Saturday, July 20, 2024

This year, Bitcoin transaction costs have dropped by more than half

The average transaction fee on BTC has fallen by 57.97% from $4.40 to $1.80 according to YCharts data, This decrease may be attributable to several causes.

The main cause possibly being the growth of the bitcoin lightning network. On the network the transactions are not on the blockchain. Typically, the Bitcoin network charges a fee for each transaction. When the traffic on the network is high, the transaction processing exceeds, by a large margin, the number of miners available. This causes the fees to rise.

Transaction Fees

In mid-April the fee on the Bitcoin network was at a high of $62.8 following a miner outage in China. This slowed down block production when the demand for Bitcoin was high.

The falling costs could be because the miners continue to process transactions. This means that the mining difficulty reduces. The second reason could be the reduced traffic on the mempool. Mempool is the aggregation of all transactions that are pending confirmation. Each BTC block has a size of 1MB and a large mempool prompts miners to favor the more profitable transactions.

When this happens users become willing to pay more for the transactions to avoid getting stuck in the mempool. This causes an increase in the transaction fee on the BTC network.

Over the last few months the average number of transactions on the network has also reduced. In the beginning of 2021 the network had 3,50,000 transactions every day and now it has dropped to between 2,50,00 and 2,13,000 transactions per day.

The transaction fee may also have fallen because of reduced use of the BTC. Demand drop cause the token cost to fall which in turn lowers transaction fees. ETH fees have also dropped following the trends in the crypto market.

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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