Bitcoin (BTC) transaction fees soared in early May, attaining their most elevated level in two years. On Wednesday, May 3, the total sum of fees paid on the Bitcoin blockchain amounted to $3.57 million, escalating nearly 400% since April’s conclusion.
According to data divulged by IntoTheBlock on May 5, this surge can be ascribed to the inception of BRC-20 tokens, which were launched experimentally a mere two months ago and employ Ordinals to store new tokens atop satoshis.
It is noteworthy that, despite the fee augmentation, Bitcoin’s average daily transaction fee remains markedly lower than Ethereum’s. Per data shared by IntoTheBlock, on May 4, the average daily transaction fee for Bitcoin stood at $6, compared to $17 for Ethereum.
Furthermore, the market capitalization of BRC-20s swelled to over $160 million this week, coinciding with Bitcoin’s all-time zenith in daily transactions.
As the utilization of BRC-20 tokens expands, demand for Bitcoin transactions appears to have risen, resulting in increased fees. While this may vex users, it bolsters security by enticing more miners and validators to partake in the network.
The meme token community’s rapid adoption of BRC-20 tokens has been a remarkable development, despite their novelty. However, this adoption may have precipitated an unintended consequence, as the relentless trading frenzy of meme coins like Pepe (PEPE) incited a surge in Bitcoin’s transaction fees.
On May 5, PEPE‘s market capitalization reached $1 billion, with confirmation of trading commencement on the Binance exchange, albeit with a minor hitch. For the time being, the listing has been deferred. This delay could further amplify demand for Bitcoin transactions and contribute to heightened fees, currently at multi-year pinnacles.
The BRC-20 token standard has rapidly emerged as a significant development in the cryptocurrency market, particularly in light of PEPE memecoin’s unrivaled ascent in popularity. In the preceding week, the token’s price burgeoned by over 600%, and on May 5, it attained an all-time apex of $0.0000032, a surge of more than 100% in the last 24 hours.
Despite the recent escalation in Bitcoin transaction fees, the current BTC transaction expense remains substantially distant from all-time records. The average cost of a Bitcoin transaction approached nearly $70 in April 2021, concomitant with a significant decline in the Bitcoin network’s hash rate.