Bitcoin transaction fees briefly doubled yet remain exceptionally low

Have some Satoshi (BTC), or Bitcoin (USD) wallets you want to reorganize. It is becoming increasingly affordable to do this. Arcane Research reports that Bitcoin transaction fees have been low since July 2021 and show no signs of increasing.

Bitcoin means that tx fees remain very low, despite a small increase last week. Source: Arcane Research

However, there was a slight increase in transaction fees over the past week. As you can see, there was a slight jump at the tail of the graph. Clustering of the mempool drove “up the average transaction fee per day over the last seven days to $691,000,” which is a doubling of what it was on Tuesday.

However, the increase in transaction fees was insignificant. Transaction fees remained within a reasonable range. Over a two-day period miners processed the mempool transactions, which secured the network and kept transacting reasonably affordable.

Eric Yakes, the author of the Bitcoin book The 7th Property, told Cointelegraph there are three main reasons transaction costs are low: Segwit adoption and hash rate distribution. Layer 2 infrastructure, such as the almost instant payment lightning network, is also a reason.

“June 2021 saw an increase in Segwit transactions on-chain, increasing from 50% up to 70%. This has steadily risen above 80% which should fundamentally be increasing the network’s transaction throughput.”

Cointelegraph reported the increasing number of Segwit addresses being used in exchanges over the period of 2021.

Yakes explained in July 2021 that network difficulty had bottomed, and has since risen ATHs following the China ban. This is combined with an increase in Segwit transactions.

“This rebound in hashrate has found blocks faster than the difficulty adjustment can keep pace with, and that has resulted in a quicker clearing of transactions than usual, thus lowering transaction prices.”

Yakes says transaction fees should not be expected “to remain persistent.” The equilibrium of the fees market will eventually be reached, and it is dependent on price, hash rate and difficulty. This will make the fee market less competitive, increasing transaction costs, and making them more expensive.

Swan Bitcoin editor-in-chief Tomer Strolight cites another reason transaction fees are so low:

“We have the largest exchanges that batch transactions now. They are now sending out more than 100 withdrawals per transaction, instead of the horrible practice of doing so every withdrawal individually as it was many years ago.

The lightning network’s ability “to open channels when the blockchain has not become congested” and then use them over and over prevents the chain becoming congested when a quicker, cheaper lightning transaction becomes an option.

Map of Lightning Network channels and nodes Source: explorer.acinq.co

According to the Arcane research report, these four factors are crucial but it is also possible that the average transaction fee has fallen due to a lower volume of transactions per day.

Yakes believes that transaction fees may rise in the short-term, but there are many trends that counter higher transaction fees so I believe they will remain lower long-term.”

Related: Bitcoin rises to $42K while markets wait for potential 7.9% CPI inflation data

Tromer is also positive

“I see that we can slowly build the network capacity to handle all of the commerce in the globe without the blockchain becoming an insurmountable block.”

This is another feather in the cap of BTC: The protocol continues to scale successfully, making it easier to transact on its network.

https://cointelegraph.com/news/bitcoin-transaction-fees-briefly-doubled-yet-remain-exceptionally-low