The transaction fees and time involved with Bitcoin have been some of the biggest hurdles in the adoption of the cryptocurrency as a medium of exchange. While multiple cryptocurrencies have emerged touting themselves as the solution — without actually providing any — things seem to be getting better for Bitcoin meanwhile.
The median transaction fee rate for Bitcoin has been some of the lowest since 2011 in the last three months.
As per transactionfee.info statistics, the median fee rate for Bitcoin hit the lowest on April 4 and 5 at 6.86 satoshi/bytes (sat/B). The fee rate increased to 39.29 on April 30, but has since come down again.
The transaction fee rate came under 10 again on Saturday (9.43), and closed on 8.86 on Sunday.
This is a quite a decline from the beginning of this year. The transaction fee rate was 453.57 sat/B on the new year’s eve — a graph that has sloped significantly downward since then.
The low fee rate indicates that it is getting cheaper to transfer Bitcoin among different wallets. The high costs and time involved with Bitcoin transactions led to a controversial split of Bitcoin’s blockchain — creating Bitcoin Cash (BCH).
Bitcoin Cash promised faster and cheaper transactions as compared to Bitcoin. While the gap between the median transaction fee rate was overbearing initially, it seems that this gap has closed to negligible in these last three months as well. The median transaction fee rate was $34.095 for Bitcoin in comparison to the $0.0333 USD for Bitcoin Cash, but on Sunday it was a meagre $0.113 compared to the $0.0038 for Bitcoin Cash.
Bitcoin’s soft fork Segregated Witness (SegWit) has been seeing exponential adoption — a fact that could explain the reduced transaction fee-rate. While only 28.34 percent of all transactions were utilizing SegWit, the number is close to 38 percent on Sunday. The transaction fees involved in the SegWit transactions are fairly lower — at the moment, they amount to only 18 percent of the total transaction costs in spite of contributing 38 percent of the total transaction volume.
With further adoption of SegWit and Lightening Network (LN), Bitcoin’s scalability problems are expected to resolve. While Lightening Network, which promises to make Bitcoin transactions faster and cheaper— is still in a nascent stage, the development has been impressive so far. The LN network capacity crossed $150,000 last month, and near-instant successful transactions have already been made through the network.
With reduced costs and time incurred with Bitcoin transactions, it may finally become viable to buy coffee and doughnuts with it.
Published May 28, 2018 — 11:00 UTC