Over the years, the Bitcoin network has been no stranger to long queues of transactions waiting to be confirmed, causing fees to skyrocket and setting off alarms on Crypto Twitter and beyond. And TThe network is currently experiencing another period of congestion, observed Bitcoin’s on-chain analyst Willy Woo.
“The mempool is now at its highest level in BTC history since data was recorded,” he said Decipher.
What’s up?
James Check, lead analyst for Glassnode, Posted Earlier this week, he announced on Twitter that there had been an explosion in Blockspace demand due to inscriptions. These were popularized by Bitcoin ordinalsand how NFTsThey allow users to write things onto the blockchain – be it images, text or audio.
He wrote that the fees are no longer as high as they were back then Ordinary madness in early May, but the network has not been able to clear its mempool since then.
Think of a mempool as the blockchain equivalent of a waiting room where users broadcast Bitcoin In (or make entries) and wait for the transaction to be selected by a miner and entered into the public ledger.
At the time of writing, there are approximately 393,000 unconfirmed Bitcoin transactions.
Check went into detail, explaining that inscriptions provide what he calls baseload pressure, accounting for 50-60% of confirmed transactions and – essentially – bloat.
“Inscriptions fill the gap left by the empty block space, and that’s what they did [so] for 5 months,” he wrote, adding that these types of transactions are “sensitive to high fees but willing to buy cheap block space.”
Listings mean more transactions and therefore higher fees, which is welcome news for some.
Woo, who told Decrypt that he is currently paying $7.50 to transfer BTC, said he wants high transaction fees.
“One day the network subsidy will end and Bitcoin will be secured exclusively on the fee market,” he said, alluding to the contentious debate over the Bitcoin security budget.
Woo added that the Lightning Network, one of BItcoin’s Layer 2 scaling solutions, needs to be strengthened but is at risk for smaller transactions with these high fees.
“We’re really taking a middle path,” he told Decrypt. “Too cheap, and we make changes that restore capacity, then the network could be systemically impaired for decades to come.” Too expensive, and the Lightning Network will no longer be decentralized and secure for everyday payments.”
The on-chain analyst noted that developers “have made tremendous progress in improving the efficiency of the blockchain since the congestion in 2017, when payment fees were very similar to what they are now.”
However, it is unclear how long today’s traffic jam will last. However, Woo is cautious.
“The sign-ups occurred during the bear market and the fees “are already at $7.50.” He asks, “What will happen during the bull market?”
Woo concludes with a somewhat ominous prediction: “Lightning may take on some of the burden, but we will also see some payment fraud as a result.”
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