- December 18, 2023
- Posted by: [email protected]
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Bitcoin is experiencing a notable surge in on-chain transaction fees, reaching a 20-month high, with miners reaping the rewards as the average cost of sending BTC skyrockets to nearly $40, according to data from BitInfoCharts as of December 17. The recent influx of Bitcoin transactions has led to elevated fees for all network users, sparking a debate among market participants about the sustainability of these high fees.
According to BitInfoCharts, the current average cost to send BTC on-chain is slightly over $37, marking the highest average figure since April 2021. The size of Bitcoin’s mempool, representing the unconfirmed on-chain transaction backlog, has grown substantially, with almost 350,000 transactions awaiting confirmation at the time of writing. Even transactions with a $2 fee are finding it challenging to secure on-chain priority.
As transaction fees become prohibitively high for smaller investors engaging in on-chain spending, a divisive discussion among Bitcoin proponents is underway. While some express frustration at the impact of increased fees, others argue that double-digit transaction costs are a glimpse into the future. Prominent figures in the Bitcoin community suggest that embracing layer-2 solutions, such as the Lightning Network designed for mass adoption, is crucial for those seeking to shield themselves from high on-chain fees.
Hodlonaut, a popular commenter, believes that the current high fees are temporary and due to external factors, emphasizing that demanding low fees for “Level 1” transactions is shortsighted and detrimental to Bitcoin’s security. According to Hodlonaut, scaling should occur on layer-2 solutions, and attempts to keep fees low undermine the competitive nature of Bitcoin as a proof-of-work network.
Despite the challenges posed by increased transaction fees, well-known commentators like Beautyon and Bitcoin veteran Adam Back argue that Bitcoin continues to function as intended. Beautyon suggests that the current environment, influenced by Ordinals, may act as a catalyst for wider adoption of layer-2 solutions. Adam Back echoes the sentiment, emphasizing that high fees drive innovation and adoption of layer-2 solutions.
According to Blockchain.com, miners’ revenue, encompassing block subsidies and fees in USD, has reached levels last seen when Bitcoin hit its all-time high of $69,000 in November 2021. Bitcoin’s price was trading at around $42,000 toward the close of the week on December 17, as per data from various crypto analytics sources.
