Why Is Everyone Talking About Mempool?

If you’ve ever traded crypto, especially Bitcoin, you’ve probably come across the term ‘mempool’ before.

In this post, we’re going to explore what a mempool is, why it’s important, and why so many people are talking about these mempools.

Let’s dive right in.

What is a mempool?

Blockchain.com defines mempool as the place,

“…where all the valid transactions wait to be confirmed by the Bitcoin network.”

Put another way, the mempool, which is a contraction of two words — memory and pool — is the waiting room for transactions that haven’t yet been incorporated into a block.

It’s the data structure the nodes hold onto with unconfirmed transactions waiting to be picked up and integrated into blocks by miners.

Things to know about a mempool

Now that we know a mempool is akin to a pre-departure lounge where transactions sit enroute to becoming part of a block, several questions may arise that include:

• Why do mempools even exist?
• How long can transactions sit in a mempool?
• Can mempool efficiency be improved?

These are all great and valid questions. Let’s address each one in turn.

Why do mempools exist?

Transactions cannot be added directly onto the blockchain when they are made. They have to be picked by miners who manually add them to blocks. Once integrated into a block, the block is added to the blockchain sequence.

So, in a sense, the mempool is one way of verifying the authenticity of a transaction by having independent third-party miners incorporate the transaction.

Can mempool efficiency be improved?

Mining is a tough job and the network makes it even more difficult to mine with each new block added to the blockchain. In fact, it can take up to 10 minutes to add a single block.

And each time a new block is added, the network is configured in such a way as to increase mining difficulty.

So no matter how efficient a miner becomes and the hardware they invest in, blockchain technology always has an upper hand.

How long can transactions sit in a mempool?

The size of the mempool and the transaction fees investors are paying determines how long transactions sit in the mempool.

If you pay more in transaction fees for your transactions, miners are more likely to select your transaction to clear faster.

This of course hasn’t gone unnoticed by most crypto investors who see transaction fees as a potential bottleneck in the entire system.

Why the masses are concerned about mempool

While cryptocurrency transaction fees have generally been heralded as being lower than conventional banking fees things might be taking a turn for the worst.

There can be no doubt that as crypto transactions become more prevalent, those with more money will make no qualms about paying a little extra to get their transactions processed faster.

This is concerning for others who have to wait to also get their transactions approved and cannot afford to pay more fees. You see when it comes to clearing transactions, there is no queue. Rather miners pick and choose the transactions they wish to work on based on transaction fees.

So transactions with higher transaction fees are more likely to get chosen and hence cleared faster.

The questions people are now asking include: Are there ways to improve this process without paying too much in transaction fees? Is there a way to cap transaction fees and have transactions cleared in a more orderly manner?

Well, until a more viable solution is proposed, it appears that mempools will continue on the same trajectory as they have been on for the last couple of years.