Bitcoin network fees have skyrocketed in the last week! In this post, we’ll talk about what caused this issue, how it affects you, and what to do next.
What is Causing the Bitcoin Network Congestion?
To fully understand this, let’s talk about the recent popularity of meme coins. Meme coins are cryptocurrencies inspired by popular memes such as Dogecoin (DOGE) and Shiba Inu (SHIB).
But, recently, one meme coin that’s been really popping has been Pepe Coin (PEPE). The coin, which was inspired by the popular “Pepe the Frog” meme, has grown by over 250% in the past few weeks.
* PEPE’s 1-month chart between April 2023 and May 2023. Image Source
The problem, though, is that PEPE coins are created on the Bitcoin blockchain.
In November 2021, the Bitcoin network pushed the Taproot upgrade, which came with a feature that allowed people to create BRC-20 cryptocurrencies and NFTs on Bitcoin’s blockchain. It’s similar to Ethereum’s ERC-20 tokens. As more people have been buying PEPE and BRC-20 tokens, the Bitcoin network – specifically its mempool – has become more congested.
What is the Bitcoin Mempool and How Does it Work?
The Bitcoin mempool is like a waiting area where pending transactions stay before they are confirmed.
Let’s imagine that the Bitcoin mempool is like the third-mainland bridge. When it’s not rush hour, it’s easy to pass through the bridge and get to yoru destination. But, when there’s traffic, movement becomes a problem.
Currently, there are over 400,000 pending transactions in the mempool.
*Bitcoin’s Mempool showing 400,000+ pending transactions as at 11:30AM, May 9,2023. Image source
But, imagine there’s also an open lane that you can use to bypass the traffic. The only catch, though, is that you need to pay – and, the higher you pay, the more likely you are to traffic but you have to pay. This means that the higher you pay to pass that lane, the more likely you are to reach your destination before everyone else.
When transactions increase on a blockchain network, users tend to pay more fees so that their transactions can be prioritized. That’s why your transaction might end up unconfirmed for a while, and also why your crypto exchange or wallet service may show an increased transaction fee until the network is back to normal.
Has a Blockchain Network Congestion Happened Before?
Remember the 2018 Ethereum traffic jam, when everyone and their grandma was trying to get those adorable cryptokitties (the NFTs)?
Ethereum fees skyrocketed because everyone wanted to jump the queue and get their transactions sorted first. It’s like a packed nightclub where people slip the bouncer a small tip to skip the line. Now, Bitcoin’s dancing to the same beat.
It’s not like we haven’t seen this movie before. Both Bitcoin and Ethereum have faced their own wild traffic rollercoasters in the past. But, like any good party, the hype eventually dies down, and people wait their turn. It’s like you see in traffic. Some people wait it out, others take a U-turn, and others look for an alternative route. But eventually, things get back to normal.
How Does The Bitcoin Network Congestion Affect You?
When the supply of something is fixed, increased demand will lead to increased prices. As Bitcoin’s block size is limited (a block is generated every 10 minutes on average), when demand for transactions increases, the fees will naturally increase.
This means that it may cost you more money to transfer Bitcoin especially if you want the transactions to go through quickly. For Quidax specifically, please check for reversed rates here.
What’s the Solution 🛠?
Okay, buckle up folks. Here’s the game plan:
1. If you’re not in a mad rush, just let the storm blow over. Like that one traffic light that’s always red when you’re late, these sky-high fees won’t stick around forever.
2. Swap lanes to another blockchain like Polygon—it’s like Bitcoin’s less crowded, cheaper cousin.
