What is RBF? RBF stands for Replace-By-Fee. It is a Bitcoin mechanism that lets the sender, before a transaction confirms, re-sign and send a new transaction using the same inputs and a higher fee, replacing the original that is still in the mempool. It is most often used to speed up stuck transactions, and it can also cancel a transaction or change what it pays.
How Does RBF Work?
Each Bitcoin UTXO can be spent only once. The replacement and the original spend the same UTXOs, so only one of them can ever confirm. When a node receives the replacement, it checks that both its total fee and its fee rate are higher than the original’s; if so, it removes the original from its mempool and keeps the new one. Under BIP-125, the sender signals in the transaction that it is replaceable. In recent years, more and more nodes also accept replacements of transactions that did not signal, known as full RBF. Either way, once the original has been included in a block, it can no longer be replaced.
What Can RBF Be Used For?
The most common use is speeding up: the destination address and amount stay the same and only the fee rate goes up, so the transaction confirms faster. The second is cancelling: change the output to send the funds back to your own address, and as long as the replacement confirms first, the original payment never happens. You can also change the amount in the replacement or add new recipients, combining several payments into one to save fees. For businesses, every replacement is a new signature and should go through the same approval workflow as the original, to confirm that only the intended changes were made.
What Risks Does RBF Pose for Recipients?
Because unconfirmed transactions can be replaced, recipients cannot treat “broadcast but unconfirmed” as received. The payer can use RBF before confirmation to send the funds back to themselves, which is a double spend. Exchanges, payment companies and merchants should wait for enough confirmations before crediting funds or shipping goods, and treat the transaction that finally confirmed as the record during reconciliation.
Conclusion
RBF lets Bitcoin senders replace a transaction with a higher fee before it confirms, which can be used to speed up, cancel or combine payments. Senders should run replacements through approval, and recipients should wait for confirmation before crediting funds. Safeheron’s Wallet-as-a-Service provides businesses with MPC key management and a policy engine.
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