On Sunday, the Bitcoin quadrant of Crypto Twitter was buzzing with concerns over high transaction fees and a congested backlog of transactions that some saw as an attack on Bitcoin. With over 469,000 transactions waiting to be confirmed in Bitcoin’s mempool, the network appeared to be clogged.
Before transactions can enter the Bitcoin blockchain, they have to go to the mempool, where they are selected by a Bitcoin miner and inserted into the next block. However, the Bitcoin network’s transaction fees were considerably high at that time, with high-priority transactions sitting at a rate of 654 sat/vB or roughly $26.
It appears that there's an "attack" on Bitcoin.
The Ordinal gang/ Big blockers? Are pushing random inscriptions and pay high fees.
They clog the mempool and increase overall fees to include a transaction in the block.
What is unclear is, what is the purpose?
They are, at this…
— Toma B (@Toma_7_32) May 7, 2023
While some Twitter users suggested that high transaction fees could be used as an “attack vector” to make Bitcoin unusable for smaller players, others believed that driving up costs in the short term would have a negligible effect on Bitcoin in the long run.
Bitcoin enthusiast Toma B pointed out that clogging up Bitcoin’s mempool benefits miners who are enjoying the rewards mainly associated with higher transaction fees, despite what some label an “attack on Bitcoin.”
According to the account, those inundating Bitcoin’s mempool with transactions would soon exhaust their funds, resulting in only a temporary impact on the network.
Pretty obvious attack vector for three later agencies with an infinite budget over the short-term.
Changes nothing over the long term tho, miners thank ‘em.
— Dylan LeClair 🟠 (@DylanLeClair_) May 6, 2023
NFT popularity drives surge in Bitcoin transactions and fees
Bitcoin’s recent surge in transaction fees and a substantial backlog have generated mixed opinions among experts. Some attribute it to the increased use of Ordinals, a protocol for creating digital assets like NFTs on the Bitcoin network.
As NFTs gain popularity and are increasingly stored and transferred on the Bitcoin network, daily transactions have also increased, resulting in higher chain fees. While there are concerns about rising transaction fees, some experts believe that the interest in innovative technologies like Ordinals has contributed to the network’s new daily record.
Is Brc-20 killing Bitcoin?
Bitcoin is not under attack and it will never be.!
Taproot upgrade enabled ordinals and once something is available. The developers are using it to explore new possibilities that you cant stop!
This is what you call a free market.
— Kashif Raza (@simplykashif) May 7, 2023
According to Dune Analytics, the total number of Bitcoin-based digital assets, known as inscriptions, reached over 4.3 million on Sunday. This represents a significant increase from last week’s inscriptions, which totaled 2.5 million according to Decrypt coverage.
Last week’s Bitcoin network transaction fees reached the highest level since July 2021, indicating a strong demand for the blockchain network.
According to popular crypto analyst Will Clemete, if the transaction fees remain high during a bear market, they are likely to skyrocket once the bull market resumes. He also said that high transaction fees in a bear market might create serious demand for Layer 2 solutions.
“Pair this with some exciting new integrations/applications, we might begin to see the lightning network truly grow,” he said.
Huge spike in Bitcoin transaction fees over the last week. Fees are currently the highest they've been since July 2021.
Serious demand to use the Bitcoin network. pic.twitter.com/7mHsiyY1MY
— Will Clemente (@WClementeIII) May 2, 2023
While some experts point towards Ordinals for the increase in transaction fees and backlog, others argue that the growing popularity of BRC-20 tokens, which were first introduced as an experimental concept in March, may also be a contributing factor.
These tokens can now be traded through UniSat Wallet and other exchanges. On Sunday alone, UniSat Wallet had done over $9.3 million worth of inscriptions trading volume, which coincided with roughly 7,500 transactions.
Some people also argue that developers are using Bitcoin’s taproot upgrade to explore new possibilities and that this increased demand is a sign of a healthy, competitive market.
Kashif Raza, founder of crypto education startup Bitinning, refuted the idea of Bitcoin being attacked. Raza said on Twitter that developers are using the technology to explore novel opportunities that cannot be impeded, terming it a “free market.”
Despite the concerns over Bitcoin’s high transaction fees and backlog, the coin has remained largely flat. It was down roughly 0.1 percent at around 28,800, according to CoinGecko.