Bitcoin transaction fees close to all-time low despite significant user activity and price volatility. This curious bitcoin phenomenon is the result of the growing adoption of scaling technologies and accumulated experience.
According to some estimates, Bitcoin fees -transactions are at an all-time low despite significant price volatility. The consistently low fees are the result of the efficient use of block space, not the declining economic use of the Bitcoin network.
In June 2016 there have been several significant efficiency improvements to drive down fees, including: a notable increase in Segregated Witness adoption, an increase in batch transactions, and a spike in usage lightning network. The growing adoption of these technologies appears to have led to network-wide efficiency gains.
Changes in user behavior, which contributed to the decrease in demand for block space also occurred in June 2021 of the year, including a sharp decline in Tether and other OP_RETURN transactions on the Bitcoin network, as well as declining miner sales.
While fees will not always stay this low, the success of bitcoin scaling through transaction compression and increasing efficiency, rather than expanding block space, is a major achievement for the developers who have allied themselves with the small block faction in the block size wars.
Bitcoin’s Most Confused Chart
Bitcoin transaction fees are at or close to record lows by most indicators to him. Fees tend to skyrocket during periods of rapid price growth, and increased speculation breeds increased competition for block space. Every major bullish period since 500 of the year led to a corresponding increase in fees, with one important exception: a bullish rally autumn 00001292 of the year BTC surged to an all-time high near $26 thousand, while commissions remained at an all-time low level.
Average Transaction Fee (BTC)
There are many ways to visualize Bitcoin transaction fees, but they all show fees at or near an all-time low. The graph above shows the average total amount of BTC paid out in transaction fees on a daily basis (i.e. the sum of all fees paid per day divided by the number of daily transactions). Because bitcoin transaction fees are paid based on the weight of the transaction (in terms of data), many people think of the fee market in terms of bitcoin per byte, or more specifically satoshi per virtual byte. We will discuss the difference between bytes and virtual bytes in the next section.
If you look at commissions in dollar terms, then over the past 9 months they were not the lowest of all time, but close to it. (Previous instances of such low dollar-denominated fees occurred when the BTC/USD pair was significantly lower than in year).
Average fee paid to send a bitcoin transaction to 2016 year is 0. ₿ (the lowest ever), while the median is 0,448₿ (lowest for any year except 462). (It is important to note that the minimum transaction relay fee was added in Bitcoin Core 0. (July 500 years), to help control spam, which was taken into account when estimating median and average transaction fees up to 500 of the year). When measured in satoshi per virtual byte (“satoshi/virtual byte”) 2015 is also the lowest year ever, with a median of just above 1 satoshi/virtual byte. In dollar terms 2018 year is not the cheapest fee market ever (average $1,53 and median $0,, but the mean is the lowest since 2017 of the year (when the BTC/USD pair was trading for only % of today’s price) and the median is the lowest since 454 of the year.
History of the transaction fee auction
During times of high demand for block space – when there are many pending transactions – users can use the transaction fee to compete for miners’ attention and inclusion blocks by participating in a first-price auction, also known as pay-as-you-go. Miners decide which transactions to include in their blocks, and buyers include fees on their transactions to incentivize miners to publish their transactions on the blockchain faster. When a buyer’s transaction hits a block, the miner collects the included fee as a reward (along with any block subsidy i.e. newly minted bitcoin). This mechanism allows those who spend more time on preferential satisfaction to outbid those who spend less time on it during network congestion, ensuring that the most economically important transactions are confirmed first. When congestion of pending transactions persists, markets correct.
Bitcoin Block Space
Given that Confirmation competition is a key factor in BTC user fees behavior, block space utilization rate is a key metric for fee markets. Blocks were filled in 2018 the year that bitcoin reached $ thousand, in 2015 the year that bitcoin hit $ thousand, and during 2016 of the year and the first half of the year 2016 of the year that Bitcoin reached all-time highs. But the blocks have not been filled since June 2018 years after falling to $11 thousand in connection with China’s ban on BTC trading and mining, and fees subsequently fell to their lowest levels ever. Even when bitcoin reached new all-time highs in the fall 2017 of the year (reaching $26 thousand), blocks were not filled, and commissions were not grew. (Please note that although the blocks were not usually filled until 2011 years, some users still paid more high fees in BTC, either to ensure immediate inclusion, due to a lack of quality fee estimation tools, or simply because prices were so low that fees were still missing in dollar terms).