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add CPFP, RBF and netowrk propoagation topics (#83)
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‎decoding/cpfp.mdx

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---
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title: "Child Pay For Parent (CPFP)"
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date: 2024-01-25T15:32:14Z
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lastmod: "2024-07-26"
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draft: false
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category: Transactions
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layout: TopicBanner
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order: 4
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icon: "FaClipboardList"
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images: ["/decoding-bitcoin/static/images/topics/thumbnails/musig-thumbnail.webp"]
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parent: "fee-calculation"
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---
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Imagine receiving bitcoin but the transaction is stuck in the mempool.
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The sender used a fee that's too low, and miners aren't picking it up.
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<div className="dark:hidden w-full rounded-lg">
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<SvgDisplay
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src="/decoding-bitcoin/static/images/topics/transactions/fees/cpfp-1.svg"
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width="100%"
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height="auto"
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/>
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</div>
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<div className="hidden dark:block w-full rounded-lg">
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<SvgDisplay
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src="/decoding-bitcoin/static/images/topics/transactions/fees/cpfp-1.svg"
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width="100%"
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height="auto"
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/>
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</div>
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What can you do? This is where Child Pays For Parent (CPFP) comes in.
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## What is CPFP?
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CPFP is a fee-bumping strategy where the recipient of an unconfirmed transaction creates a new transaction (child) that spends the pending funds and includes a high enough fee to incentivize miners to confirm both transactions together.
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## How Does CPFP Work?
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Let's break it down with an example:
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1. Alice sends 1 BTC to Bob with a very low fee
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2. The transaction gets stuck in the mempool because miners ignore low-fee transactions
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3. Bob creates a new transaction (child) spending the unconfirmed bitcoin
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4. Bob attaches a high fee to the child transaction
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5. Miners see they can collect both fees by including both transactions
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6. Both transactions get confirmed in the next block
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<div className="dark:hidden w-full rounded-lg">
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<SvgDisplay
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src="/decoding-bitcoin/static/images/topics/transactions/fees/cpfp-2.svg"
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width="100%"
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height="auto"
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/>
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</div>
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<div className="hidden dark:block w-full rounded-lg">
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<SvgDisplay
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src="/decoding-bitcoin/static/images/topics/transactions/fees/cpfp-2.svg"
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width="100%"
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height="auto"
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/>
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</div>
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## Technical Details
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CPFP works because of two key Bitcoin concepts:
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1. **UTXO Model**: Bitcoin allows spending unconfirmed outputs, enabling the creation of child transactions
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2. **Mempool Package Evaluation**: Miners evaluate related transactions as a package, considering their combined size and fees
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### Fee Calculation
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The effective fee rate for a CPFP package is:
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<div className="text-center my-4 text-orange-500">
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$$\text{Effective Fee Rate} = \frac{\text{Parent Fee + Child Fee}}{\text{Parent Size + Child Size}}$$
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</div>
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CPFP is particularly useful when:
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- You receive a transaction with too low fees
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- The sender didn't enable RBF (Replace-By-Fee)
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- You need urgent confirmation of incoming funds
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## Limitations
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While powerful, CPFP has some constraints:
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- Only the recipient can initiate CPFP
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- Requires enough funds to cover the new transaction fee
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- Some wallets don't support CPFP natively
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- May not work during extreme network congestion

‎decoding/fee-calculation.mdx

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order: 306
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icon: "FaClipboardList"
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images: ["/decoding-bitcoin/static/images/topics/thumbnails/transaction-module/fees-thumbnail-feecalculation.jpg"]
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children: ["transaction-weight", "blocksize-blockweight", "fee-rate", "rbf"]
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children: ["transaction-weight", "blocksize-blockweight", "fee-rate", "rbf", "cpfp"]
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---
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## Topics:

‎decoding/network-propagation.mdx

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This file was deleted.

‎decoding/rbf.mdx

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---
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title: "RBF"
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title: "Replace-By-Fee (RBF)"
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date: 2024-01-25T15:32:14Z
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lastmod: "2024-07-26"
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draft: false
@@ -11,4 +11,42 @@ images: ["/decoding-bitcoin/static/images/topics/thumbnails/musig-thumbnail.webp
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parent: "fee-calculation"
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---
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(coming soon)
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Imagine you send a Bitcoin transaction to your friend. You eagerly wait for it to be confirmed, but it gets stuck in the mempool.
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Why? **Because the fee you set was too low**, and miners aren't interested in including it in a block.
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## The Problem
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Your transaction is sitting in the mempool, unconfirmed for 48 hours. Frustrated, you wonder why it's taking so long. The answer is simple: your transaction fee is too low, and no miner is picking it up.
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<div className="dark:hidden w-full rounded-lg">
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<SvgDisplay
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src="/decoding-bitcoin/static/images/topics/topics/transactions/fees/rbf-1.jpg"
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width="100%"
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height="auto"
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/>
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</div>
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<div className="hidden dark:block w-full rounded-lg">
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<SvgDisplay
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src="/decoding-bitcoin/static/images/topics/transactions/fees/rbf-1.jpg"
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width="100%"
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height="auto"
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/>
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</div>
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## The Solution: RBF
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To fix this, you can use Replace-By-Fee (RBF). RBF allows you to replace your stuck transaction with a new one that offers a higher fee, making it more attractive to miners.
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## How Does RBF Work?
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To increase the fee, you create a conflicting version of the transaction. This new transaction spends at least one of the same UTXOs as the original transaction you want to replace.
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By doing this, you signal to the network that your transaction can be replaced by one with a higher fee.
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## Types of RBF
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1. **Opt-in RBF**: Here, the transaction must specify and signal to miners that it can be replaced by a higher fee transaction. This is done by setting the `nSequence` to a value below `0xffffffff`.
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2. **Full RBF**: Any unconfirmed transaction can be replaced without signaling. This method offers more flexibility but may face network policy restrictions.

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