Bitcoin transactions & fees explained

In your wallet, a Bitcoin payment looks like a bank transfer. But there is no account behind it, the fee does not depend on the amount, and a confirmed payment cannot be reversed.

Not balances but coins: the UTXO model

Bitcoin doesn’t keep accounts. Every transaction has inputs and outputs. An output that has not been spent yet is called a UTXOGlossaryUTXO (Unspent Transaction Output)An output of an earlier transaction that hasn’t been spent yet – like a single banknote in your wallet. Bitcoin has no account balances: your balance is the sum of all the UTXOs you can spend with your keys.On the learning path: Stage 5 · Step 4 – First withdrawal →In the glossary →× (unspent transaction output). Each output can serve as an input exactly once – a second attempt would be a forbidden double spend.^[1]

Think of UTXOs as banknotes: your balance is the sum of your notes. A note is always spent whole, and you get the rest back as change – which is why a transaction typically has two outputs.^[2]

Worked example: your wallet holds two UTXOs of 300,000 and 200,000 sats. You pay 400,000 sats, i.e. 0.004 BTC ($320 at an illustrative price of $80,000 per BTC).

Item	Amount
Input 1	300,000 sats
Input 2	200,000 sats
Total inputs	500,000 sats
Output to the recipient	400,000 sats
‘Change’ output to a new address of yours	97,910 sats
Difference = fee to the miner	2,090 sats (≈ $1.67)

There is no separate ‘fee’ line in the transaction: the fee is the difference between inputs and outputs.^[3]

From sending to a block: the mempool

Your wallet signs the transaction and sends it to the network. Every node checks it and places it in its own mempoolGlossaryMempoolThe buffer in which a node collects valid but still unconfirmed transactions until a miner includes them in a block. There is no central mempool – every node keeps its own.On the learning path: Stage 5 · Step 4 – First withdrawal →In the glossary →×, a waiting area for unconfirmed transactions – there is no central mempool. Miners prefer the transactions with the highest fee rate, because the fees go to them.^[4] Once your transaction is in a block, it has its first confirmationGlossaryConfirmationA transaction has one confirmation as soon as it is in a block; each further block adds one. With every confirmation, it becomes harder to displace the payment after the fact.On the learning path: Stage 5 · Step 4 – First withdrawal →In the glossary →×. The bigger picture is explained in How does Bitcoin work?.

How the fee arises: vbytes times sat/vB

A block can hold at most 4 million weight units.^[5] Transactions bid for this scarce space with their feeGlossaryTransaction fee (network fee)The amount a Bitcoin transaction pays to the miner. It depends on the transaction’s size in vbytes and the fee rate offered – not on the amount you send.On the learning path: Stage 5 · Step 4 – First withdrawal →In the glossary →×. It is made up of:

• Size in vbytes (virtual bytes): the weight divided by four; signature data counts for less.^[5] The size depends on the number of inputs and outputs and on the address type, not on the amount.^[3]
• Fee rate in sat/vBGlossarysat/vB (satoshis per virtual byte)Unit for the fee rate of a Bitcoin transaction: how many satoshis you pay per virtual byte of its size. The higher the rate, the sooner miners will include the transaction in a block.In the glossary →×: how many satoshis you offer per vbyte. It determines your priority.^[4]

Fee = size in vbytes × fee rate in sat/vB

A typical payment (one input, two outputs, bc1q… address) is around 141 vbytes; each additional input adds around 68 vbytes.^[6] The worked example above (two inputs, ≈ 209 vbytes) therefore pays about 10 sat/vB. This is how the rate plays out at 141 vbytes (illustrative price $80,000 per BTC, currently $85,533; own calculation):

Fee rate	Fee in sats	≈ in dollars	Typical situation
1 sat/vB	141	$0.11	quiet network
5 sat/vB	705	$0.56	somewhat more demand
20 sat/vB	2,820	$2.26	busy network
100 sat/vB	14,100	$11.28	exceptional situation

Current recommendation: 2 sat/vB for the next block, 1 sat/vB for confirmation within about an hour, 1 sat/vB if you’re in no hurry.^[7] The values move with demand – check them right before sending. Rates below 1 sat/vB are possible too: since version 29.1 (September 2025), Bitcoin Core relays transactions from 0.1 sat/vB by default; not every wallet offers rates that low.^[8]

What this looks like in a wallet

Sending, choosing a fee, speeding up if necessary

9:41Example wallet

Send bitcoin

1 Recipient

bc1qexample7w0xnotreal4demo3address9k2

2 Amount

0.004BTC≈ $320 (example price $80,000)

Continue

9:41Example wallet

Network fee

SlowNormalFast

Fee rate2 sat/vB

Size141 vB

Network fee282 sats ≈ $0.23

1 Rate · 2 Speed up

Allow speeding up later (RBF)

Review & send

9:41Example wallet

Transaction

Unconfirmed – waiting in the mempool

Amount−0.004 BTC

Fee rate2 sat/vB

Confirmations0

1 Status · 2 Raise fee

Raise fee (RBF)

Illustrative example – real apps look different in detail.

Confirmations: how safe is ‘arrived’?

Only once your payment is in a block does it have a confirmation. Every further block on top makes it harder to displace it after the fact. According to the whitepaper, an attacker with 10% of the computing power has less than a 0.1% chance of success after five blocks.^[2]

How long to wait is up to the recipient. The Bitcoin Developer Guide gives six confirmations – around an hour – as a guideline for large amounts, but calls the number itself ‘somewhat arbitrary’.^[9] ExchangesTermExchange (crypto exchange)A trading platform where buyers and sellers trade bitcoin with each other via an order book.On the learning path: Stage 4 · Step 2 – Choosing a provider →In the glossary →AdLicensed providers with a paid linkProviders from our comparisonKrakenExchange · MiCA (Central Bank of Ireland)Visit Kraken* (paid link, opens in a new window)BitvavoExchange · MiCA (AFM, Netherlands)Visit Bitvavo* (paid link, opens in a new window)CoinbaseExchange · MiCA (CSSF, Luxembourg)Visit Coinbase* (paid link, opens in a new window)All 7 compared – including non-partners →*Paid link: if you sign up or buy through it, we earn a commission. Your price stays the same. How we make money →18+ · Crypto assets are highly volatile; you could lose all your money. No deposit protection.× set their own rules for deposits.

Stuck payments: RBF and CPFP

If the fee rate is too low and the network is busy, a payment can wait for hours or days. Two tools help:

• Replace-by-fee (RBF)GlossaryReplace-by-fee (RBF)A method of replacing a still-unconfirmed transaction with a new version that pays a higher fee. This lets you speed up a stuck payment, as long as it isn’t in a block yet.On the learning path: Stage 5 · Step 4 – First withdrawal →In the glossary →×: you replace the unconfirmed transaction with a version that spends at least one of the same inputs and pays a higher fee.^[10] Since version 28.0 (October 2024), nodes running Bitcoin Core accept this by default for any unconfirmed transaction, even without prior signalling.^[11],[10]
• Child pays for parent (CPFP)GlossaryCPFP (Child Pays for Parent)A way to speed up a stuck transaction: a follow-up transaction (the ‘child’) spends one of its outputs and pays a high fee. It then pays off for miners to include both transactions together.On the learning path: Stage 5 · Step 4 – First withdrawal →In the glossary →×: a new transaction spends an output of the stuck one and pays a high fee. A miner can only include the ‘child’ together with the ‘parent’, so it pays for them to confirm both.^[12] This also works for the recipient.

Rule of thumb: RBF if your wallet supports it; otherwise CPFP, provided you control an output of the stuck transaction.^[4] If a transaction is never confirmed, the bitcoin stay where they were; by default, Bitcoin Core drops it from its own mempool after two weeks.^[13] Other nodes may keep it and rebroadcast it, though – so don’t simply send the same payment a second time.

Irreversible: no cancellation, no chargeback

Bitcoin relies on cryptographic proof instead of trust. Transactions are meant to be practically irreversible, to protect sellers from fraud.^[2] For you, this means:

• Wrong address = money gone. No bank reverses the payment, no support team can step in.
• Fraud is not undone. Anyone pressuring you into a payment is counting on exactly that. More in Spotting & avoiding scams.
• Test amount first. Before a large payment to a new address, send a small amount and check that it arrives.

What’s next?