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https://bitcointalk.org/index.php?topic=199947.0

Can anyone explain what replace-by-fee means?

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This thread explains it.

It's a method that allows replacing an already transmitted transaction by transmitting another transaction with a higher fee. This only works on transactions before they are signed by miners (0-confirmations).

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    So basically it floods the mempool with multiple transactions that only differ by fee. It seems this creates more "noise" for miners than necessary. – Geremia Mar 29 '17 at 18:47
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    @Geremia the miner's are economically incentivized to discard the lower fee transaction. It should add more load to the network but shouldn't increase the size of the mempool. – Ammar Bandukwala Apr 6 '17 at 13:14
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    If the fee is so high that makes sense for someone to mine on old blocks, surely it would also work for 1+-confirmations? – Janus Troelsen Jul 3 '17 at 11:01
  • Normally a miner will pick the one with the highest fee. Some explorers continue to show the older double spent even after the new one has been confirmed. – Jus12 Nov 12 '17 at 12:50
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After 6 years, Now I want to tell you what is Replace by Fee :)

This feature was proposed in BIP125 and implemented in Bitcoin Core 0.12.0.

In simple words, by enabling (Replace By Fee) RBF in a transaction, if a transaction doesn't get mined, it can be resent by the sender with a higher mining fee with keeping the input data of the UTXO(Unspent Transaction Output) same as before.

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