There are different estimations used in wallets, explorers and other Bitcoin projects. For example:
This is the fee rate distribution right now according to https://btc.bitaps.com
Are different estimations misleading and affect the way fees are used in Bitcoin transactions? Will it be better if we just share mempool stats and user can decide the fee rate accordingly?
If I compare this with BTCUSD orderbook on any exchange, are we trying to estimate at what price buy order will get filled in certain time? Does that make sense?
In Bitcoin, block space is the supply, fee bidding to get the transaction included in a block is demand, miners are sellers who will fill the limit orders however they can include any transactions (not necessary it will be prioritized based on fee rate) so what exactly are we trying to estimate and why?
Market buy orders that fill the sell orders on exchanges can be compared to a transaction using fee rate 310 sat/vByte when highest bid in mempool is 300 sat/vByte. Although things are not instant in Bitcoin and there is a time gap between broadcasting with a certain fee rate and transaction being included in block. There are few other differences like if I try to buy 0.01 BTC right now on Bitfinex at 70,000 it will be executed at 53,450 and in Bitcoin there is no such thing, you can decide any fee rate and even if I use 1000 sat/vByte right now, same will be used and accepted by miners unless there is something that avoids such errors in wallet being used but overall picture looks similar and all this makes estimation even more difficult.
I consider it misleading because lot of users think a transaction with fee rate 1-5 sat/vByte will be included in 1 week or maybe a transaction with X sat/VByte will be included in Y time which is not true. User decide the fee rate and can do bidding, transaction will be included based on demand, supply and miners.
Will it be better if the wallets used this approach?
- Show mempool stats
- Leave the fee rate for user to decide
- RBF every transaction and follow different algorithms for automated bidding
A simple algorithm for automated bidding can be: