Quote from: Xiaoxiao on September 02, 2014, 03:58:16 AM

Does one have to manually confirm a transaction? Or do you preset it somehow to confirm only x transactions with y fees, etc?

No, it's not manual.

To be confirmed, the transaction must be included with the signed block when it's broadcast to the network. There is a limited amount of space in each block, so not all pending transactions can be included with each block broadcast. The Satoshi implementation includes an algorithm that determines transaction priority that takes into account transaction fees, the length of time the coins resided at the source address(es) before being spent, and the size of the transaction itself. Miners using custom software (these days, effectively all of them) can use whatever system they like to decide what transactions to include. Some miners will send blocks with no transactions at all - that's a bit rude, and they're leaving transactions fees on the table, but it happens. Most miners use the algorithm from the Satoshi implementation.

If the majority of miners were to decide not to include transactions without fees, then you'd need to fulfill their requirements to get included in the blocks they mine. If those fees become too high for the network to support, then Bitcoin would lose value, which in turn means miners lose profitability. Like most everything else in Bitcoin, this is a case of financial incentives of multiple parties being balanced against one another. If miners require high fees, fewer people will use their service and they'll lose money. Perhaps off-chain transactions would become the big thing, or perhaps sidechains. It's in the best interest of miners - individually and as a community - to continue to accept fee-less and low-fee transactions if there is room available in the block.