Early in May, Bitcoin (BTC) transaction fees skyrocketed, eventually hitting an all-time high over the last two years.
On Wednesday, May 3, the total amount of fees paid on the Bitcoin blockchain reached $3.57 million, climbing around 400% from late April.
This surge can be attributed to the creation of BRC-20 tokens; these tokens were introduced just two months ago as an experiment and use Ordinals inscriptions to store new tokens on top of satoshis, according to data shared with Finbold provided by IntoTheBlock on May 5.
It’s worth noting that despite the rise in fees, Bitcoin’s average daily transaction fee is still significantly lower than Ethereum’s. As per the data shared by IntoTheBlock, the average daily transaction fee on Bitcoin is $6, compared to $17 on Ethereum on May 4.
What’s more, the market cap of BRC-20s climbed to over $160 million this week and led to a new all-time high in Bitcoin daily transactions.
As more people start using BRC-20 tokens, the demand for Bitcoin transactions has increased, leading to a rise in fees. While this may be frustrating for users, it also incentivizes more miners and validators to join the network, thereby increasing its security.
The rapid adoption of BRC-20 tokens by the meme token community has been a notable development, despite being a relatively new innovation. However, an unintended consequence of this adoption has emerged, as the continuous trading frenzy of meme coins such as Pepe (PEPE) has triggered a surge in Bitcoin’s transaction fees.
On May 5, PEPE hit a market cap of $1 billion and was confirmed to begin trading on the Binance exchange. This could further increase the demand for Bitcoin transactions and contribute to rising fees, which are currently at multi-year highs.
The BRC-20 token standard has swiftly emerged as a significant development within the cryptocurrency market, particularly in light of the meteoric rise in popularity of the PEPE memecoin. Over the previous week, the token’s price has increased by more than 600%, and on May 5, it hit a new all-time high of $0.0000032, up over 100% in the last 24 hours.
In spite of the most recent increase in Bitcoin transaction fees, the current BTC transaction cost is still a significant distance from all-time high levels. The average cost of a Bitcoin transaction almost hit $70 in April 2021, which coincided with a significant drop in the hash rate of the Bitcoin network.
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