Bitcoin Transactions Fees Still Low Despite Increase In Transaction Rates

The performance of Bitcoin over the past 12 months has been nothing but a disappointment. In fact, the majority of experts seem to believe that this downward trend will persist for quite some time. Jack Dorsey, the CEO of Twitter, is the only prominent voice to have supported Bitcoin lately. He called Bitcoin ‘the internet’s native currency’ and also supported the Lighting Network’s experiment called ‘Torch.’

Transaction volumes are nearing record highs, despite the concerns over the performance of Bitcoin. This is according to data published on blockchain.com. The data also indicated that transaction fees on the Bitcoin network are lower than usual.

The last time that the transaction volumes were this high was at the beginning of last year. The transaction fees, however, were considerably higher back then. The volume of Bitcoin mining rewards has also reduced significantly. Currently, only 20BTC was paid out as compensation mining new blocks, whereas at the same time last year, miners got thousands of Bitcoin as rewards.

Interestingly, the average daily trading volumes for Bitcoin have been increasing gradually over the past 6 months. This explains the ever-growing transaction rates per block in the Bitcoin network.

In a study conducted by Hasu, a blockchain analyst cum blogger, the increase in the batching of Bitcoin transactions increased the efficacy of blocks in the Bitcoin network. This also reduced the demand for newly mined blocks, resulting in the reduction of mining rewards.

Because the number of transactions has reduced and block efficiency has increased, it is explicable that the demand for new blocks has reduced, hence the low mining rewards.