The Bitcoin network is close to reaching $1 billion in fees paid to miners. This new record takes into account all transactions from the time BTC was created to date, as estimated by Coinmetrics. There are more than 440 million transactions, with a growth curve that is very noticeable in the last 5 years.
Bitcoin, $1 billion in fees
On July 28th, 2019, the cumulative value of the fees was approximately $955 million. Surely the miners are happy with this result. It took ten years to reach this psychological threshold but the cumulation seriously began in 2017 when the growth in the value of bitcoin led to a huge increase in fees.
This is one of the main arguments brought forward in support of the thesis that bitcoin is a store of value similar to gold and will never be a real medium of exchange. At most, it can be used to move enormous sums of money which, when transferred in FIAT currency, are subject to high taxation. However, everyday life micropayments are still more convenient with fiat currencies.
Cost to move $450 million worth of Bitcoin: less than $400 in network fees, no permission needed, no middleman.
Cost to move $450 million in fiat: thousands of dollars in fees, banks needing to sign off on the transaction, multiple check points.
Crypto is the future of finance. https://t.co/Dez01mpPb3
— ERIK FINMAN (@erikfinman) July 30, 2019
In reality, developers are working to solve the fee issue. The first two solutions that have been implemented for several months now are SegWit, now adopted in 50% of bitcoin transactions, and transaction batching.
SegWit, an acronym for Segregated Witness, is used to enable the development of 2nd layer scalability solutions. This update is designed to make Lightning Network more efficient. It also introduced a slight increase in the size of the blocks by increasing the number of transactions that the network is capable of inserting into each block.
Batching, on the other hand, is a method used to place as many transactions as possible in a single block. By adopting this technique more transactions are actually placed in a single large tx, this promotes the decline in network taxes. This is a fundamental operation because it saves space and minimises costs.
The arrival of Lightning Network should definitely solve the problem. To date, however, this solution is still far from ready: only 0.1% of the BTC value shifted daily is done through LN.