The Underestimated Roles of Bitcoin Mempools.

The Role of Mempools in Bitcoin and Ethereum Transactions

The decentralised economy involves highly advanced concepts and technologies, some of which are usually overlooked by users due to their indirect impact on their experience.

However, network participants and validating nodes recognise the role of mempools in streamlining crypto payments and managing network workload. Let’s explain this concept in more detail.

Bitcoin Mempools Explained

Mempools are temporary storage spaces where Bitcoin payments are queued before being picked up by network participants to start the validating process. These pools help ease network congestion, facilitating faster execution and lower fees.

Each blockchain has its own distinguished storage structure, control measures, and priority settings. The Bitcoin mempool received a SegWit fork update that segregated “witness” data to facilitate processing scaling through L2 networks and improve transaction structure.

The Ethereum blockchain introduced the maximal extractable value, which refers to the node’s ability to reorder pending transactions in a way that generates the most returns.

Why are Mempools Important?

With the increasing number of crypto users and exchange platforms, the number of decentralised payments and blockchain-based operations is strikingly high. This inflow leads to frequent network congestion, especially during extreme market booms, when gas fees skyrocket, and crypto transfers face delays.

These storage pools help streamline inflowing operations and help nodes select transactions in a way that ensures operating in good faith. However, some criticism arises that validators prioritise large-volume transfers to earn high commissions and ignore low-value payments, leading to significant delays.

Bitcoin vs Ethereum Mempools

Bitcoin and Ethereum are the largest and most sophisticated decentralised ecosystems, with noticeable differences in transaction processing. Let’s compare how operations are executed and queued in each network.

Bitcoin Mempool

The BTC network follows the proof-of-work consensus mechanism that requires solving mathematical problems to find and mine a Bitcoin transaction. This lengthy process extends the waiting time, which justifies why some transactions take longer than expected.

Once the transaction is mined and confirmed by network rules, it is inserted into a 4MB file chained and assigned a block in the blockchain.

Ethereum Mempool

Ethereum relies on more automation using smart contracts and proof-of-stake algorithms that eliminate the need for mining. Smart contracts execute and process transactions much faster and reward nodes for their role in validation.

This automation executes payments much faster than the Bitcoin blockchain. However, the increasing number of users and associated layer-2 networks and solutions can lead to network delays.

Conclusion

The mempool is a waiting room for crypto transactions. Validating nodes have their special storage spaces where pending payments are queued.

Network nodes and miners prioritise and select transactions based on their associated gas fees and amounts, which allow them to increase their earnings from the validation process.