Increased fees and a backlog of transactions are besieging the Bitcoin (BTC) network and it’s due to a popular new “token” standard according to a CryptoQuant analyst.
On May 9, Axel Adler Jr, an analyst with the crypto data firm, explained that BRC-20 memecoin minting on the BTC blockchain is causing the surge in block space demand, adding:
“Unlike conventional token standards, such as Ethereum’s ERC-20, BRC-20 does not utilize smart contracts and operates only with wallets supporting the Bitcoin blockchain.”
According to CryptoQuant, the average fee per transaction skyrocketed, exceeding $16 and peaking at $29 on May 9.
Bitcoin under siege from BRC-20 “junk” coins: record fees and thousands of unconfirmed transactions!
“Unlike conventional token standards, such as Ethereum’s ERC-20, BRC-20 does not utilize smart contracts and operates only with wallets supporting the #Bitcoin blockchain.”
— CryptoQuant.com (@cryptoquant_com) May 9, 2023
Data from Bitinfocharts similarly reported a spike in the average transaction fees, recording a jump to $31 on May 8 compared to around $19 the day prior.
On May 8, the total fees per block temporarily exceeded the block subsidy reward of 6.25 BTC for the first time since 2017.
On May 9, Bitinfochart data recorded a new all-time high on the seven-day moving average for the number of Bitcoin transactions, hitting a top of 534,000.
However, the figure could actually be higher than that with Bitinfocharts recording two higher spikes over 600,000 daily transactions this month using raw values. On May 9, it recorded 598,000 BTC blockchain transactions.
Love em or hate em, ordinals are definitely shaking things up. The number of transactions on the #bitcoin blockchain reached a new all time high yesterday of 534,000. pic.twitter.com/NTWmPsdiLw
— Mati Greenspan (@MatiGreenspan) May 9, 2023
Blockchain.com has confirmed the data reporting that the average transactions per block are also at an all-time high of 3,778.
According to Mempool Space, there are currently 400,000 unconfirmed transactions pending on the network so the backlog is not clearing which is keeping transaction prices elevated.
Related: ‘Bitcoin is not under attack:’ BTC maxis allay fears of a DoS offensive
On May 9, the total market capitalization of BRC-20 tokens surpassed $1 billion, as reported by Cointelegraph.
The problem has got so bad that Bitcoin core developers are mulling taking action against BRC-20 tokens and Ordinals which they consider as network spam.
bitcoin-core devs want to kill ordinals & BRC-20s
Miners likely want to double down on ordinals & BRC-20s to increase fees and the value of private mempools
Ordinals & BRC-20 holders want the right to exist and pursue growth
Civil war https://t.co/QeoAHJpPN4
— Ryan Berckmans ryanb.eth (@ryanberckmans) May 9, 2023
Furthermore, the number of ordinal inscriptions has almost doubled from 2.5 million to 4.78 million in just over a week.
It is all good news for miners though as profitability, or hash price, has surged 66% since the beginning of the month.
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