transfer details to external observers.

This approach attracts miners who will prioritize confirmation.

Transaction Accelerators

For stuck Bitcoin transactions, senders can use external accelerator services. There are many online, both free (like bitAccelerate, Blockchain, bitTools, bitNitro, bitcoinjumper, pubtx) and paid (like antPool, viaBTC), with acceleration starting at $20. This is cost-effective for large transfers.

Using accelerators is straightforward: with a few clicks, the sender inserts the transaction hash, then the transaction moves through the mempool until a miner confirms it. For a free service, it's advised to use multiple accelerators. With paid Bitcoin transaction accelerators, the fee serves as an additional incentive for the miner.

Selecting the Right Method

When making a payment with Bitcoin, senders must accurately calculate the transaction fee. It's typically set to a default average level. Yet, many wallets allow users to voluntarily increase this fee. This increment is the simplest way to speed up a Bitcoin transaction.

Other methods demand extra resources and technical skills. For instance, to edit the transaction fee or create a new transaction based on a previous one, the wallet must support RBF (Replace-by-Fee) and CPFP (Child Pays for Parent) functions. Dealing with accelerators carries its own risks, such as falling prey to fraudulent or unreliable services.

Therefore, before selecting a service, it's crucial to thoroughly investigate its reputation and consult the Bitcoin network community for insights and recommendations regarding your specific situation. It's also important to remember that the effectiveness of all methods is contingent on the current network congestion.

Incorporating recent updates, it’s valuable to note that newer versions of Bitcoin wallets and services are integrating more user-friendly interfaces and options for managing transaction fees. For example, some wallets now include features that estimate the optimal fee based on current network activity or allow for fee adjustments after a transaction is sent, making use of the RBF protocol. Moreover, educational resources provided by the community, like forums and dedicated cryptocurrency websites, offer guidance on best practices for transaction management, ensuring users can make informed decisions without needing extensive technical knowledge. As Bitcoin continues to evolve, these developments aim to enhance user experience and provide greater control over transaction times and costs.

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