Bitcoin gets ‘smarter’ transaction fees

Due to changes in the Bitcoin Core code, the virtual currency should be able to handle transaction costs better. For example, the rules for calculating transaction costs have been made dynamic rather than hard coded.

The changes to the Bitcoin Core code, which makes the move to version 0.10, are in a blogpost from the Bitcoin foundation. With the new code, bitcoin looks at how long it takes for a transaction to be processed in the blockchain. Based on this period, the system determines what the transaction amount will be in order to enable fast processing. Previously, these rules were not dynamic but hard-coded into the source code of the Bitcoin Core code.

In the new code it is now also possible to give a priority to a bitcoin transaction. For example, the user can indicate that he wants to wait up to six cycles of the blockchain for a transaction confirmation.

With the updated Bitcoin Core code, some of the slow transaction processing issues should be addressed by the floating fees implementation. In addition to ‘smarter’ transaction costs, the processing of payments without transaction costs should also run more smoothly. These ‘free’ transactions can currently take a very long time.

Furthermore, the Bitcoin foundation expects that transaction costs will rise in the future because the volume of bitcoin payments will grow strongly. Partly for this reason, the organization believes that developers will still have to develop new code in order to remove future bottlenecks in the blockchain.