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Bitcoin’s Transaction Fee Has Been a Crisis for Bitcoin Network- Ends up now

The transaction fees are falling partly because of continuing adoption of SegWit, and fewer people trading Bitcoins. However, it remains to be seen if the price will continue remaining low

Bitcoin community may be having the best day ever following the reduction of transaction fees. The price is falling since mid-January. It is now less than $1 from the $34 registered in mid-December last year.

The price fell to $0.79 on last Sunday, the lowest this month. The peak was $34 on December 23, the highest ever. The median price was more than $10 from mid-December until mid-January.

The main question is whether fees will remain low in future. The cause of congestion was a very low number of outputs per transactions. For instance, a single Bitcoin transaction could involve many more payments to different recipients simultaneously. Companies these optimizations a priority although they were not bothering them before during the times of low transaction fees.

However, the number of outputs per transaction has been rising. It is likely that fees will remain low given continuing the adoption of SegWit. For instance, it is now in place at Bitfinex and also Coinbase in the coming few days. However, just about 15 percent of transactions use SegWit. Coinbase, which handles a large number of Bitcoin transactions, was slow in adopting. Now more people can breathe.

High transaction fees made Bitcoin more foes and forks

Increase in fees made Bitcoin more foes and more forks in the last few months. Although this is not the first time Bitcoin registered skyrocketing fees, attention was unavoidable this year. This is because cryptocurrency went popular among many people around the world.

In terms of foes, Microsoft, Valve, Stripe and some other companies stopped accepting Bitcoin payments. They said part of the reason was high transaction fees and volatility. High transaction fees on the network also make Bitcoin less desirable for merchants. This is in addition to high Bitcoin volatility. The high fee is prohibitive for smaller payments.

In some way, the exit of many people to other cryptocurrencies solved the congestion problem also. A few people are also trading Bitcoins and therefore lesser activity. A number are also opting for other altcoins. Thus, whether SegWit will deal with the problem remains to be seen if more people start to trade.

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David

David Kariuki is a journalist who has a wide range of experience reporting about modern technology solutions including cryptocurrencies. A graduate of Kenya's Moi University, he also writes for Hypergrid Business, Cryptomorrow, and Cleanleap, and has previously worked for Resources Quarterly and Construction Review magazines.

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