Memecoin Craze and Ordinals Protocol Cause Bitcoin Transaction Fees to Surge
Today we published a banner on the BTCX website with the following information:
Due to extremely high transaction fees, processing times will be longer than usual. We have increased the priority fee to reflect the current on-chain fees. Please be patient and expect delays. Thank you for your understanding!
The brief article below describes the background to the sudden increase in the fee.
The average Bitcoin transaction fee increased nearly fivefold in the last 15 days, reaching a two-year high of $9.61, according to Glassnode data. The total amount of fees paid on the Bitcoin blockchain exceeded $3.5 million, a 450% increase since April. This rapid rise in transaction fees is attributed to the growing popularity of Ethereum-style "BRC-20" tokens, such as Ordinal tokens and PEPE coin, as well as the Ordinals protocol used for minting NFT-like assets on Bitcoin.
Data from Galaxy Research revealed that 50% of all Bitcoin transactions were related to BRC-20 transactions on May 2nd. The listing of PEPE coin on major crypto exchanges like Crypto.com, Binance, and KuCoin further fueled the transaction fee boom.
In addition to the memecoin craze, the Ordinals protocol has contributed to the increased transaction fees and backlog. The total number of Bitcoin-based digital assets, known as inscriptions, surpassed 4.3 million on Sunday, reflecting the growing popularity of BRC-20 tokens.
The high transaction fees have sparked concerns among some in the crypto community, who view the situation as an attack on Bitcoin aimed at making the network unusable for smaller players. However, others argue that high fees mainly benefit miners and that the impact on the network is likely to be short-lived.
Despite these concerns, Bitcoin's trading price remains largely unaffected, staying below the $30,000 resistance level.