The mempool explained

The mempool (a combination of the words memory and pool) of the Bitcoin blockchain plays an important role in processing transactions. Like a lobby, Bitcoin transactions with a valid signature wait in the mempool until they are taken into the next block by a miner. In this article, we explain the various functions of the proverbial memory pool. Time to dive in.

Waiting area for transactions

The Bitcoin blockchain is an open ledger in which transactions are kept decentralized by thousands of different nodes. Nodes are computers in the Bitcoin network that have a full copy of the blockchain and store and verify each block. The nodes form a network by connecting with each other and sharing information about blocks and transactions with each other.

Running a node allows one to check that the rules of the network are being followed correctly, making sure not to be tricked or other parties secretly changing the rules.

The miners are responsible for creating and filling the blocks with transactions and securing them through the proof of work mechanism. Miners sort out transactions via the mempool: a queue or lobby for transactions that have not yet been confirmed, but do have a valid digital signature. This signature confirms that the transaction is valid and is done by the owner of the private key(s), and thus that the bitcoin in the UTXO UTXO UTXO stands for Unspent Transaction Output. These are outputs that have not yet been issued and therefore still belong to a specific bitcoin address. All UTXOs within a wallet form the total balance in bitcoins. sent legitimately.

Miners are profit-driven and prioritize the most profitable trades over less profitable trades. Transactions with a lower miner’s fee are less likely to be chosen, but that does not mean that they will never be executed.

The mempool can be used to determine the amount of your miner’s fee. Are you in a hurry and want a transaction to be confirmed quickly? Then you benefit from adding a relatively higher fee. Most wallets also have a built-in function for determining the transaction costs with the associated waiting time until sufficient confirmations. This estimate is based on the average transaction costs paid at that time.

Read more about determining your miner’s fee here.??

Not one pool

‘The’ mempool is actually not the right name, it should actually be ‘a mempool’. There is not one mempool, but thousands. Each node has its own mempool and shares the transactions with a valid digital signature with other nodes in the network. Invalid transactions are rejected by the node itself.

In principle, the contents of each mempool should be the same, since each transaction request is sent to each node at the same time. However, during busy times on the Bitcoin network, there are often differences between mempools. Tracking these differences provides insights into the accumulation of transactions and expected processing time.

Did you know that the term mempool does not appear in the Bitcoin white paper? It was not until the Bitcoin Improvement Proposal (BIP) 35 in 2012 that the term was first used.

Read more about the background of Bitcoin here.

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