Analyzing Transaction Fees with Probabilistic Logic Programming

Abstract

Fees are used in Bitcoin to prioritize transactions. Transactions with high associated fee are usually included in a block faster than those with lower fees. Users would like to pay just the minimum amount to make the transaction confirmed in the desired time. Fees are collected as a reward when transactions are included in a block so, on the other perspective, miners usually process first the most profitable transactions, i.e. the one with higher fee rate. Bitcoin is a dynamic system influenced by several variables, such as transaction arrival time and block discovery time making the prediction of the confirmation time a hard task. In this paper we use probabilistic logic programming to model how fees influence the confirmation time and how much fees affect miner’s revenue.