Transaction fees make the bitcoin blockchain go round. The miners are compensated for their efforts, not only through inflationary block rewards but also through fees charged to users for adding their transaction to blocks. While fees on average make up about 4% of the total miner revenue per day, with the lion’s share coming from block rewards, sometimes economic shocks cause those fees to rise.
The average fee per transaction is approximately $1.63 with the median being $0.88 over the past five years. The fees are the prices charged for a transaction to get into the limited space of a 1 MB block that occurs every 10 minutes. This results in about 1,800 transactions (~556 average transaction size in bytes) that are able to fit into a block. If the standard 144 blocks are mined per day, we observe a ceiling of about 260,000 transactions per day. Thus there is always a backlog of unconfirmed transactions that reside in the mempool awaiting miners to select them for inclusion in the blockchain.
According to Blockchain.Info, there are about 3.4 million bytes awaiting inclusion in the mempool. Miners will usually include the transaction with the highest fees and work their way down as capacity dwindles to the lower fee transactions. Imagine you are commuting to work and…