July 14, 2015

Blockchain Spam and Bitcoin Transaction Fees

Last week, the bitcoin network was the target of a spam attack causing massive transaction delays. The attacker flooded the network with transactions that were small in value but large in data size, quickly filling up blocks and creating a backlog of unconfirmed transactions. At the peak, more than 80,000 transactions were waiting to be mined into a block.

As our users had witnessed, one of our payments was unconfirmed for five days. Similar to the transactions used in the spam attack, our payments are usually sent to multiple addresses at once and require relatively large block allocations. We didn't realize an attack was happening at the time of issuing payment and attached the default miner's fee of 100 bits. As a result, our transaction was buried with all the spam transactions. In the past, we were able to get away with paying the tiny fee and still have transactions confirmed quickly since blocks were rarely filled. As bitcoin adoption increases and the risk of more spam attacks loom, the importance of including a reasonable fee is highlighted. We attached a higher fee with our most recent payment and it was included in the next block.