Bitcoin commissions broke records last week amid rising popularity of Ordinals and BRC-20. What was happening to the network and how did it affect miners’ revenues?
Last Monday, users began reporting unusually high transaction fees on the Bitcoin network.
In some cases, they exceeded $10,000, and the record was broken by a transaction with a commission of more than $15,000. The average fee for the smallest transaction was $23.
In addition, on May 7 (for the first time in six years) the total commission per block received by miners exceeded the current remuneration for miners – 6.25 BTC.
What caused the increased load on the network and how did it affect the first cryptocurrency?
What is BRC-20 and Ordinals
The reason for this situation in the network was the increased demand for transaction confirmation from the growing popularity of Bitcoin’s counterpart NFT Ordinals and BRC-20 tokens;
The Ordinals protocol is a satoshi numbering system that assigns each satoshi a serial number and tracks them through transactions.
These numbers give users the ability to make individual satoshi unique by adding additional data to them. One bitcoin can be divided into 100,000,000 satoshi – each satoshi is worth 0.00000001 BTC.
Essentially, Ordinals allows you to create NFT analogs on the Bitcoin network. Their key difference from NFT in most other networks is that Ordinals do not use smart contracts.
The numbers are written directly into individual satoshis, which are then incorporated into blocks in the Bitcoin blockchain;
After the launch of Ordinals in January 2023, developers began experimenting with creating interchangeable tokens in Bitcoin.
BRC-20 token standard appeared in March 2023 and was created by a programmer under the pseudonym of Domo.
For almost two months BRC-20 did not attract much attention, but in early May the situation changed when the popularity of meme tokens on the network began to grow.
On May 8, the total capitalization of BRC-20 tokens was about $650 million. The leader was the ORDI meme-token with a combined market value of more than $400 million.
The daily trading volume of BRC-20 tokens exceeded $200 million, along with ORDI tokens PEPE, MEME, PIZA and BANK contributed to the network haip.
Hype and commissions
Glassnode analysts released a report this week outlining the implications of the hype for the network and miners.
According to the report, the active issuance of BRC-20 meme tokens in Bitcoin has led to an increase in commissions, resulting in an increase in income for miners, which began to approach an all-time high.
And exceeded the remuneration per block of 6.25 BTC for the fifth time in the history of the network.
It remains to be seen whether BRC-20 tokens will become a long-term phenomenon, analysts note, but the short-term jump in mining revenue was a welcome respite for miners after the 2022 bear market.
Given the small amount of data in BRC-20 transactions and the large fees users were willing to pay, miners were able to fill blocks with a record number of transactions.
Last week, a new record was set for the daily number of transactions, 682,000, which surpassed last year’s peak volume in 2017 by 39%.
According to Glassnode, BRC-20 and Ordinals token holders paid a total of 1,262 BTC in commissions to miners, of which 1,090 BTC (86%) came from last week.
As of this week, commissions are back to normal (about $2 per transaction), and some experts believe the haip around Ordinals and BRC-20 will subside in a few months.
However, the developers are afraid of a repeat of the frenzy.
The creators of Lightning Network announced the release of Taproot Assets Protocol v 0.2, which will avoid possible delays in transaction processing due to Bitcoin network congestion.
Hype by hype, but a mixer by schedule
While experts question the long-term interest in BRC-20 tokens, bitcoin itself remains one of the most popular crypto-assets: On May 13, the number of Bitcoin wallets with at least 1 BTC stored on them surpassed 1 million.
In addition, according to Bloomberg, bitcoin was among the top three attractive assets amid the risk of default in the U.S.
This turn of events can hardly be called surprising, because earlier the problems of banks were good for bitcoin.
As the number of BTC holders grows, the chance of getting “dirty” BTC, for example, by purchasing via P2P or directly on small exchanges, increases.
To avoid future problems with withdrawal of such coins, you can clear your BTC with Mixer.money.
In full anonymization mode after clearing the user receives bitcoins from major cryptocurrency exchanges with a turnover of 1 000 000 BTC per day.
It becomes impossible to trace the origin of the coins, such bitcoins are not detected by the analytical software as having been involved in the mixing;
In addition, the mixer provides an “Exact Payment” feature, which can be used to pay for goods and services without the risk of de-anonymization.
Coins are mixed in the same way as in Full Anonymity mode. You can use TOR mirrors for mixing via the site and also the official Mixer.money bot in Telegram.
Clearing coins takes up to six hours and the service has a maximum commission of up to 5% via the site and up to 4.5% via the bot + 0.0007 BTC.
Timely clearing of BTC will allow withdrawing coins without problems at any convenient time and not to be a victim of commission spike or excitement around another phenomenon in the network.