The Bitcoin (BTC) network recently experienced a surge in average transaction fees, hitting a yearly high surpassing $37. This escalation in blockchain fees was primarily fueled by heightened activity within the Ordinals segment, resulting in increased demand for block space.
A similar scenario unfolded back in April-May 2023, following the popularization of inscriptions—an innovative feature allowing notes on the Ordinals blockchain. During that period, average fees surged to $19, highlighting the demand for Bitcoin NFTs. Although interest in Bitcoin NFTs initially subsided, it resurged in Q3 2023.
The uptick in network fees correlates directly with the rising demand for inscriptions on the Ordinals network. Both the number of these tokens and the volume of associated fees have been consistently trending upward.
Miners emerged as the primary beneficiaries, witnessing a substantial income boost, akin to Bitcoin’s value reaching historical highs around $69,000.
Some users expressed concerns about the high network fee levels potentially hindering widespread cryptocurrency adoption. Contrarily, influential figure hodlonaut contends that Bitcoin’s network isn’t designed for mass adoption and high fees serve as a protective measure against attacks. Instead, he advocates for the utilization of second-layer solutions like Liquid Network or Lightning Network, specifically designed for accessible transactions at scale.
According to hodlonaut, Bitcoin’s Proof-of-Work consensus algorithm inherently supports a consistent increase in value. He emphasizes the impracticality of maintaining low fees within this network structure, citing failed forks like Bitcoin Cash as examples.
Furthermore, fee hikes were observed across other blockchains issuing Ordinals-like tokens. On Dec. 16, gas consumption for operations involving “inscriptions” in EVM networks surged to $8.37 million. Notably, Avalanche accounted for $5.6 million of this total, while Arbitrum One registered $2.1 million.
The widespread increase in transaction fees underscores the growing activity and demand for innovative functionalities like inscriptions across various blockchain networks.
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