Increasing Txn Fees Of Bitcoin & Ethereum - Was Blockchain Really Meant For This Day?

Increasing Txn Fees Of Bitcoin & Ethereum - Was Blockchain Really Meant For This Day?

2020-06-20 | Big Bob

Increasing Txn Fees Of Bitcoin & Ethereum - Was Blockchain Really Meant For This Day?

The two leading cryptocurrencies namely Bitcoin [BTC] and Ethereum [ETH] are the only two assets with real fees being paid to proceed transactions.

Was It Really Meant For This Day

Within the early era of Bitcoin [BTC], it had been practically free to use with the transactions costing next to zero.  And now 10 years later, research reveals that Bitcoin and Ethereum are the only blockchains where users are actually paying to use the blockchain, while the rest of the mining still remains counting on rewards from the ecosystem.

While explaining further Ryan Watkins, a researcher at Messari said:

Over 99% of all blockchain fees are paid to Bitcoin and Ethereum miners. Outside Bitcoin and Ethereum actually every blockchain is liberal to use.

The fees on other blockchains rarely rise above $1000 USD on a day to day. In fact, Dogecoin has the highest fees this generated compared to other altcoins.

On the other hand, the fees on Ethereum recently surpassed that of Bitcoin. Hence, reflecting greater GAS usage on the blockchain in comparison. He added:

Ethereum fees is still above BTC fees. Last time this happened was during mid-2018 when the controversial and now defunct exchange, Fcoin, was clogging up the ETH blockspace. The actual difference – today’s fee pressure is far more fundamentally driven which seems alike a real economic activity.

Nevertheless, the cross between the transaction fees occurred earlier this month and while it continues to stay, Bitcoin’s fees could snap back to highs soon again.

BTC & ETH Ever Increasing Txn Fee's - Was Blockchain Meant For This Day?

$40 USD For Txn Fees For Transferring To Just 3 people

The growth of Tether [USDT] stablecoin and DeFi on Ethereum are two of the foremost important fundamentally driving forces for Ethereum’s success. However, the recent seen hike within the Ethereum transactions has now become a worrying signal for the several users, even Vitalik himself. He recently said within the on-going argument and voted to extend GAS size limit on the blockchain. He said:

The thing of the actual worrying is linked to the thought that the high txfees are making the chain much less useful for people now. I’ve spent $40 USD on txfees recently just from transferring to *3 people*.

This protocol has also been criticised heavily for not performing adequately and having to vary integral aspects of it timely. Moreover, because of its’ utility as a smart contract platform, the fees are required to be considerably low. Grubles, a Bitcoin developer said:

Thus, so Ethereum was able to solve nothing but lined Vitalik’s pockets it seems. It doesn’t scale. Txn fees are so high. Solidity contracts break every single day.

Bitcoin & Satoshi's Vision

During the launch of Bitcoin by an anonymous creator, known by the name Satoshi Nakamoto, envisioned a way forward for Bitcoin run on transaction fees. The future fees would be the sole thing driving the miners’ interest to continue ‘mining or validation’ transactions. In fact, Satoshi Nakamoto himself observed an early conversation in 2010.

However, within few decades when the reward gets too small, the transaction fee will become the most compensation for nodes. I’m sure that in upcoming few years there'll either be very large transaction volume or no volume.

Moreover, high Bitcoin transaction fees and congestion of the mempool are destructive thereto. Hence, the expansion of the 2nd layer solution which is cheaper and believe Bitcoin’s security like Lightning or Liquid network is paramount.

Overall, the whole space remains in beta mode when it involves real-world adoption. Decentralization and development are happening simultaneously on altcoins, while leading projects, Bitcoin and Ethereum are counting on some other mediums of their usability.

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