What Is The MemPool?
The MemPool, short for memory pool, is a short-term database of unconfirmed transactions that is kept by each node.
Although the term “MemPool” is frequently used, there is no common pool shared by all bitcoin nodesWhat Is A Bitcoin Node? A bitcoin node is any computer that runs the bitcoin software, enforces the bitcoin consensus rules, and validates bitcoin transactions and blocks. Bitcoin nodes are.... Each node keeps their own record of unconfirmed transactions. When a bitcoin miner finds a new block, they select transactions from the mempool to include in that block. Since miners have an incentive to maximize revenue, it stands to reason that they’ll prioritize transactions that pay the highest fee rateWhat Is The Fee Rate? The fee rate for a Bitcoin transaction is the number of sats a sender is willing to pay for each byte of on-chain transaction data..... In the event that a transaction is taking too long to confirm, either the sender or the receiver can use one of the fee bumpingWhat Is Fee Bumping? Fee Bumping is a method of increasing the miner fee of a transaction after it has been sent but has not yet been confirmed and added... methods to incentivize a miner to confirm their transaction sooner.
Pending Transactions
When a transaction is broadcast, it is sent from a node to its peer nodes, who then send it to their peers. This cycle repeats until the transaction has spread widely enough for every node to add it to their own mempool. This buffer zone is essential because it allows nodes to relay all pending transactions to their peers before the next block is mined. While transactions are waiting in the mempool, nodes check each transaction to ensure that they comply with the bitcoin consensus rulesWhat Are The Bitcoin Consensus Rules? The Bitcoin consensus rules are the set of rules that all of the bitcoin nodes agree on that govern and maintain the Bitcoin protocol..... These checks include verifying signatures, ensuring that outputsWhat Are Inputs & Outputs? Every bitcoin transaction is made up of inputs & outputs. Inputs are bitcoin being sent and outputs are bitcoin being received. Until bitcoin is sent... do not exceed inputsWhat Are Inputs & Outputs? Every bitcoin transaction is made up of inputs & outputs. Inputs are bitcoin being sent and outputs are bitcoin being received. Until bitcoin is sent..., and that UTXOWhat Is A Bitcoin UTXO? UTXO is short for unspent transaction output and is any particular fraction of a bitcoin that has not been spent. A single UTXO can hold... has not been spent before. If a transaction does not meet these criteria, it will be rejected. If a transaction is compliant, it will remain in the mempool until a miner includes it in a block and adds it to the blockchainWhat Is The Blockchain? The blockchain is the public record of bitcoin transactions, which are organized into blocks that are all chronologically linked to one another. Because every block is....
Fee Market
The MemPool acts as a form of transaction feeWhat Is A Transaction Fee? A Bitcoin Transaction Fee, commonly known as a miner fee, is the amount of bitcoin that a sender attaches to their transaction to incentivize Bitcoin... marketplace, allowing individuals sending transactions to see how much demand there is for limited block space at the moment. Because block capacity is limited to 1 MB, each block results in a bidding war between those sending transactions. On-chain fees are calculated by fees per byte commonly known as the fee rate. Fees can be estimated by looking at the transactions that haven’t been confirmed yet.
Anyone sending a transaction is able to examine current mempool congestion to make an informed decision about how high/low of a fee rate to pay. Senders can get a sense of how fast their transaction will be added by looking at the spread of fees at any particular time. The transaction that pays the highest fee rate gets put to the blockchain first, followed by those that pay a lower fee rate.
Transaction fees tend to climb when more transactions join the mempool (increasing demand) in order to get into the next block. If the mempool clears out and the number of outstanding transactions decreases, transaction costs are expected to decrease (decreasing demand). Bitcoin wallets that offer custom miner fees not only enable their users to prioritize transactions more precisely but they create a more efficient fee market overall and are helping bitcoin to scale.