THE ACTUAL REASON BEHIND THE ANOMALOUS NETWORK CONGESTION AND HIGH GAS FEE FOR BITCOIN EXPLAINED

If you have transacted with Bitcoin or attempted to do so within the past week, you would have experienced at least one of these two; delay in processing time or/and a high transaction fee. At the time of writing this article, on-chain data has shown that there are over 400,000 unconfirmed transactions in Bitcoin’s mempool, which is significantly higher than the congestion experienced during the 2020–2021 bull run. As a result, Bitcoin’s gas fee has increased and is currently standing at an average of $8 after soaring to over $19 between May 7 and May 9. However, Roqqu pegged its Bitcoin network fee at $5, which is relatively cheap compared to the current market conditions. Even Binance, currently the world’s largest cryptocurrency exchange, temporarily suspended Bitcoin withdrawals for 2 hours to assess the implications of the sudden rise in gas fees.

While exchanges are doing everything within their power to make Bitcoin transactions seamless for their customers, it is essential to note that exchanges have little-to-no control when it comes to blockchain network activities.

How it all started

In January 2023, Casey launched the Ordinal Protocol, with which he indexed every satoshi, which can be tracked throughout the Bitcoin network. A Satoshi can be customized with arbitrary information to create Non-Fungible Tokens (NFTs), which are natively digital collectibles for Bitcoin.

Inscriptions make each satoshi behave like NFTs, which can be tracked and transmitted using the ordinal theory to give each satoshi an identity and enable them to be shared across the network. They are equally resilient, unchangeable, safe, and decentralized as Bitcoin.

The BRC-20 Standard

On March 8, Domdata launched a theory for creating fungible tokens known as the BRC-20 standard using the mechanisms of the Ordinals protocol. According to his theory, anyone could inscribe JavaScript Object Notation (JSON) onto Bitcoin using the Ordinals protocol to deploy token contracts to mint and transfer tokens. JSON can be inscribed on Satoshis to create tokens that can be traded like other assets. BRC-20 tokens are transferable on the blockchain.

BRC-20 is not EVM-compatible and, therefore, cannot support smart contracts. This means developers cannot create different programmable tokens. Despite these limitations, the BRC-20 standard has grown significantly since its launch. As is the case on the Ethereum blockchain, the BRC-20 standard has given way to the creation of many meme coins. Its tokens currently trade for over $5 billion in market cap. Some examples include ORDI, DOMO, and PUNK.

The emergence of the Ordinal protocol and the BRC-20 standard has put a lot of pressure on the Bitcoin network because Bitcoin wasn’t designed to lift heavy weights like this. In fact, the average size of a block is usually between 1 MB and 1.5 MB. These recent events have been the primary reason behind the network congestion, which naturally causes gas prices to rise significantly.

In essence, the higher the gas price you pay, the faster your transactions get processed. Every blockchain network incentivizes its validators to prioritise higher fees when confirming transactions on the network.

Recommendation on how to avoid delayed transactions or high network fees

Simply send your Bitcoin to the Roqqu wallet app and convert it to any other coin whose network is not congested at the moment. Let’s say TRX or USDT, using the TRC-20 network. Then send your coin wherever you need it. You can recommend the same procedure for someone sending coins to you. Easy-peasy

Conclusion

The introduction of the BRC-20 standard and the Ordinals protocol will eventually pave the way for more possibilities on the Layer-1 blockchain. However, it has resulted in network congestion and a high gas price for the Bitcoin network. These innovations are still relatively new and will be optimised to suit the network better.

Glossary

Satoshi: The smallest unit of Bitcoin

NFT: non-fungible token

EVM: Ethereum Virtual Machine

BRC-20: Bitcoin Requests for Comment

Bitcoin gas fee: This is the fee paid to Bitcoin miners for maintaining the Bitcoin network and validating transactions.

JSON: Javascript object notation