Replace-by-Fee enables an unconfirmed transaction in Bitcoin-Thezwerk to replace a new transaction with a higher fee, which is particularly useful to accelerate transactions during network jams.
The most important thing summarized:
💡 If a transaction is created and sent to the network, miners can decide which transactions they include in the next block, whereby they usually prefer transactions with higher fees.
💡 If a transaction has been sent with a fee that is too low and is not confirmed quickly enough, the sender can send the same transaction again with a higher fee.
💡 This new transaction “replaces” the original by offering a higher fee, which increases the likelihood that it will be confirmed faster.
In this article we explore the Replace-by-Fee (RBF) function in blockchain networks, your advantages and challenges, security concerns, as well as future developments and potential effects on transaction fees and network capacity.
What is Replace-by-Fee (RBF)?
Replace-by-Fee (RBF) is a function in the Bitcoin network that makes it possible to replace an unconfirmed transaction with another that offers a higher fee. This function was originally in GDP 125 proposed and in version 0.12.0 of Bitcoin CoreImplemented in February 2016. RBF was developed to improve the flexibility and efficiency in handling transaction fees and network capacities.
RBF enables the transmitter of a transaction to spread a new version of this transaction in the network. This new version must offer higher transaction fees than the original. As long as the transaction has not yet been confirmed in a block and remains in the Mempool, it can be replaced. This is particularly useful in times of high network utilization if transactions with lower fees may not be confirmed quickly.
Instructions: Use Replace by Fee
Here is detailed instructions on how replaces-by-feen (RBF) works and how you can use this function:
Step 1: Use wallet with RBF support
Not all wallets support RBF from house. Make sure you use a wallet that supports the RBF, such as:
- Trezor
- Bitcoin Core
- Electrum
- Green Wallet (from block stream)
- FRG Wallet
These wallets enable you to explicitly choose the “Activate RBF” option when creating a transaction.
We recommend using the Trezor Wallet for the RBF function.
Step 2: Send a transaction with RBF
- Choose the amount and the fee: Indicate the amount you want to send and the recipient. As a rule, your wallet shows you a fee that is sufficient for a quick confirmation.
- Activate RBF:
- With some wallets you have to explicitly check or select the “Activate Replace-by-Fee” option if you create the transaction. If you activate this option, the wallet inserts a special marker into the transaction data, which signals to the miners that the transaction can be replaced by a higher -paid transaction.
- In other wallets (such as electrum) it can also activate the “RBF” option as the standard.
- Send transaction: After you have created the transaction and activated RBF, you can send it to the network. The transaction is to all Nodes and Miner transmitted, but it could get stuck in the network if the fee is too low.
Step 3: Replace the transaction with a higher fee
If your original transaction is not confirmed (because the fee is too low or the network is overloaded), you can replace the transaction with a higher fee:
- Create a new transaction: Open your wallet and find the unconfirmed transaction you want to replace. In most wallets you can select this transaction and click on “Replace” or “Replace RBF”.
- Adjust new fee: The wallet shows you the details of the unconfirmed transaction. You can now increase the fee to increase the likelihood that the transaction will be confirmed quickly. This is usually done by simply increasing the transaction fee.
- Send a new transaction: After you have adjusted the fee, you can send the transaction again. This transaction will replace the old transaction in the network, and the miners will prefer it due to the higher fee.
Additional information:
- RBF flag in transaction format: RBF adds a special “RBF flag” to the transaction, which indicates that the transaction can be replaced by a higher paid. Most modern wallets automatically set this flag when RBF is activated.
- RBF use of miners: Miner prefer transactions with higher fees. A transaction that RBF has activated could be considered “replaceable” by miners, and they may be waiting for a higher fee before confirming the transaction.
- Caution for recipients: Recipients should be aware that an RBF transaction may still be replaced by a higher transaction. When accepting payments, it is advisable to only wait for the final confirmation to ensure that the transaction is not replaced again. A transaction from 6 block confirmations is considered to be fully confirmed.
Replace-by-Fee (RBF) criticism
Replace-by-Fee (RBF) led to controversy in the Bitcoin community, mainly because of the fear that the risk of “Double Spending“Could increase. Critics argue that RBF relieves fraudsters to reverse transactions after they have already been considered paid by the recipients.
How does Double Spending work at RBF?
- At RBF, the sender can replace a transaction with a new one with a higher fee, but there is also the risk that two competing transactions (with different fees) exist in the network at the same time.
- An attacker could send a transaction with a low fee and another with a higher fee to different receivers. If the attacker gets the transaction with the higher fee first (which is accelerated by the RBF function), he could try to undo the first transaction or to withdraw the payment for the recipient of the first transaction.
Deplacement:
- Validation by miners and knots: The blockchain and especially the miners validate transactions before they are included in a block. A double donation is recognized because only the first transaction with the same inputs is accepted. As soon as a transaction is confirmed, the other is rejected.
- Increased security measures: Many wallets and stock exchanges implement additional exams to identify double spending. If you find that a transaction is replaced by RBF, you can also determine the likelihood of a double spending based on the transaction history and the review of inputs.
In the Bitcoin blockchain (and also with other cryptocurrencies), a transaction is considered safe and finally when it Confirmations has received in the network. A confirmation means that the transaction was included in a block and the miners recognized as valid.
The following applies to Bitcoin:
- 1 confirmation: The transaction was included in a block.
- 6 confirmations: This is generally recognized as a safe standard, since it significantly reduces the likelihood of pulling out or double spending. After 6 confirmations, it is extremely unlikely that a transaction will be reversed again or replaced by another transaction. No RBF can take place here.
Common questions (FAQ) about Replace-by-Fee (RBF)
In this section we answer the most important and most common questions about the topic of replacy-by-fairy (RBF).
No, RBF can only be used for transactions that have been explicitly marked as replicable. The first sending of transactions must be provided with a special flag that indicates that they are qualified for the RBF function.
Wallets and services that monitor transactions can recognize the RBF flag in a transaction and inform the recipient accordingly. This gives the recipient the information that the transaction may be replaced and a certain caution is required, especially when accepting payments without confirmations.
RBF can lead to higher transaction fees because users have to increase the fees in order to have their transactions treated primarily. This is particularly the case in times of high network utilization if users want to ensure that their transactions will be confirmed quickly.