What Is The Mempool

When you send a Bitcoin transaction, it doesn’t immediately land on the blockchain. It goes first to the mempool — short for memory pool — where it waits to be included in a block.

The mempool is a holding area maintained by every node on the network. Think of it as a queue of transactions waiting for the next available space in an upcoming block. Each block has a size limit — roughly 1 to 4 megabytes depending on the transaction type — which means only a certain number of transactions can be included in each ten-minute block.

When a miner assembles a new block, they select transactions from the mempool. They’re not required to take them in order of arrival. They’re incentivised to take the ones paying the highest fees — maximising their revenue per block.

This creates a fee market. When the mempool is congested — during bull market peaks, major news events, or periods of high activity — transactions compete for limited block space. Fees rise. Transactions paying higher fees get included quickly. Transactions paying lower fees wait.

During quiet periods, the mempool clears quickly and fees drop to near zero. During the 2017 and 2021 bull runs, the mempool backed up significantly and fees spiked — at times making small transactions economically impractical.

For most ordinary transfers, the mempool is invisible. Transactions confirm within a block or two. But understanding it explains why Bitcoin fees aren’t fixed, why confirmation time varies, and why the Lightning Network — which settles payments off-chain — was developed to handle high-frequency small payments more efficiently.

Tomorrow: transaction fees — why they exist and how they actually work.

— The Daily Bit