The Bitcoin network is currently in chaos as the number of unconfirmed transactions has skyrocketed to over 390,000 in less than two weeks, leading to a bottleneck in the mempool.
This increase in unconfirmed transactions has caused a staggering 343% rise in transaction fees, while miners struggle to keep up with the demand. Users are left frustrated and facing delays in completing their transactions.
The impact of Ordinal inscriptions and BRC20 tokens
The overwhelming backlog can be traced to a surge in the minting and transferring of Ordinal inscriptions and BRC20 tokens. The Bitcoin blockchain now hosts over 13,000 BRC20 tokens and an astonishing 4.17 million Ordinal inscriptions, which are further contributing to the network’s congestion.
Clearing the current backlog would require mining 179 blocks, which could take approximately 1.24 days to accomplish given the average block time of 10 minutes.
As a result of the congested mempool, transaction fees have soared by a whopping 343% over the past 11 days. According to bitinfocharts.com, the average transaction fee now stands at 0.00031 BTC or $8.82 per transfer.
The website mempool.space reveals that even low-priority fees are as high as $7.74, while medium-priority fees cost $7.90. Users needing urgent transaction processing must pay a high-priority fee of $7.99 per transfer.
The clogged mempool has generated a wide range of reactions on social media, with some users excited about the surge in activity, while others perceive the rise of non-financial transactions as a DDoS or an attack.
Despite the increase in unconfirmed transactions, there has not been a significant uptick in Lightning Network adoption, primarily due to the high costs of opening and closing channels and the limited availability of non-custodial solutions.
Binance halts Bitcoin withdrawals
The world’s largest crypto exchange by trade volume, Binance, temporarily halted Bitcoin withdrawals due to the “congestion issue” plaguing the Bitcoin network. This decision further highlights the challenges the network is currently facing.
Charles Edwards, a renowned Bitcoin analyst and the founder of Capriole Fund, predicts a major catalyst that could boost Bitcoin’s price in 2023.
The Federal Reserve’s restrictive monetary policies and series of interest rate hikes since March 2022 have contributed to a challenging year for cryptocurrencies.
However, Edwards believes that the Fed may be unable to further raise rates as the system reaches a breaking point. This potential shift in the Fed’s approach could result in relentless unwinding and have a positive impact on Bitcoin’s value.
The Bitcoin network is grappling with chaos due to a massive surge in unconfirmed transactions, primarily caused by the increased activity in Ordinal inscriptions and BRC20 tokens.
This congestion has led to soaring transaction fees and frustration among users. The current situation underscores the need for improvements to the network’s infrastructure and scalability to prevent such issues from arising in the future.
