Replace-By-Fee (RBF)

Replace-by-fee, or RBF, is a policy that lets a sender replace an unconfirmed bitcoin transaction with a new version paying a higher fee. Standardized as BIP 125 in 2015, it turns fee estimation from a one-shot guess into an adjustable bid: if the network gets congested after broadcast, the sender can raise the offer until miners include the payment.

Why it matters

Block space is a fee market, and fees can move by an order of magnitude within hours. Without RBF, a transaction sent with too low a fee could sit unconfirmed for days. RBF also ended any illusion of safely accepting zero-confirmation payments, since an unconfirmed transaction is explicitly replaceable; merchants who once treated mempool acceptance as payment had to wait for confirmation instead. This trade-off generated years of debate before node software moved toward treating all unconfirmed transactions as replaceable, with Bitcoin Core adding a full-RBF option in late 2022.

How it works

A replacement transaction spends at least one of the same inputs as the original, which makes the two mutually exclusive: only one can ever confirm. Relay policy requires the replacement to pay a higher fee and a higher fee rate than what it displaces, preventing free spam. Wallets expose this as a fee bump button, and a related technique, child pays for parent, achieves the same result from the receiving side.