Currently transaction fees are negligible compared to the block reward. Many miners are willing to process 0 fee transactions because it hardly costs them anything and promotes use of the network. However this will change over time as the block reward declines and transaction fees become more important.
Of course, the huge problem here is that there is only an incentive to add substantial fees if the number of transactions is larger than the maximum the network can handle. If they increase the blocksize to allow for more transactions per minute then there will be less incentive to pay fees. The fee system is also not very friendly to microtransactions because its not percentage based.
The specifics of that might not be quite right.
But a transaction generally specifies some amount which goes to whoever mines a block which includes the transaction.
If one wants their transaction to be included in a block more quickly, one can include a higher transaction fee, so that miners have a greater incentive to include your transaction in a block compared to other transactions.
I am fairly sure that the above is basically correct, but not entirely sure.
I don't actually own and have not used bitcoin, I'm just interested in the space.
How does that work, exactly? I thought that the only reward that the miners get is the block reward hard-wired in the system. Is there another mechanism that allows them to negotiate transaction prices with clients and accept/decline transactions?