Effect of Bitcoin fee on transaction-confirmation process
This addresses the issue of transaction delays in Bitcoin for users making micro-payments, but it is incremental as it applies existing queueing theory to analyze a known bottleneck.
The paper tackles the problem of how Bitcoin transaction fees affect confirmation times, particularly for low-fee transactions, by modeling the process with queueing theory and deriving mean confirmation times, showing quantitative impacts through numerical examples.
In Bitcoin system, transactions are prioritized according to transaction fees. Transactions without fees are given low priority and likely to wait for confirmation. Because the demand of micro payment in Bitcoin is expected to increase due to low remittance cost, it is important to quantitatively investigate how transactions with small fees of Bitcoin affect the transaction-confirmation time. In this paper, we analyze the transaction-confirmation time by queueing theory. We model the transaction-confirmation process of Bitcoin as a priority queueing system with batch service, deriving the mean transaction-confirmation time. Numerical examples show how the demand of transactions with low fees affects the transaction-confirmation time. We also consider the effect of the maximum block size on the transaction-confirmation time.