Does the transaction fees of a blockchain increase only after the total size of transactions exceed the block size limit?

Question

I understand that the smaller the block size limit the higher the transaction fees may get as users compete for the privilege of their transaction been included in the block.

But before the limit is reached it makes sense to me that no competition is needed as all transactions fit in the block, or am I missing something?

Answer 1

You are understanding it right.
The motive of the high transaction fee is to get the transaction confirmed quickly. If the number of transactions in the Mempool is low(hence no competition), the miners will accept transactions with very low fees as well. The downside is the transaction will take longer to be included in a block.

Even transactions with zero transaction fee can be valid in edge cases. See https://www.reddit.com/r/Bitcoin/comments/72j2cd/0_fee_transaction_finally_got_confirmed_after_43/ https://bitcoin.stackexchange.com/questions/69030/how-did-these-zero-transaction-fee-transactions-make-it-into-the-bitcoin-network .

The recent versions of bitcoin core require a minimum transaction fee ( 1000 satoshis at the time of writing ). If the transaction fee is lower than that, it is not relayed.