Every block has room for at most 4,000,000 weight units, or 1,000,000 virtual bytes. When more people want to transact than fits, they bid against each other. That auction is the fee market.
How the auction works
You set your fee yourself, as inputs minus outputs. Miners usually pick the transactions with the highest feerate, measured in satoshis per virtual byte (sat/vB), because that earns the most per unit of space. Size depends on how many inputs and outputs you have and their script types, not on the amount sent.
Waiting in line
Unconfirmed transactions wait in each node's mempool. When the queue is short, almost any feerate gets into the next block. When it is long, low-fee transactions can wait for hours or days, or be dropped when a node's mempool fills up. Wallets estimate a feerate from recent blocks and the current mempool. If you guessed too low, you can bump the fee with RBF or CPFP.
Cheap and busy periods
Fees go up and down with demand. As of 23 October 2026, mempool.space suggested about 1 sat/vB for next-block confirmation, and many transactions were paying even less. Since Bitcoin Core 29.1, the default minimum relay feerate is 0.1 sat/vB, down from 1 sat/vB. During demand spikes, feerates have at times jumped to many times that level.
Saving on fees
- Use SegWit or Taproot addresses: witness data is discounted.
- Combine many small coins when fees are low, since each extra input adds size.
- Batch several payments into one transaction.
- Move frequent small payments to Lightning.
The security budget
Miners earn the subsidy plus fees. Since the April 2024 halving at block 840,000, the subsidy is 3.125 BTC per block, and it keeps halving every 210,000 blocks. Over the long run, fees must carry more and more of miners' income. How large that fee market will be is an open question, and nobody can know the answer for sure.