{"id":6434,"date":"2018-04-03T16:50:09","date_gmt":"2018-04-03T16:50:09","guid":{"rendered":"https:\/\/www.legitgambling.com\/news\/?p=6434"},"modified":"2018-04-03T15:44:23","modified_gmt":"2018-04-03T15:44:23","slug":"better-coin-selection-algorithm-allows-bitcoin-to-cut-fees","status":"publish","type":"post","link":"https:\/\/www.legitgambling.com\/news\/better-coin-selection-algorithm-allows-bitcoin-to-cut-fees\/","title":{"rendered":"Better Coin Selection Algorithm Allows Bitcoin To Cut Fees"},"content":{"rendered":"

\"\"\u2018Coin Selection<\/em>\u2019 is the technical term used to talk about the algorithm that allows Bitcoin to decide which bits of data are to be used to create a user's transaction<\/a>. This is the digital equivalent of a person giving the cashier $5 for a $2 item and getting back $3 in change<\/strong>. This particular algorithm will be receiving a major update in Bitcoin code very soon.<\/p>\n

While this may not sound like a major breakthrough it will result in a massive improvement because this particular algorithm is not fully optimized in the core code. The most significant impact resulting from the change in the \u2018Coin Selection<\/em>‘ algorithm<\/a> is that it will see a potential change in transaction fees.<\/p>\n

In a statement, Andrew Chow<\/strong>, Bitcoin Core contributor said <\/p>\n

Bitcoin Core's original coin selection algorithm actually needs a lot of reworking, especially with regards to transaction fees. It's inefficient and it ends up doing a weird loop to try to guess the amount of transaction fees that are needed<\/p><\/blockquote>\n

This is why the people behind Bitcoin have been working hard on developing this new algorithm that is being labeled as \u2018branch and bound<\/em>\u2019 or \u2018BnB<\/em>\u2019. This new algorithm will carry out calculations in a more efficient way \u2013 resulting in a small bump in processing speed and lower transaction fees.<\/p>\n

This change was proposed two years ago but has only recently been deemed ready to be added to Bitcoin Core<\/a>. This feature should be ready for general use by the time the 17th version of the core software is released which will most likely be in 2019<\/strong>.<\/p>\n

How Coin Selection Works<\/h2>\n

The new coin selection algorithm is a big step up from how it used to be. When Bitcoin is in your wallet, it is not just one piece of data. It is divided into several chunks. There could be several transaction chunks in your wallet. These are technically called \u2018unspent transaction outputs<\/em>\u2019 or UTXOs.<\/p>\n

As an example, a customer might have a UTXO worth 0.3 BTC, some 0.2 BTC UTXOs and a few other denominations. The chunking of UTXO\u2019s are based on previous transactions and how they were sent to the person.<\/p>\n

If a customer needs to pay for 0.2 BTC, the old algorithm might select the 0.3 BTC chunk as the input of the transaction. There will then be two outputs: the 0.2 BTC that receives the payment, and the 0.1 BTC which is the customer\u2019s change. However, the inefficiency in the old algorithm means that it was not good at picking the right data chunks and always ended up creating \u2018change outputs\u2019 instead of just selecting the exact data chunk. The inefficient process also created \u2018dust\u2019 the small pieces of Bitcoin that are not worth spending because of transaction fees.<\/p>\n

Thanks to the new algorithm, Bitcoin<\/a> can now avoid both of these issues. BnB looks at the payment needed and looks for the exact UTXO needed. This has a knock-on effect on transaction fees since if an exact match can be found; the transaction data is smaller and easier to process. The process is still being tweaked, but developers are optimistic about its future use.<\/p>\n","protected":false},"excerpt":{"rendered":"

\u2018Coin Selection\u2019 is the technical term used to talk about the algorithm that allows Bitcoin to decide which bits of data are to be used to create a user's transaction. This is the digital equivalent of a person giving the cashier $5 for a $2 item and getting back $3 in change. This particular algorithm […]<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[69],"tags":[],"class_list":["post-6434","post","type-post","status-publish","format-standard","hentry","category-bitcoin"],"yoast_head":"\nBetter Coin Selection Algorithm Allows Bitcoin To Cut Fees<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legitgambling.com\/news\/better-coin-selection-algorithm-allows-bitcoin-to-cut-fees\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Better Coin Selection Algorithm Allows Bitcoin To Cut Fees\" \/>\n<meta property=\"og:description\" content=\"\u2018Coin Selection\u2019 is the technical term used to talk about the algorithm that allows Bitcoin to decide which bits of data are to be used to create a user's transaction. This is the digital equivalent of a person giving the cashier $5 for a $2 item and getting back $3 in change. This particular algorithm […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.legitgambling.com\/news\/better-coin-selection-algorithm-allows-bitcoin-to-cut-fees\/\" \/>\n<meta property=\"article:published_time\" content=\"2018-04-03T16:50:09+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.legitgambling.com\/news\/wp-content\/uploads\/2017\/12\/bitcoin.jpg\" \/>\n<meta name=\"author\" content=\"Kate Leaman\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@KateLLeaman\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Kate Leaman\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" 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