Bitcoin transaction fees down more than 50% this year
According to YCharts data, Bitcoin’s average transaction fees (BTC) have fallen from $ 4.40 to $ 1.80 this year, a 57.97% decrease. This increase is due to many factors.
One explanation is that the rapid expansion of the Bitcoin Lightning Network, where transactions take place outside the blockchain, could be a catalyst.
Looking ahead, the Bitcoin network will charge a fee for every transaction. This payment is then shared among the miners. When the network is congested and the need to process transactions exceeds the supply of miners, users often have to pay more.
On April 21, the average transaction fee on the Bitcoin network hit an all-time high of $ 62.8 per transaction as a miner failure in China slowed the process.
The cost reduction is due to the fact that Bitcoin miners are less skeptical and less interested in processing transactions. In this case, the mining difficulty, which measures how difficult it is to validate a Bitcoin transaction, goes down.
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Another possible reason for reduced transaction costs is the openness of the mempool, i.e. the collection of all pending transactions before confirmation. When a transaction is sent to the Bitcoin network, it remains in the mempool until confirmation is received. Since each BTC block has a certain size of 1MB, a large mempool can encourage miners to prefer more lucrative transactions.
In these cases, customers pay more so their transactions don’t get stuck in the mempool. This increases the overall transaction costs on the Bitcoin network.
The size of the Bitcoin mempool was much lower than its maximum capacity, as shown in the graph below.
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The average number of transactions has also decreased significantly in recent months. While at the beginning of 2021 there were an average of more than 350,000 transactions per day, this number has now fallen to 250,000 to 213,000 transactions per day.
Another explanation for the drop in transaction costs is that Bitcoin traders and owners tend to use less BTC. Due to the reduced demand, the price per token drops, which lowers the transaction fees.
Meanwhile, Ethereum fees have also decreased compared to the rest of the crypto market. The average transaction fee on the Ethereum network at press time is $ 4.90, peaking at $ 69.92 on May 12, 2021.
At the start of a new week, Bitcoin (BTC) has returned to the $ 57,000 level, ending some turbulent weeks with prices falling.