What Is the General Algorithm Miners Use to Select Transactions for a Block?
Miners generally employ a greedy algorithm to select transactions, prioritizing those that offer the highest fee rate, typically measured in satoshis per virtual byte (sat/vbyte). They iterate through their mempool, selecting transactions from highest fee rate to lowest.
This process continues until the block is full, meaning the block size or weight limit is reached. The goal is to maximize the total transaction fees collected in the block, thereby maximizing the miner's profit from the block space.
Glossar
Miners
Validation ⎊ The term "Miners," within cryptocurrency contexts, fundamentally denotes entities responsible for validating and adding new transaction records to a blockchain.
Transaction Fees
Cost ⎊ Transaction fees represent a quantifiable expense incurred for processing and validating transactions across diverse financial systems, functioning as a critical component of network participation and security.
Satoshis per Virtual Byte
Metric ⎊ Satoshis per Virtual Byte (Sats/vByte) is the standard unit of measure for transaction fee density on the Bitcoin network, quantifying the cost of block space.
Algorithm
Framework ⎊ Within cryptocurrency derivatives and options trading, a framework denotes a structured computational process designed to model, predict, or automate trading strategies, often incorporating elements of quantitative finance and market microstructure.
Greedy Algorithm
Heuristic ⎊ A Greedy Algorithm, within cryptocurrency, options trading, and financial derivatives, represents a problem-solving approach prioritizing immediate optimality without considering long-term global consequences.