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Glossary Term:

Transaction Fee

Transaction fees are the amount a Bitcoin transaction pays to miners for the ability to take up space on the blockchain. These fees do not scale with the amount of Bitcoin sent by a transaction, but rather by the amount of data that a transaction takes up to send. It is measured is satoshis per byte. Due to the limited amount of space per Bitcoin block, 1 Megabyte or around 2,000 transactions worth of data, miners prioritize the transactions within the mempool that have paid the most in transaction fees. While during off-peak times a user can manage to send Bitcoin transactions for as little as 1-2 satoshi per byte, there have been instances of high volume where a transaction that wishes to get confirmed within 6 blocks may have to pay upwards of 80-100 satoshi per byte for an on-chain transaction.