Commissions per Bitcoin transaction reaches an all-time low in 3 years

Author at TechGenyz Bitcoin
Bitcoin Transaction

Transaction fees in the Bitcoin network reached their lowest level on January 1, 2019, registering a median of $0.02 per transaction. Amounts like this one were not recorded since October 2015, according to data from Bitcoin Visuals.

The transaction fee is the rate that one has to pay for transferring Bitcoin from one person to another. It is deducted automatically from the amount that is being sent and the rate is destined to the miners, who extract and validate the transaction in the Bitcoin network.

This figure occurred despite the fact that the volume of bitcoin operations is currently 75% higher. The analyst Kevin Rooke highlighted in a tweet that on October 13, 2015, the previous date that the rates were 0.02 USD, when it was 134,741 transactions, while in the first week of January in this year the figure reached 234,576 transactions. In his opinion, the fact that bitcoin mining is validating more transactions for the same fees represents progress.

It should be remembered that during the frantic growth of the bitcoin price at the end of 2017, transaction fees soared to over $65 for operation. At its highest point, which changed on December 23, 2017, with the median of transaction fees at $33.67.

The commissions that are applied to the transactions in the bitcoin network, constitute the fees received by the miners as an incentive to maintain mining. This activity allows you to validate the transactions to avoid double-spending and at the same time keep the Bitcoin network safe. However, too high fees make the adoption of this cryptocurrency unviable as a means of payment at the retail level.

In the Bitcoin blockchain, the transaction commission is decided by the forces of the free market. This means that anyone is free to set their own transaction fee. Bitcoin blockchain has a size of 1 MB, and, on average, a transaction of 1 BTC has a size of 230-250 bytes, which in turn means that it can accommodate only 4194 to 4559 transactions in the block.

The figures reveal that currently moving bitcoins is cheaper than in 2017, a fact that could be explained by the incorporation of scalability solutions such as SegWit. This update, which was launched in August 2017, had reached 40% adoption one year after its activation. According to data from SegWit space, on October 10, 2018, the largest number of SegWit transactions was registered in the bitcoin network, accounting for 51.64% of total transactions. Currently, the transactional predominance remains at around 38%.

Another solution that promises to take off the adoption of bitcoin, is the network Lightning Network (LN), which offers a second layer solution, designed to perform instant micropayments of bitcoins, with minimal transaction fees. The LN network, which was launched almost a year ago with just 69 nodes and 135 payment channels, already has more than 5,000 public nodes and 17,800 payment channels, showing exponential growth.

The development of these technologies poses a favorable scenario for the massification of bitcoin, beyond speculation with its price.