Bitcoin’s Transaction Fees Skyrocket as the Bitcoin Halving Looms
Almost 20,000 Bitcoin transactions are currently paying more than 35 cents for a next block confirmation.
Having almost tripled since last summer, Bitcoin transaction fees continue to grow. According to a new bitcoin fee estimator from Bitmain, almost 20,000 transactions are currently paying more than 35 cents for a next block confirmation. The current average fee is almost 15 cents per average bitcoin transaction size of approximately 500 bytes.
The somewhat confusing graph, due to unintuitive parameters such as satoshi per byte, illustrates no transaction is currently delayed at a fee rate of more than 60 satoshis per byte, which has to be multiplied by the average transaction size of 500 bytes, divided by 100 million satoshis into a bitcoin and the resulting fee of 0.0003 converted to usd, which, at the current price, according to google, stands at 15 cents.
Opting for a higher fee
Few are likely to go through the laborious process of undertaking the above calculations every time they wish to make a transaction. Many, therefore, are opting in for a much higher fee of 150 satoshis per byte or 35 cents per average transaction. Moreover, exchanges may incur production costs when changing or calculating default fees. Leading some service providers to set a higher fee rate, such as okcoin’s current 0.0005 btc per transaction, or 23 cents.
Transactions even more expensive
Bitcoin transaction fees have almost tripled since last summer due to a cap on transaction capacity, pricing out some businesses. The latest example is Ascribe, an intellectual property attribution company which intended to use bitcoin’s blockchain for property attribution. However, Trent McConaghy, CEO of Ascribe stated that they had to design their own blockchain, called BigchainDB, which was released back in February, due to bitcoin’s scalability making transactions expensive.
According to McConaghy, one potential customer needed to make 100,000 transactions a day, costing $10,000 per day at a fee of 10 cents. He further states:
“We found ourselves needing to turn down opportunities knowing that the Bitcoin blockchain would [not] be able to handle the throughput we needed to serve larger enterprises.”
There has been a long debate on Bitcoin’s scalability with many hoping that by now the matter would be settled, but the absence of a segwit release has led to the issue being re-visited, with Jihan Wu, co-founder of Bitmain/Antpool, tweeting on the 29th of April:
“Someone must be… enjoying the tx fee policy maker position.”
Followed by a further tweet complaining that: “A new Bitcoin user was confused by the slow Bitcoin network and the fee policy. (From a wechat group).”
Peter Smith, CEO of Blockchain.info, complained back in March that one of the most popular bitcoin wallets was facing record numbers of complaints regarding transaction delays. Little action seems to be taken, with a solution, as yet, not available.
Fees, therefore, may continue to increase, pricing out further businesses and opportunities as well as fuelling the current blockchain hype as service providers are forced to build their own private blockchains.