I just received a few questions about how transaction fees are calculated on Bitcoin, so I wrote this article to help everyone understand better.

First, what is txn? Simply put, it’s short for transaction — a transaction on the Bitcoin blockchain. And the on-chain txn fee is determined by two main factors: the size of that transaction (measured in virtual bytes or vB) and the fee rate you choose (measured in sat/vB).

Currently, the minimum fee is set at 1 sat/vB. The interesting part is that if you want to send more money from multiple addresses (meaning adding more inputs), or send to multiple recipient addresses (adding more outputs), your txn will be larger, its size will increase, and the fee will go up accordingly.

A simple way to understand: what txn is, is just a record of a transaction on the network, and the fee you pay depends on how “heavy” or “light” that transaction is. If you want to save on fees, try to reduce the number of inputs or outputs in your transaction.