bitcoin/bitcoin — pull request #3959 by gavinandresen (2014-03-25 13:18:47+00:00)
Title: estimatefee / estimatepriority RPC methods

New RPC methods: return an estimate of the fee (or priority) a transaction needs to be likely to confirm in a given number of blocks.

Fee-per-kilobyte estimates for 1..10 confirmations from this code:
```
gavin$ for i in {1..10}; do ./bitcoind estimatefee $i; done
0.00044643
0.00044248
0.00044053
0.00029499
0.00020492
0.00014970
0.00012981
0.00012190
0.00011769
0.00011217
```

Mike Hearn created the first version of this method for estimating fees.
It works as follows:

For transactions that took 1 to N (I picked N=25) blocks to confirm, keep N buckets with at most 100 entries in each recording the fees-per-kilobyte paid by those transactions.

(separate buckets are kept for transactions that confirmed because they are high-priority)

The buckets are filled as blocks are found, and are saved/restored as part of the mempool.dat file.

A few variations on Mike's initial scheme:

To estimate the fee needed for a transaction to confirm in X buckets, all of the samples in all of the buckets are used and a median of all of the data is used to make the estimate. For example, imagine
25 buckets each containing the full 100 entries. Those 2,500 samples are sorted, and the estimate of the fee needed to confirm in the very next block is the 50'th-highest-fee-entry in that sorted list; the estimate of the fee needed to confirm in the next two blocks is the 150'th-highest-fee-entry, etc.

That algorithm has the nice property that estimates of how much fee you need to pay to get confirmed in block N will always be greater than or equal to the estimate for block N+1. It would clearly be wrong
to say "pay 11 uBTC and you'll get confirmed in 3 blocks, but pay 12 uBTC and it will take LONGER".

A single block will not contribute more than 10 entries to any one bucket, so a single miner and a large block cannot overwhelm the estimates.