The Bitcoin Network Is In Chaos – Here’s Why – Cryptopolitan
The Bitcoin network is currently in chaos as the number of unconfirmed transactions has shot to over 390,000 in less than two weeks, leading to a bottleneck in the mempool.
This increase in unconfirmed transactions has caused a staggering 343% increase in transaction fees, as miners struggle to keep up with demand. Users get frustrated and face delays in completing their transactions.
The Impact of Ordinal Inscriptions and BRC20 Tokens
The overwhelming backlog can be traced to an increase in the minting and transfer of Ordinal Inscriptions and BRC20 tokens. The Bitcoin blockchain now hosts over 13,000 BRC20 tokens and an astonishing 4.17 million Ordinal inscriptions, further contributing to network congestion.
Clearing the current backlog would require mining 179 blocks, which could take approximately 1.24 days to achieve given the average block time of 10 minutes.
As a result of the overloaded mempool, transaction fees have increased by a whopping 343% in the last 11 days. According to bitinfocharts.com, the average transaction fee is now 0.00031 BTC or $8.82 per transfer.
The website mempool.space reveals that even low-priority fees are as high as $7.74, while medium-priority fees cost $7.90. Users requiring urgent transaction processing must pay a high-priority fee of $7.99 per transfer.
The tight mempool has generated a wide range of reactions on social media, with some users excited about the increase in activity, while others perceive the increase in non-financial transactions as a DDoS or an attack.
Despite the increase in unconfirmed transactions, there has not been a significant increase in Lightning Network adoption, primarily due to the high cost of opening and closing channels and the limited availability of non-custodial solutions.
Binance Stops Bitcoin Withdrawals
The world’s largest crypto exchange by trading volume, Binance, temporarily halted Bitcoin withdrawals due to the “congestion problem” plaguing the Bitcoin network. This decision further highlights the challenges facing the network.
Charles Edwards, a renowned Bitcoin analyst and the founder of the Capriole Fund, predicts a major catalyst that could increase Bitcoin’s price in 2023.
The Federal Reserve’s restrictive monetary policy and series of rate hikes since March 2022 have contributed to a challenging year for cryptocurrencies.
However, Edwards believes that the Fed may not be able to raise interest rates further as the system reaches a breaking point. This potential shift in the Fed’s approach could result in relentless unwinding and have a positive impact on Bitcoin’s value.
The Bitcoin network is struggling with chaos due to a massive increase in unconfirmed transactions, primarily caused by the increased activity in Ordinal Inscriptions and BRC20 tokens.
This congestion has led to sky-high transaction fees and user frustration. Today’s situation emphasizes the need for improvements to the network’s infrastructure and scalability to prevent such problems from occurring in the future.
Disclaimer: The information provided is not trading advice. Cryptopolitan.com has no responsibility for investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.
