Why the record number of BTC transactions isn't leading to higher fees
Since May 2023, the number of daily transactions has consistently exceeded 500,000, a number that was previously unattainable. The amount of information that can be transmitted via the network is very limited, so this spike in transactions should lead to higher fees.
That usually happens since users offer a bigger reward for miners to have their transaction added to the block as soon as possible. However, now, paying half a dollar is sufficient to send funds from one wallet to another.
The reason for the discrepancy lies in the distribution of digital objects via the Bitcoin network. The first to appear were Ordinals, the same thing as non-fungible tokens as NFTs on the Ethereum network. The excitement didn't last long, though. It endured only from about February to April. After that, interest switched to BRC-20, which are quasi-tokens since they're minted and transmitted with Bitcoin using the JSON text format.
While Ordinals accounted for about 7.5% of total transactions, BRC-20 still accounts for 40% to 60%.
However, unlike pictures, tokens don't need a lot of space in a block. They can be compared to sand that takes up all the free space in a jewelry box. If a small number of transmitted images took up 20% to 50% of the block, BRC-20 still fits in 20%. This fact led to higher total transactions while keeping fees at an average level.
However, the interest in tokens isn't exactly harmless since it leads to more unspent UTXO transactions. Casey Rodarmor, the man who brought about Ordinals, came up with a new Runes protocol to reduce the negative consequences of the fast-paced minting of new quasi-tokens. According to Rodarmor, 99.9% of them don't carry a payload and simultaneously "spam Bitcoin with 'junk' UTXOs".
The Bitcoin Frontier Fund offered $100,000 in prize money to the first development team to write a programme for sending tokens on the Runes protocol.
StormGain Analytical Group
(platform for trading, exchanging and storing cryptocurrency)