Bitcoin’s fees have skyrocketed recently with one transaction now costing $1.15, an all-time high, according to Nikita Zhavoronkov, a researcher at Moscow’s Engineering Physics Institute, an apparent contributor to Bitcoin Core and lead developer of Blockchair, a Bitcoin blockchain search engine.
His data shows that bitcoin transaction fees have surpassed the previous all-time high of $1.06, now costing $1.15. Alex Petrov of Bitfury argued fees are cyclical, but a trend of ever increasing fees has been established in the recent months, usually followed by complaints from bitcoiners that their transactions are not confirming.
The main reason is because bitcoin has run out of capacity. Transactions are now sorted not by first-seen, but by who pays the most, making it all unpredictable as no one really knows how much they should pay at any time, leading to complaints of unconfirmed transactions.
There have been many proposals to increase capacity, but none has gone anywhere so far. The latest hash-power results suggest a completely split community as, following F2Pool’s signaling for segregated witnesses (segwit), that proposal now stands around 36%, the same hashrate as Bitcoin Unlimited.
That means neither will be able to reach the needed overwhelming majority of 75% or 95% for its activation, which further means any added capacity or solution to the current problem seems very unlikely.
There is a new proposal that may bridge the divide, extension blocks, but Blockstream’s current or former employees appear to be in opposition, continuing their two years long objection to many proposals.
As such, its chances of success are on a par with a coin-flip, somewhat leaning towards less than 50%. At the same time, most appear completely fed up with this debate, leading to an ever growing number of businesses pivoting away from bitcoin and integrating ethereum or other currencies.
The latest may be OpenBazaar, a decentralized market much hailed by bitcoin’s community when first launched. Mike Wolf, their lead designer, publicly stated that “bitcoin fees are getting high,” before asking whether other coins should be accepted with the overwhelming response being yes. Wolf then publicly enquired:
“What are some good @ethereumproject projects to keep an eye on?”
OpenBazaar seems to be following in the footsteps of many other solely bitcoin focused businesses, such as Coinbase, which never accepted any other digital currency until they added ethereum last year following an ever increasing congested bitcoin network.
Brave browser, a project much lauded in bitcoin, appears to be taking the same action, as are other businesses which seem to have no choice due to thin profit margins now eaten by a network that scientific studies have called inefficient.
Yet, bitcoin’s price doesn’t seem to care. The currency has gone mainstream as far as brand awareness is concerned. As such, it is doubtful the majority of bitcoin’s public knows much about the scalability debate or cares about it.
But, as utility is degraded, many are asking what is the tipping point and, if we do reach it, whether the market will give bitcoin a second chance after attitudes are set that the network is slow, congested, expensive and lacking much utility.