Bitcoin Core 29.1 Slashes Default Minimum Relay Fee by 90%
Bitcoin’s core software has implemented one of the most significant fee-related changes in years, reducing the default minimum relay fee for transactions by 90%. This update is designed to reflect Bitcoin’s substantial price appreciation over the past decade and to enhance the efficiency of transaction propagation across the network.
Details of the Fee Reduction
Released on September 4, Bitcoin Core 29.1 sets the default minimum relay fee to 100 satoshis per thousand virtual bytes (0.1 sat/vB), down sharply from the previous 1 sat/vB. The fee rate determines the minimum cost a transaction must pay to be relayed by nodes, which helps prevent spam and denial-of-service (DoS) attacks. While node operators can customize this setting, most are expected to adhere to the new default.
Rationale Behind the Change
The decision was finalized by Bitcoin Core developers on August 15, motivated by Bitcoin’s increased valuation over the last ten years. Previously, the minimum relay fee served as a protective measure against network abuse, but with Bitcoin now trading at significantly higher prices, a lower fee threshold in BTC terms is both feasible and beneficial.
Network Adoption Remains Gradual
According to BitRef data, more than 72.5% of Bitcoin nodes run Bitcoin Core software, with the remainder using Bitcoin Knots, a fork prioritizing user control. Among these, Bitcoin Core 29 is the most popular version, but only 571 nodes (under 2.3% of the network) have upgraded to Bitcoin Core 29.1, which incorporates the new fee defaults.
Bitcoin Knots 29.1, although based on Core 29.1, does not adopt the lower fee default. Instead, it increases the minimum relay fee tenfold relative to Bitcoin Core’s new default, preserving the older, higher fee level by default. This divergence highlights differing philosophies between node software projects regarding fee policy.
Community and Developer Perspectives
Bitcoin Core developer Gloria Zhao explained that the update responds to a recent trend where transactions with fees below the previous 1 sat/vB threshold were still being mined. However, inconsistent fee policies among nodes caused delays in block propagation, as some nodes rejected or failed to receive low-fee transactions promptly.
Zhao emphasized the need to strike a balance: lowering fees enough to facilitate smoother block relay while maintaining sufficient protection against spam and DoS attacks.
Supporting the update, Mempool.Space, a Bitcoin network data provider, encouraged users to avoid overpaying transaction fees, describing 0.1 sat/vB as the new standard fee rate.
FinOracleAI — Market View
This reduction in Bitcoin Core’s default minimum relay fee lowers the cost barrier for transaction relay, potentially increasing network throughput and user activity by making small transactions more economically viable. However, the slow adoption of the update and the divergence in fee policies between Bitcoin Core and Bitcoin Knots nodes could delay its full impact.
Risks include possible increases in spam transactions if fees are set too low, which could strain network resources. Market participants should monitor adoption rates of Bitcoin Core 29.1 and network fee dynamics to assess the update’s long-term effects on transaction costs and network security.
Impact: positive
