The digital currency ecosystem has recently experienced a price onslaught due to massive transaction congestion on the Bitcoin network, causing gas fees to skyrocket and prompting some exchanges to halt BTC transactions over the weekend. Top crypto market analyst Willy Woo commented on the situation, stating that while the high gas fees can benefit the security of the network, it is not ideal for nodes and decentralization.
The reason behind high fees is largely credited to Bitcoin ordinals, an integral cause of the network fee surge. Woo explained that Bitcoin rewards will likely tend toward zero someday, and the only incentive investors will have to ensure security on the protocol is by paying the necessary gas fees to miners or validators. However, he added that at the moment, decentralization is crucial and would have preferred the impact of ordinals to have emerged later, when the security budget becomes more pressing and decentralization is already well-established.
Despite the inconvenience caused by the high gas fees in the Bitcoin network, some see hope in focusing on the pros highlighted by Woo. However, it should be noted that block rewards won’t be reduced to zero for several years, which means the inconvenience may potentially harm the protocol more than anticipated.
A potential solution lies in Layer-2 technologies to help cushion the impact of soaring transactions on the protocol, such as Lightning Network, which eases clogs on the Bitcoin network. It is worth mentioning that Binance experienced network congestion and had to integrate the Lightning Network to alleviate the issue. Similarly, the emergence of related solutions can significantly help reboot the Bitcoin network’s outlook.
However, the digital currency ecosystem might continue to experience more ordinals in the near term, as these “distinguished shitcoins” are being seen as an attack on the Bitcoin network. It is essential to weigh the potential benefits and downsides thoroughly and monitor developments in Layer-2 solutions to anticipate any shifts in the network’s standing.
As with any investment, it is crucial to conduct thorough market research before investing in cryptocurrencies, considering fluctuations in market conditions and potential personal financial losses.