Do you have a satoshi to send or want to change your Bitcoin (BTC) wallets? It becomes cheaper and cheaper to do so. According to a report by Arcane Research, “Bitcoin transaction fees have been low since July 2021 and are not showing any signs of recovery.”
Bitcoin means transaction fees are still very low despite a slight increase last week. Source: Secret Research.
However, there was a slight increase in transaction fees last week. Shown by a slight upward trend at the end of the chart, the meme pool group “has increased its average transaction fee per day over the past seven days to $691,000, double the amount from last Tuesday.”
However, the doubling of transaction fees is negligible: transaction fees have remained low. Miners completed mempool transactions for two days, securing the network and making the transactions available.
Eric Yak, author of Bitcoin The Seventh Property, told Cointelegraph that there are three main reasons why transaction costs are so low: adoption of Segwit, hash-rate redistribution, and Bitcoin’s layer 2 infrastructure as a lightning network for near-instant payments.
“In June 2021, there was a significant increase in the share of Segwit transactions on the network, which increased from ~50% to ~70%, and then steadily increased to more than 80%, which will significantly increase the transaction flow on the network.”
Cointelegraph reported an increase in the number of exchanges using Segwit addresses in 2021.
In July 2021, Yakes explained that “network issues hit rock bottom and have since risen to ATH” after China’s ban and hash rate redistribution. Besides the increase in Segwit coefficients:
“This drop in the hash rate has resulted in blocks being discovered faster than the difficulty of mods can handle, and it has resulted in transactions being filtered out faster than otherwise, lowering the transaction price.”
However, Jakes points out, “Transaction fees should not be expected to remain fixed. Ultimately, everything dependent on price, hash rate and complexity will find their balance, making the market for fees less competitive and increasing transaction costs.”
Tomer Strolett, editor in chief of Swan Bitcoin, points to another factor explaining the low transaction fees:
“Now we have the largest exchanges with all transactions in bulk. This means that they send 100 or more withdrawals in one transaction instead of the terrible practice that prevailed a few years ago where every withdrawal was made as one.”
Additionally, by allowing the Lightning Network to open “channels when the blockchain is offloaded and then use them over and over again, it prevents the chain from being overloaded when it is possible to make a lightning-fast transaction faster and cheaper.”
Map of Lightning Network nodes and channels. Source: explorer.acinq.co
The Arcane research report notes that while these four factors are important, it is also possible that “fewer transactions per day will result in lower average transaction fees.”
For Jax, “Transaction fees may increase in the short term, but there are many trends towards higher transaction fees that I think will be consistently lower in the long term.”
Related: Bitcoin returns to $42,000 as markets await data on potential 7.9% CPI inflation
Drums are also positive:
“I see that we can gradually increase network bandwidth to handle all commerce in the world without blockchain becoming an insurmountable bottleneck.”