Bitcoin users are experiencing a surge in transaction fees as the network becomes more congested with activity.
Ordinal Inscriptions and BRC-20 Tokens Cause Bitcoin Fee Spike
Bitcoin users are experiencing a surge in transaction fees as the network becomes more congested with activity. According to data from Bitinfocharts, the average transaction fee on Bitcoin reached over $7 on Thursday, the highest level since June 2021.
One of the reasons for the higher fees is the increased demand for BRC-20 tokens, a new type of asset that is created and stored on the Bitcoin blockchain. BRC-20 tokens use a technique called ordinal inscriptions to attach data to individual satoshis, the smallest unit of a bitcoin. These satoshis can then represent anything from digital art ownership to meme tokens.
Creating and transferring BRC-20 tokens requires more data than a regular Bitcoin transaction, which means they take up more space on the blockchain. This leads to more competition for block space and higher fees for users who want their transactions confirmed faster. Some critics argue that ordinals and BRC-20 tokens go against the original vision of Bitcoin as a simple and efficient peer-to-peer electronic cash system.
Bitcoin's high fees may deter some users from using the network, especially for small or frequent transactions. However, some solutions have been developed to address this issue, such as the Lightning Network, a second-layer protocol that enables fast and cheap off-chain transactions.
