According to YCharts, the average transaction fee for bitcoin (BTC) has dropped from $ 4.40 to $ 1.80 this year, up 57.97%. This increase can be attributed to a number of factors.
One explanation is that the rapid expansion of the Bitcoin Lightning Network, where transactions are outside the blockchain, could be a contributing factor.
By comparison, the Bitcoin network charges a fee for every transaction. These payments are then distributed among the miners. When the network is congested and the demand for processing transactions far exceeds the supply of miners, users often pay more.
On April 21, the average transaction fee on the Bitcoin network hit an all-time high of $ 62.8 per transaction as mining disruptions in China slowed block production at a time when demand for bitcoin was high.
The decrease in costs can be explained by the fact that Bitcoin miners are becoming less skeptical and do not lose interest in processing transactions. When this happens, the difficulty of mining is reduced, which measures how difficult it is to confirm a Bitcoin transaction.
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Another possible reason for lower transaction costs is the offloading of the mempool, which is collecting all pending transactions before committing them. When a transaction is sent to the Bitcoin network, it remains in the mempool until you receive confirmation. Since each BTC block has a specific size of 1MB, a large pool of memory can encourage miners to opt for more profitable transactions.
In these cases, customers start paying more so that their transactions don’t get stuck in the memory pool. This increases the total cost of transactions on the Bitcoin network.
The size of the Bitcoin meme pool was well below the maximum capacity as shown in the table below.
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The average number of transactions has also dropped significantly in recent months. On average, at the beginning of 2021, there were more than 350,000 transactions per day, but now this number has dropped to 250,000-213,000 transactions per day.
Another possible explanation for the lower transaction costs is that bitcoin traders and holders tend to use less bitcoins. Decrease in demand leads to a decrease in the value of the token, which reduces transaction fees.
Meanwhile, Ethereum’s fees have also coincided with the rest of the cryptocurrency market. The average transaction fee for the Ethereum network is $ 4.90 at time of publication, after peaking at $ 69.92 on May 12, 2021.
As the new week kicks in, Bitcoin (BTC) is once again worth $ 57,000, ending several turbulent weeks when prices plummeted.