• Bitcoin fees have exceeded the block subsidy due to a recent burst of activity related to the Ordinals protocol, which is used to create unique non-fungible tokens.
• This has caused congestion on the Bitcoin network and high costs for users making transactions.
• Some users and exchanges are considering Lightning Network as an alternative scaling solution.
BRC-20 Explosion Sends Bitcoin Users Scrambling
The sudden surge of activity on the blockchain related to the Ordinals protocol has led to soaring costs for users sending bitcoin payments. A miner earned 6.701 BTC, or almost $200,000 in transaction fees on Sunday night, exceeding Bitcoin’s current block subsidy of 6.25 BTC – a rare occurrence that illustrates how this phenomenon has affected the Bitcoin network.
What is Ordinals?
Ordinals introduced “inscriptions,” or arbitrary content like text or images that can be added to sequentially numbered satoshis or “sats” – the smallest units in Bitcoin – to create unique, non-fungible tokens (NFTs). The protocol is now also being used to mint BRC-20s which are fungible tokens.
Effects of BRC-20 Minting
The effects of these new tokens have been immediate: transactions fees have skyrocketed, transactions are waiting longer in the queue and some users and exchanges are already starting to consider alternatives such as Lightning Network, a scaling solution designed to make Bitcoin transactions faster and cheaper.
Frustration With High Fees
This surge in fees has caused frustration with many people who cannot afford them – particularly those from African countries where access to traditional banking services is limited or expensive. Anita Posch tweeted: “Can anyone explain how I’m going to onboard people with these fees? They really need BTC while you’re just playing around”.
Alternative Scaling Solutions
Despite these frustrations with high transaction fees, some people think that solutions such as Lightning Network offer potential relief by providing better scalability options for users looking for cheaper ways of using cryptocurrencies like Bitcoin.