Why does Bitcoin want transaction charges previous to hitting its most coin restrict?


First, there must be an incentive to incorporate any transactions in a block. Whereas mining rewards are sufficient of an incentive, a wholesome price market ensures that miners try so as to add as many transactions as they’ll to a block.

Second, there’s restricted block house. How a lot house there ought to be is a big level of competition, however just about everybody agrees that blocks have to have an inexpensive restrict with a purpose to hold participation within the system accessible, and thus hold the system decentralized. As such, transactions should compete for house in a block. That is determined by what we name the “price market”, the place transactions could have greater and decrease charges primarily based on the availability (quantity of block house) and demand (variety of transactions) of the community.

Because of this, sure, transactions with greater charges are prioritized by miners (those amassing the charges) over transactions with decrease charges. That is how a free market works.

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