Home News Bitcoin transaction fees briefly doubled yet remain exceptionally low

Bitcoin transaction fees briefly doubled yet remain exceptionally low


Do you need to transmit some Satoshi or organise your Bitcoin (BTC) wallets? It’s becoming more affordable. “Transaction fees have remained low since July 2021, exhibiting no signs of growing,” according to Arcane Research.

Bitcoin mean tx fees remaining very low despite small hike last week. Source: Arcane Research

Last week, though, there was a modest increase in transaction fees. Clustering of the mempool pushed “increase the average transaction fees each day over the past seven days to $691,000, a doubling since last Tuesday,” as shown as a modest bump at the tail end of the graph.

Nonetheless, the increase in transaction fees is negligible: transaction fees have remained modest. Over the course of two days, miners churned through the mempool transactions, protecting the network while keeping transaction costs low.

The adoption of Segwit, hash rate redistribution, and Bitcoin layer 2 infrastructure like the near-instant payment lightning network kicking in, according to Eric Yakes, author of the Bitcoin book The 7th Property, are three primary reasons why transaction costs are so low.

“From 50% to 70% in June 2021, the percent of Segwit transactions on-chain has progressively climbed to beyond 80%, which basically should be enhancing transaction throughput for the network.”

Following the China prohibition and redistribution of hash rate, “network difficulty bottomed and has since increased to ATHs,” according to Yakes in July 2021. When you add up the increased amount of Segwit transactions, you get:

“This increase in hash rate has resulted in the discovery of blocks faster than the difficulty adjustment can keep up with, resulting in a faster clearing of transactions than would otherwise be the case, cutting transaction costs.”

Presently, all of the major exchanges are batching trades

Transaction costs, on the other hand, “should not be expected to be persistent,” according to Yakes. Price, hash rate, and difficulty will eventually hit a sweet spot, making the fee market less competitive and raising transaction costs.”

Another reason transaction costs are minimal, according to Tomer Strolight, editor-in-chief of Swan Bitcoin, is:

“Right present, all of the major exchanges are batching trades. This means they’re sending out 100 or more withdrawals in a single transaction. Rather than the dreadful practise of sending out each withdrawal individually, as was the case some years ago.”

Plus, the lightning network’s capacity to open “channels” when the blockchain isn’t overburdened. When a faster, cheaper lightning transaction is available, using them over and over keeps the chain from becoming clogged.”

Lightning Network nodes and channels map. Source: explorer.acinq.co

While these four factors are crucial, according to the Arcane research report, “it’s also likely that a decreased number of transactions per day has driven down the average transaction charge.”

“Transaction fees may rise in the near term,” Yakes says. “But there are so many tendencies against increased transaction fees. That I believe they will be consistently lower over the long term.”

Tromer is also positive:

“I truly believe we can steadily increase network capacity. In order to handle all of the world’s business without becoming an insurmountable bottleneck.”

Bitcoin consolidates after $40K surge as analyst eyes weekly higher low for BTC price

Previous articleCrypto.com gives users in excluded countries one week to repay loans
Next articleDubai establishes virtual asset regulator and announces new crypto law