Unconfirmed Transactions With Bitcoin
It’s been almost twelve years since the world found out about Bitcoin, the first digital currency launched on the market. Today, Bitcoin is the most talked-about currency worldwide.
According to blockchain.com, the number of confirmed Bitcoin transactions has scaled up to an incredible 320,000 transactions per day.
However, Bitcoin’s popularity has resulted in a rising number of unconfirmed transactions as well, lingering in the mempool. The mempool is an area on the blockchain where the node stores pending transactions waiting to be relayed to other nodes.
Currently, blockchain.com shows an average of 724,000 unconfirmed Bitcoin transactions daily.
Why is this happening? Why can’t the miners validate transactions at the speed at which the Bitcoin blockchain promised? Keep reading our guide to find out.
Unconfirmed Transactions Explained
Proof of Work
The reason why blockchain technology is so revolutionary is that it allows users to transact without the intervention of third parties that have the whole authority over their transactions. This decentralized network is run by miners who perform cryptographic proof to mine new blocks for the verified transfers.
The Bitcoin blockchain uses the proof of work protocol to confirm new transactions. The miners solve a complex mathematical problem by running the data through a hash or cryptographic function. Bitcoin uses the SHA-256 hash algorithm which outputs a 32-byte hash value.
Miners have to try multiple times before they generate the right hash value. Once a miner finds the solution, he creates a new block that also contains the hash value of the previous one, which is how blockchain eliminates double-spending.
The block with transactions has to be accepted by other miners who will continue to add up new blocks to it.
How Long Does a Bitcoin Transfer Take?
If you want your transaction to be considered reliable and to be approved by a platform accepting crypto payments, you’ll have to wait until it gets 6 confirmations from 6 different miners.
On the Bitcoin blockchain, the miners create a single block of data every ten minutes. This is the average confirmation time for a single transaction but since you need at least six of them, the standard Bitcoin transfer takes approximately one hour.
Considering the speed at which new users are joining the Bitcoin network, it’s no wonder that this one hour sometimes turns into 16 hours or more. The network is overburdened with incoming transactions that can’t be processed as quickly as they should be, so these delays are becoming increasingly more common.
Unconfirmed transactions. Source: Bitcoin Fees
The Reasons Behind Unconfirmed Transactions
Several reasons lie behind the unconfirmed Bitcoin transactions:
- You’re impatient.
If you’ve just made the transfer, you can’t expect it to be completed in a flash. Don’t forget the initial ten-minute wait which is a must for you to get at least one confirmation.
- Increased network activity.
From time to time, the Bitcoin network gets overloaded with incoming transactions and the chances that your transaction might end up in the mempool are higher.
Some of you might be puzzled why there aren’t enough Bitcoin miners when the interest for crypto trading is constantly moving in the upward direction. Well, mining is actually more complex than that.
The Bitcoin blockchain has been designed in such a way that it doesn’t allow for a new block to be mined in less than 10 minutes. That’s why the mining difficulty is calculated and readjusted every two weeks.
But even more important is the fact that the size of one Bitcoin block is set at 1 MB or 1,000,000 Bytes. The average bitcoin transaction size is around 495 Bytes which means there can be 2020 transactions in one block.
- Low blockchain fee.
It’s quite often for miners “to forget” a transaction that includes a very small blockchain fee for the service. They need these fees as an incentive to keep the network running since mining blocks is a rather tedious job that consumes both time and computing power.
Not only that but their other mining reward, a given number of bitcoins per block, is being cut in half every four years. The current reward is set at 12.5 BTC per block until the next halving takes place in May 2020 and reduces it to 6.25 BTC.
Therefore, the higher the fee you’re willing to pay, the faster you’ll see your transfer completed. According to Bitcoin Fees, you need to pay at least $0.48 to have your transaction mined in the next block (wait time: 10 minutes), $0.44 to have it verified within the next three blocks (30 minutes), or $0.08 within six blocks (one hour).
The pending transactions are stored in the RAM of the mining hardware. Therefore, if the node’s mempool threatens to occupy the whole RAM capacity as more transactions enter the network, miners can set a blockchain fee minimum and discard transactions that offer less.
Mempool size in the last 60 days. Source: Blockchain.com
Solutions for Unconfirmed Transactions
If your transaction is unconfirmed, the best thing to do is just wait for a day or two as most unconfirmed transactions tend to be completed within that time.
Rarely, transactions with a very low blockchain fee might get stuck in the mempool for over a week. In that case, you have an option to wait for your transaction to “expire” and be released from the mempool, which can take from two to three weeks.
You can also consider these popular options:
Replace-By-Fee (RBF) is when you replace your existing transaction by creating the same transaction but with a higher fee. To prevent double spending, the new transaction not only pays its own cost but the fee of the transaction it wants to replace too.
- Child Pays for Parent.
Child Pays For Parent (CPFP) is when you send the same transaction to yourself and pay a high fee as an incentive for miners to prioritize your transaction and confirm the one in the mempool from which you’re actually drawing the input (the parent transaction).
Disclaimer: Digital currencies and cryptocurrencies are volatile and can involve a lot of risk. Their prices and performance is very unpredictable and past performance is no guarantee of future performance. Consult a financial advisor or obtain your own advice independent of this site before relying and acting on the information provided.