Trezor adds dynamic transaction fees to hardware wallet
Bitcoin hardware wallet Trezor has made a few updates to their platform including one significant change where the hardware wallet now supports dynamic transaction fees.
The updates included a few items such as a new wallet URL which has a more stable environment for faster account loading, and they also pushed out the new application settings page which allows users to choose their preferred Bitcore server to communicate with the blockchain. The move according to SatoshiLabs, the maker of Trezor, was done so that users do not have to depend on SatoshiLabs’ servers availability anymore. In case of a server downtime, users may switch to another Bitcore server within few seconds.
Introduced in this update is a dynamic fees structure, which allows wallet users to prioritize their transactions for speedier confirmation times within the bitcoin network. As the number of bitcoin transactions per day rises due to an increase in global adoption, and we begin to plateau at a 1mb ceiling, the use case for a higher transaction fee comes into play so that users can out-compete others to ensure quicker confirmation times.
In addition to dynamic fee structures that wallets are introducing, for example Blockchain.inforecently added dynamic fees and BitGo added them last year, are wallets that are also starting to add support for Replace-By-Fee (RBF). GreenAddress and Electrum have both added support for RBF in the past several weeks.
RBF allows bitcoin transactions to be flagged as replaceable until they are confirmed in a block. For users who send transactions with RBF turned on, it allows them to increase the fees on the transaction for faster confirmation times, provided the transaction hasn’t already been confirmed.
This dichotomy between dynamic fees and replace-by-fee is creating what is called a fee market. Whether the fee market is warranted or not, the end result is that bitcoin users will have to pay higher transaction fees to participate in the open network, which inevitably will push some users off-chain or off the bitcoin network completely.