The day the transaction fees took the crown
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Bitcoin, the largest cryptocurrency by market capitalization and trading volume, sets another record with Block 788695 as transactions on the blockchain network spiral out of control.
Recently, there has been an alarming increase in user transactions on the Bitcoin blockchain, leading to network traffic and congestion. This has increased profitability considerably as transaction fees skyrocket to control the situation.
In an interesting development witnessed by the crypto community yesterday, it was seen that miners had made a lot of money as the transaction fees in block 788695 exceeded the block support. This will be the second event for the Bitcoin network where transaction fees in a block are greater than the block grant.
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Bitcoin Block 788695 sets another record
According to Bitcoin mining data reports from Mempool, transaction fees in block 788695 were seen to be greater than the block grant. The reports show that 6.7 BTC in transaction fees was contained in block 788695, greater than the block grant of 6.25 BTC.
The last time this happened was in 2017 when transaction fees in block 500546 were reported to have exceeded the block grant. This phenomenon occurs primarily when the Bitcoin blockchain network receives extremely high network activity from user transactions.
Miners are seen to earn a lot from these congested blocks, which contain high user transactions compared to regular blocks. They create blocks by collecting transactions from the Mempool and adding them to a block, and when the blocks are filled, it goes through complex mathematical calculations. The miner who solves the math problem is rewarded with transaction fees and the block grant.
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The block subsidy refers to the amount of new Bitcoin created or minted in each block. For each block successfully created, the miner is allowed to mint a fixed amount of new Bitcoin, which is based on the “current issuance rate determined by the Bitcoin protocol.”
The Bitcoin block grant amount is determined by an algorithm in the source code and starts at 50 BTC per block, which is divided in half every four years. The block grant splitting process, otherwise known as BTC halving, has trickled down to 6.25 from 50 BTC where it started and is expected to be split further in 2024.
Why are BTC transaction fees increasing?
The jump in BTC transaction fees can be attributed to recent user activities on the blockchain network. First, the introduction of the BRC-20 token standard on the Bitcoin network for the seamless minting of fungible tokens has gained increased popularity in the blockchain and crypto community.
The recent hype of tokens, including meme coins minted using the BRC-20 standard, has led to increased FOMO for users making more token purchases and transactions on the Bitcoin network.
BTC price opens on a negative on the daily chart timeframe | Source: BTCUSD on TradingView.com
Featured image from Istock & Mempool, chart from TradingView.com
