I like analogies, because they help to understand new concepts by bridging ideas we already have and new ideas. What's better than trying long content on Nostr with an analogy about how #Bitcoin works. This time about the "fees" or commissions paid on each transaction, and talking about ships 🚢 and packages 📦.

Suppose we want to send money in currencies 🪙 of different denominations, but all always of the same size (UTXO), to various parts of the world. We decide to do it by sea, for which we need ships. Every time we want to send money we will put together a package (transaction) 📦 and drop it off at the port (mempool).

Every 10 minutes or so a ship (block) 🚢 will arrive to pick up those packages to take to destination. It is clear that the captain (miner) will not perform the task for free, therefore along with each package we must also leave the payment for the shipping service, which we will call gratuity (fee).

The capacity of each ship is limited, and the captains will never be able to load more than a certain weight ⚖️ (block size limit). That is why each of them will carefully choose what to transport, although they will always try to carry as much as possible to earn more money. In other words, he will try to fill the capacity of his ship.

If when the captain arrives at the port depot there are few packages, and they all fit on his ship, he will take them all on board. But, since his limit is weight, if on the contrary there are more packages than he can load, he will choose those that pay best depending on their weight. In other words, the one that pays the best per kg.

Not all packages are the same, some will weigh more than others. Maybe because the box is made of a different material (different types of transactions), or because we use many low denomination coins instead of few high denomination coins. The captain only cares about the weight, not what is inside and what each coin represents.

What if the tip we left was not enough for him to take our package? We have two options. We could go to the port to add more tip (RBF). But for that we should have warned that we would come back when we left it in the first place (opt-in RBF), otherwise we will not be authorized to enter 👮. The second alternative is to leave a second package with a very high tip, but with instructions that it cannot be sent if that first package is not sent (CPFP). The captain will be tempted to take the 2nd package, but the average price per kg of both should be worth it since he will have to take both or neither.

When we tip, we are paying for the transportation of our package based on its weight (transaction weight). The tip we have to pay will be the result of the competition for a place on the ship, among all those who want to send packages at any given time.

This article is a compilation of a Twitter thread I made more than 2 years ago: https://twitter.com/diegogurpegui/status/1361867413566984194

Any thoughts? Comment below