Bitcoin users are facing a new exponential increase in transaction fees on the network, driven by the demand for block space to register Ordinals.
According to Mempool data, more than 327.000 Bitcoin transactions are currently waiting to be confirmed on the blockchain network.
The Bitcoin blockchain has been saturated again by the boom caused by the registration of ordinals, which are very similar to traditional NFTs, and whose demand has significantly increased the cost of block space on the blockchain. As the demand and trading of BRC-20 and Stamps tokens, based on the Ordinals protocol, intensifies on the network, users compete to have their transactions confirmed as quickly as possible, causing many others to suffer from the high cost of transacting in Bitcoin today.
Mempool data shows that, The current cost of confirming a high-priority transaction in Bitcoin is 482 sat/vB, or about $28 USD., roughly. Medium-priority transactions on the blockchain average 438 sat/vB, or about $25, while low-priority transactions fetch 400 sat/vB, or about $23, which is still a fairly high transaction fee for the average user.
Source: Mempool
Far from its historical maximum
The average transaction fee on Bitcoin has risen substantially since the appearance of Ordinals in January of this year. The Block Research shows that these fees experienced a 1.800% increase since the beginning of the year, when they were close to $1,52 per transaction.
Source: The Block Research
However, despite this sharp increase, transaction fees on the Bitcoin network are still far from the all-time high seen in April 2021, when they exceeded $53 per transaction.
Recently, Bitcoin users paid up to 700 sat/vB to confirm their transactions on the blockchain, indicating that these fees have been decreasing in recent hours.
Miners are the biggest winners from rising transaction fees
While Bitcoin users are suffering from the rising commission fees, it is the miners of the blockchain network who are benefiting greatly from this situation.
According to the Mempool, At block #821596, Bitcoin miners earned 7,86 BTC from commission fees alone, outpacing the revenue they receive from the block reward, which is currently 6,25 BTC. In this block, which was mined by AntPool, the average fee was 700 sat/vB, or about $41, per transaction.
Source: Mempool
The revenue generated by miners from transaction fees in blocks #821595, #821597, #821598, and #821599 was also higher than that generated by the block reward, which miners receive when generating a new block on the blockchain network.
In 2021, X user @ODELL commented that high transaction fees on Bitcoin are necessary “to prevent denial of service (spam) attacks that can threaten decentralization and thus censorship resistance,” while user @princevegetabtc highlighted that many people are currently figuring out how the Bitcoin network will be maintained once the last bitcoin is mined and there are no more block rewards.
It is estimated that by 2140, Bitcoin miners will be rewarded solely by the fees paid by users to confirm their transactions on the network.
Continue reading: A new token standard is coming to the Bitcoin network
