The Bitcoin network is witnessing record transactions and fees as its blockchain struggles to confirm over 400,000 pending transactions. According to a CryptoQuant analyst, Axel Adler Jr, the surging demand for block space is caused by the introduction of a popular new “token” standard, the BRC-20 memecoin on the Bitcoin blockchain. While Ethereum’s ERC-20 tokens utilize smart contracts, BRC-20 tokens operate solely with wallets supporting Bitcoin.
The average fee per transaction has soared, peaking at $29 on May 9, and fees per block temporarily exceeded the block subsidy reward of 6.25 BTC for the first time since 2017. On the same day, the seven-day moving average for the number of Bitcoin transactions reached a new all-time high at 534,000. However, Bitinfocharts suggests these figures could be higher, with two recorded daily transactions spikes exceeding 600,000 in May.
The Bitcoin transaction backlog adds further pressure on network fees, with Mempool Space revealing 400,000 unconfirmed transactions pending. As BRC-20 tokens’ market capitalization surpassed $1 billion on May 9, their impact on the Bitcoin network has caused concern among its core developers.
On one hand, the Bitcoin core developers are considering taking action against BRC-20 tokens and Ordinals, which they regard as network spam. On the other, miners may want to capitalize on them to boost fees and the value of private mempools further. Simultaneously, Ordinals and BRC-20 holders argue for their right to exist and pursue growth. The differing interests and opinions raise underlying questions on the future of these tokens in the network.
Meanwhile, miners enjoy increased profitability as the hash price surges by 66% since the beginning of the month. Resulting from the Bitcoin transaction volume and high fees, it’s vital to evaluate the potential impact of BRC-20 tokens on the network and identify a mutually beneficial resolution for all involved parties.
As the Bitcoin network continues to evolve and new token standards are introduced, striking a balance between innovation and maintaining the network’s integrity is essential. Analyzing the pros and cons of BRC-20 tokens and other future developments will help ensure the cryptocurrency ecosystem remains healthy and viable for all participants.