Understanding Bitcoin Transaction Fees (Analogy)

William K. Santiago
1 min readDec 18, 2019

Transaction fees are like paying for checking in your bags on an airline flight and paying for, say $50.00 per bags.

Example $50.00/bag is like 186 satoshis/Byte
So if you are traveling with 4 bags you would have to pay $200.00 in bag fee charges.

Or if your BTC transaction is 223 Bytes in size you would have to pay 41,478 satoshis, which estimates to $5.39 in transaction fees (current Price.)

Note:
Each input will add 180 (plus or minus 1) bytes
Each output will add 34 bytes

So moral of the story when traveling keep the bags to a minimum and when BTC transacting keep your transaction size to a minimum.

You can reduce fees by increasing the number of outputs in a transaction.
So think of outputs as the recipients, like paying individual salaries or monthly services like Netflix , etc. This way you can pay to multiple recipients in one go. So one input but multiple outputs or recipients vs paying salaries as individual transactions.

For example, Alice needs to pay Bob 6 BTC. Now she has one bitcoin address A with two outputs which have 2 BTC and 8 BTC balance respectively and another one address B with one output 7 BTC balance in his bitcoin wallet. The cheapest way to send this payment is just to send from address B with one input.

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William K. Santiago

Founder & CEO, C4 CBP at PrivKey LLC, Blockchain strategist, cybersecurity