Data from ycharts.com shows that the average transaction fee for Bitcoin has spiked to $30.91, a level not seen since April 2021. The period leading up to April 2021 was marked by Bitcoin’s surge to $64,900, fueled by Coinbase’s NASDAQ listing and the narrative that crypto was going mainstream.
However, this run came to an abrupt end when China extended its anti-crypto policy to ban proof-of-work mining and Tesla announced it would stop accepting BTC for vehicle purchases due to environmental concerns.
Currently, meme coin mania is driving activity on the Bitcoin network via the recently released BRC-20 standard. BRC-20 was created in March by an anonymous individual known as “Domo” and allows fungible assets to operate on the Bitcoin chain. Taproot, launched in November 2021, enabled this by making transactions quicker and more cost-effective, laying the groundwork for smart contracts and dApps. However, this has led to higher transaction fees and chain bloat, as warned by commentators at the time.
The top three BRC-20 tokens by market cap are Ordi, Nals, and Pepe, valued at $411.3 million, $42.3 million, and $34.7 million, respectively, according to the brc-20.io website. Despite the triviality of some token names, some experts believe that BRC-20 tokens will be a significant factor in driving Bitcoin dominance and rendering Ethereum irrelevant in the next bull market.
Willy Woo points out that while there are pros and cons to the current situation, an alternative source of mining revenue is needed to keep miners incentivized as block rewards will be zero one day. However, the trade-off is “bad for nodes and decentralization,” especially since the impact of Ordinals is happening at a time when mining rewards are still high.
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