Bitcoin’s network is facing a backlog of transactions and higher fees due to an increase in BRC-20 memecoin minting on the BTC blockchain. Axel Adler Jr, an analyst with CryptoQuant, explains that “BRC-20 does not utilize smart contracts and operates only with wallets...
Bitcoin’s network is facing a backlog of transactions and higher fees due to an increase in BRC-20 memecoin minting on the BTC blockchain.
Axel Adler Jr, an analyst with CryptoQuant, explains that “BRC-20 does not utilize smart contracts and operates only with wallets supporting the Bitcoin blockchain,” which is causing a surge in block space demand. As a result, the average fee per transaction has skyrocketed, reaching over $16 and peaking at $29 on May 9.
Bitcoin under siege from BRC-20 "junk" coins: record fees and thousands of unconfirmed transactions!
"Unlike conventional token standards, such as Ethereum's ERC-20, BRC-20 does not utilize smart contracts and operates only with wallets supporting the #Bitcoin blockchain."
by… pic.twitter.com/yCsrXGM38H— CryptoQuant.com (@cryptoquant_com) May 9, 2023
Bitinfocharts data shows that the average transaction fees have spiked to $31 on May 8, compared to around $19 the day before.
In a remarkable event on May 8, the total fees per block momentarily outstripped the block subsidy reward of 6.25 BTC, a phenomenon not seen since 2017.
May 9 witnessed another historic moment when Bitinfocharts documented a fresh all-time high on the seven-day moving average for the number of Bitcoin transactions, reaching a peak of 534,000.
Love em or hate em, ordinals are definitely shaking things up. The number of transactions on the #bitcoinblockchain reached a new all time high yesterday of 534,000. pic.twitter.com/NTWmPsdiLw— Mati Greenspan (@MatiGreenspan) May 9, 2023
However, these numbers may actually be higher than recorded, with Bitinfocharts reporting two spikes over 600,000 daily transactions this month using raw values.
The site also recorded 598,000 BTC blockchain transactions on May 9, while Blockchain.com confirmed that the average transactions per block are at an all-time high of 3,961.
Despite the high number of transactions, a backlog of 400,000 unconfirmed transactions is keeping transaction prices elevated. On May 9, the total market capitalization of BRC-20 tokens reached over $1 billion.
The surge in memecoin minting has caused concern among Bitcoin core developers, who are considering taking action against BRC-20 tokens and Ordinals, which they see as network spam. The number of ordinal inscriptions has almost doubled from 2.5 million to 4.78 million in just over a week.
Miners, on the other hand, are benefiting from the increased fees, as profitability or hash price has gone up by 66% since the start of the month, signaling a profitable period for those maintaining the network.