Bitcoin block demand leads to a fee spike as Memecoins boom
Fees on the Bitcoin blockchain have risen to two-year highs as ‘Bitcoin Request for Comment’ (BRC-20) tokens and the growing popularity of the Ordinals protocol drive demand for block space.
Average transaction fees on the Bitcoin network held just under $20 during European hours on Monday, up from last week’s average $1.20 level. Such levels were previously seen in May 2021, when bitcoin prices hit a then-record high of $60,000.
The number of non-fungible tokens (NFTs) linked to the Bitcoin blockchain surged past 3 million last week following a one-day surge in activity that consisted mostly of text-based assets, data from Dune Analytics showed.
The tokens, called inscriptions, operate on the Ordinals protocol. Ordinals allow users to enter data into the Bitcoin blockchain by entering references to digital art in small bitcoin (BTC)-based transactions.
The BRC-20 token standard allows users to issue transferable tokens directly through the network – which has spurred a collection of digital artwork and meme tokens built on Bitcoin.
Data from OrdSpace, which tracks BRC-20 data, shows that over 11,000 tokens issued on Bitcoin are available on the open market as of Monday with a cumulative market capitalization of $1.6 billion.
So far, tokens from Ordinal’s marketplace Ordi (ORDI) are the most valued BRC-20 tokens with a market cap of $220 million and 7,300 unique ordi token holders. Ordi is said to be the first BRC-20 token distributed on Bitcoin, which could also help its value proposition among holders.
Pepe tokens on Bitcoin – distinct from those issued on Ethereum – are the second largest BRC-20 issuance, albeit with a relatively smaller market cap of $17 million.
Meanwhile, some analysts consider the rapid transaction activity a sign of network adoption adding to Bitcoin’s foundational narrative.
“During the last peak in 2019, most Bitcoin transactions were skewed toward larger transactions, in the $1,000 to $10,000 range,” Tom Rodgers, head of research at ETC Group, said in an email to CoinDesk.
“This suggests that most Bitcoin users used the blockchain for trading. Compare this to today. The largest cohort of Bitcoin transactions – 359,560 – came from transactions under $1. This suggests a huge increase in Bitcoin velocity – or the amount of Bitcoin that are transacted by users, rather than being locked in cold wallets and held long-term,” Rodgers added.
While adoption has been rapid, network congestion has briefly caused problems at crypto exchanges such as Binance, which stopped bitcoin withdrawals twice over the weekend.
As such, on-chain data shows there are nearly 415,000 unconfirmed Bitcoin transactions at the time of writing on Monday, which is higher than any seen during the 2018 and 2021 bull runs.
