Bitcoin Core's Minimum Relay Fee Has Been Reduced by 90% After Upgrade

Bitcoin Core has reduced the standard transaction fee by 90%, one of the most significant changes in recent years aimed at reducing the cost of transfers on the Bitcoin network.

In the Bitcoin Core 29.1 update, released on September 4, the default minimum relay fee was reduced from 1 satoshis per virtual byte (sat/vB) to 0.1 sat/vB. This is a 90% reduction. The fee is calculated as the transaction size in vB multiplied by the stake in satoshis.

While each node operator can customize this setting, most are expected to keep the default value. Nodes will typically ignore transactions with fees below the threshold they set.

The decision to reduce the fee was made by developers on August 15 in response to the significant increase in the price of Bitcoin over the past decade. Initially, the minimum fee served as protection against DoS attacks, but in the context of the high price of BTC, its reduction became economically justified.

Gradual implementation

According to BitRef, over 72.5% of nodes (18,811) are running Bitcoin Core, while nearly 27.25% are running its fork Bitcoin Knots, which is aimed at greater user control. Only 571 nodes (less than 2.3% of the network) are already running version 29.1 with the new fee.

Bitcoin Knots 29.1, although based on Core 29.1, does not adopt the new settings by default, keeping the previous threshold of 1 sat/vB. This means that the new policy will be applied gradually as nodes upgrade.

Community Reaction

Bitcoin Core developer Gloria Zhao explained that the change was also due to the fact that transactions with fees below the old limit were still included in blocks. This created synchronization problems, as nodes with different settings could incorrectly process such blocks.

Mempool.space supported the reduction, stating in July: “0.1 sat/vB is the new 1 sat/vB,” and advised users not to overpay for space on the blockchain.

Source: cryptonews.net