Branch and bound

From CryptoMarketsWiki
Jump to: navigation, search

Branch and bound, or "BnB," is a cryptocurrency trading technique designed to reduce trading fees.

How it works

Technically, a single, whole cryptocurrency (for example, one bitcoin) is not comprised of a single, whole bundle of code; it is comprised of multiple "chunks" of data called "unspent transaction outputs" (UTXOs). The smaller a "chunk" of, say, a bitcoin is moved out of a wallet during a transaction, the greater the chance that the resulting fees from whatever service is being utilized to carry out the transaction will be such that the transaction costs more than the amount being transferred is actually worth (not unlike how pennies cost more to manufacture than they are worth) - the term "dust" is used to describe chunks of bitcoin so small, they aren't worth spending.

BnB is an algorithm designed to avoid this problem by choosing the best combination of existing UXTOs from someone's bitcoin wallet to see if there is a combination that rounds out to exactly the amount a user wishes to send.[1]

References