What Is Transaction Malleability and How Does It Relate to Fees?

Transaction malleability refers to the ability for a third party to alter the unique transaction identifier (TXID) of a transaction before it is confirmed, without changing the transaction's essential details like the sender or recipient. While it does not directly relate to the fee amount, it historically posed a problem for systems relying on the original TXID, such as those implementing "Child Pays For Parent" (CPFP) or exchange withdrawal systems.

If the TXID changed, a subsequent transaction that referenced it could become invalid. This issue was largely addressed by the Segregated Witness (SegWit) upgrade, which removed the malleable data from the TXID calculation.