Bitcoin blocks experienced a congestion rate of 95 percent in the month of October 2018. Nevertheless, this failed to impact the transaction fees which currently average between $0.20 and $0.50 per transaction.
Low Fees Despite High Congestion
The high congestion rate of Bitcoin’s block caught the attention of popular cryptocurrency analyst Willy Woo. In a recent tweet, he published a graph, comparing the BTC transaction fees in two different congestion episodes.
“Meanwhile… during the bear market no less… Bitcoin’s blocks peak above 95% full without anyone noticing, the fees and confirm times remain nominal. Bitcoin of 2018 is not Bitcoin of 2017. The protocol is quietly improving.”
Meanwhile… during the bear market no less… Bitcoin’s blocks peak above 95% full without anyone noticing, the fees and confirm times remain nominal. Bitcoin of 2018 is not Bitcoin of 2017. The protocol is quietly improving. pic.twitter.com/ZgtpBnQFbJ
— Willy Woo (@woonomic) October 20, 2018
The first period outlined in the chart is from 2017 when the congestion was topping about 85 percent. The fees, at the time, peaked to as much as $55 per a single transaction.
The other period is from this month when the congestion rate is at its all-time high standing at about 95 percent. Regardless, Bitcoin transaction fees currently average between $0.20 and $0.50 per transaction.
How Does it Work?
The way Bitcoin’s network functions is unlike any of the centralized payment settlement networks. The distributed ledger behind the world’s most popular cryptocurrency confirms the transactions when its network of nodes – which are most commonly referred to as miners – reaches an agreement (or a consensus) to mine a block.
Each one of the network’s blocks can, on average, handle more than 500 transactions because its size limit is relatively small – 1 MB.
However, as the volumes of BTC go up, the speed of the transactions goes down, which generally allows the network to increase the fees to confirm transactions faster. It does so by supplying more hashpower.
A fairly recent upgrade on the Bitcoin network further contributed for its’ blockchain efficiency. The Lightning Network, as it’s called, took off micro transactions of Bitcoin and processes them on an off-chain which would simply put their record on the main chain when they are being carried out.
What do you think of Bitcoin’s relatively low fees despite all-time high congestion? Don’t hesitate to let us know in the comments below!
Images courtesy of AdobeStock