The mempool is a critical part of Bitcoin’s architecture
Every time a Bitcoin user wants to move funds through the Bitcoin blockchain, they broadcast a transaction to the network’s nodes. Then, that transaction sits on Bitcoin’s memory pool or mempool, “waiting” for miners include it in a block on the chain.
The mempool in detail
Basically, the mempool acts as a sort of “waiting room” for unconfirmed information or transactions. On a more technical level, the mempool is an intermediate memory on the Bitcoin network that temporarily stores data, from which miners then select and confirm it, permanently adding them to the blockchain’s ledger.
It’s worth mentioning that the mempool is not a specific, physical storage unit. Instead, it is the aggregated unconfirmed data that the Bitcoin nodes validate and propagate to each other.
Each Bitcoin node is different, though. They run at different speeds, use different hardware, and have different internet connections. As consequence, there are as many mempools as there are Bitcoin nodes.
Fees, nodes, and miners: How Bitcoin transactions work
Every Bitcoin transaction originates from a wallet. Users set the amount they want to send, the fee they want to pay, and the address they wish to send to.
Once they send the transaction, the network’s nodes rebroadcast it to each other. At the same time, they run a series of checks to ensure that it’s valid and compliant with Bitcoin’s protocol, written in the source code —namely signatures, transaction size, output and input, etc.
After the transaction passes through the first set of checks, nodes allow it into the mempool. Here’s where miners come in.
Miners are always looking to maximize profits. That said, how long each transaction remains unconfirmed depends solely on one thing: the network fee.
Interested about how Bitcoin miners make money? You can learn more about it on the following article: Understanding Bitcoin mining revenue
Bitcoin miners will always pick the transactions set with the highest fee from the mempool to secure the highest earnings possible. Once they clear it, they will move to the following highest fee, and so on.
In the meantime, new transactions will arrive in the mempool. If their commission is higher than those already in line, miners will ignore older transactions and pick those first.
As a result, attached fees determine how long each transaction stays in the mempool. If its reward is too low, that transaction will most likely remain unconfirmed until the ones with higher fees go through.
If you want to read more about the Bitcoin mining process, you can’t miss our explainer article: What is Bitcoin mining and how does it work?
Why is the mempool important?
The most important advantage the mempool provides to Bitcoin users is convenience. Without it, we would get rejected transactions every time we didn’t set the proper fee.
The mempool allows users to rest easy knowing that even when the network fee isn’t high enough, their transaction will be stored until the volume decreases and miners eventually confirm it.
This brings to another benefit: balancing miner fees. Remember that Bitcoin is programmed to clear a block in an average time of ~10 minutes. If transaction volume increases significantly, the mempool will receive new transactions much faster than miners can record them onto blocks.
As a result, transactions with lower fees would remain unconfirmed for longer times.
Thus, people who need their assets transferred immediately will offer to pay higher fees to the miners. At the same time, as transaction fees increase, users may prefer to wait for more convenient costs. In turn, volume would decrease, driving fees down again.
On the other hand, with less volume, miners confirm low-fee transactions, sometimes clearing the mempool altogether. The dynamic between block space supply and demand determines the cost of transacting on Bitcoin.
An empty mempool means that miners will confirm any incoming transaction instantly, regardless of its fee. That may encourage users to transact in that particular moment, driving volume up, and fee costs with it.
Finally, having a tool like the mempool provides excellent insight into on-chain metrics in real-time. It enables users to calculate fees for a given operation, see the congestion level in the network, and estimate the waiting time for their transactions according to the fee they want to pay.
What we refer to as the mempool is the aggregation of validated but unconfirmed transactions stored on Bitcoin’s full nodes. These nodes’ capacity to save all pending Bitcoin transactions improves the network’s efficiency and ease of use while providing valuable data for both miners and users.
You can visit different websites to check the state of the mempool and the congestion of the network. It’s a great idea to do so before interacting with the Bitcoin blockchain to estimate fees and waiting times.
Bitcoin’s architecture is extremely well designed and crafted, but it can be complex to understand. We encourage everyone to learn about it to avoid mistakes, and hope this article helped you do that.