How Does a Fee Market Differ from a Fixed-Fee Structure in a Blockchain?

A fixed-fee structure sets a predetermined, constant transaction cost, regardless of network congestion. This is simple but leads to long confirmation times during high demand, as miners have no incentive to prioritize.

A fee market, however, allows users to bid for block space by setting their own transaction fees. During congestion, fees rise, incentivizing miners to prioritize high-fee transactions and ensuring that those willing to pay get faster confirmation.

This dynamic pricing mechanism efficiently allocates scarce block space.