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Bitcoin Fees Skyrocket ~1,000% As NFT “Ordinals” Resurgence Causes Congestion
Bitcoin transaction fees have soared by nearly 1,000% since August, reaching their highest levels since May 2023’s meme coin frenzy.
The resurgence of Bitcoin-linked non-fungible tokens (NFTs), known as Ordinals, is the main driver behind this surge.
Ordinals, which allow NFTs to be stored on Bitcoin, saw a spike in demand earlier this year, pushing fees to nearly 2-year highs.
The average fee for a Bitcoin blockchain transaction hit $6.84 on Wednesday, up from a low of $0.64 in August, according to BitInfoCharts data.
Over the past two weeks, almost 1.9 million Ordinals inscriptions have been uploaded to the blockchain.
Interestingly, Bitcoin has surpassed Ethereum to become the leading blockchain for NFT sales volume in recent days.
This NFT resurgence is not only affecting transaction fees but also benefiting struggling Bitcoin miners.
With blockchain transaction fees now constituting approximately 8.5% of their revenue, miners’ bottom lines are getting a boost.
This comes as a welcome development, especially with the upcoming Bitcoin halving event in April 2024, which will reduce block rewards by half.
Binance, the world’s largest crypto exchange, listed the Ordinals’ token ORDI earlier this week.
Its price almost doubled before retracing some of its gains.
While Ordinals have mainly been used for meme coin implementations, they are seen as a barometer for the growing demand for Bitcoin block space. Read more here.
Bitcoin fees surge from BRC-20 token NFTs.
Bitcoin Ordinals’ congestion challenges.
Rising Bitcoin transaction fees hurt El Salvador.
Ethereum’s record-low gas fees explored.
Bitcoin Mining: A pricey game of computing, energy, and policy.
The impacts of high transaction cost on Bitcoin and Ethereum.
What Problems Does Zucoin Solve With Bitcoin’s NFT Issues?
Bitcoin transaction fees are seeing a dramatic increase due to the return of Bitcoin-associated non-fungible tokens (NFTs), known as “Ordinals”.
As the source article highlights, the average price for a Bitcoin blockchain transaction has jumped from USD $0.64 in August 2023 to USD $6.84 recently.
On the other hand, Zucoin operates on the SplitChain network, where transfer fees on the network are non-existent by default.
Think about it. A world where transferring value incurs no extra charges.
Zucoin’s network functions in a unique way.
Not every node is tasked with storing the same data as others.
This approach minimizes unnecessary data storage, maintaining network efficiency.
Networks slow down depending on how much coordination they have to do.
With Bitcoin’s network, if thousands of nodes need to all have the same data, the network comes to a crawl, as a majority consensus needs to be reached before reliable transaction settlement is achieved.
It’s why Bitcoin struggles to go beyond 7 transactions per second, on average.
Zucoin, however, functions on a network rooted in finding truth, not consensus, removing the need for all nodes to store identical data, as the network grows.
It’s an approach that provides a more efficient and scalable solution, allowing nodes to hold smaller fragments as the number of nodes increases.
The rise in transaction fees is resulting in higher revenue for Bitcoin miners, but is it good for people using Bitcoin as a payment system?
This is an area where Bitcoin has generally failed.
It’s not a payment system, it’s a store of value.
Less like Visa 2.0 and more like digital gold.
This is fine, but repeated attempts to turn Bitcoin into a payment system, especially in the form of Bitcoin’s Lightning Network, have faced continuous and serious issues.
Zucoin, on the other hand, eliminates the energy-draining mining process to settle a transaction.
As Albert Einstein once noted, “We can’t solve problems by using the same kind of thinking we used when we created them.”
A crypto system solving these issues needs to start from a clean sheet of paper—and this is what Zucoin did through its Splitchain network.
Even though Ordinals, like most NFTs in recent times, are primarily used for “meme coins“, their presence on Binance indicates a rising demand for Bitcoin block space and scalable network bandwidth.
There is a clear demand for it, despite the numerous usability issues the high fees are causing on the Bitcoin network.
As the cryptocurrency world evolves and matures, adaptability will determine the future.
It’s clear—decentralized flexibility and scalability, coupled with ease of use, rule.
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All the best,
Peter & Rob
MyZucoins
Disclaimer: Of course, this is not advice, financial or otherwise. It’s also important to consider the risks and challenges associated with any potential benefits.