The bitcoin network charged transaction fees from its users on par with ethereum last week as ordinal enrollments returned to form, according to blockchain data.
The reversal debunks a years-long trend of ethereum being the most expensive network and raises questions about bitcoin‘s long-term usability and security.
The cost of registration
According to IntoTheBlock, bitcoin fees “outperformed ethereum” last week. totalizing $61 million between November 18 and 25.
The market intelligence provider’s figure is slightly higher than that of Glassnode, whose data reflects ~$52.6 million in fees over the same period. Meanwhile, ethereum fees on Glassnode amounted to ~$61.5 million.
These figures are much closer to normal. In November 2022, for example, Glassnode shows that ethereum collected $92.2 million in total fees, while bitcoin generated only $12.5 million for the entire month.
The difference from last year lies in “ordinals,” a newly developed protocol for enrolling non-btc tokens on the bitcoin blockchain that became popular earlier this year.
The technology supports both fungible tokens (e.g. stablecoins) and non-fungible tokens (NFTs) in bitcoin, two main features that once differentiated ethereum from its big brother. As the popularity of both use cases skyrocketed in May, so did bitcoin transaction fees, which skyrocketed to $124 million over the course of the month.
The pattern repeated itself in November: when ordinals surpassed 40 million total signups, the average btc transaction fee skyrocketed to $12.96 in the week leading up to November 13, while the average ethereum transfer cost $7, 52.
When ordinal volume dropped two weeks earlier, those numbers were just $2.56 for bitcoin and $4.94 for ethereum.
Pros and cons of high rates
Minting ordinal NFTs can be especially expensive because their image data is built directly into the bitcoin blockchain, unlike ethereum NFTs. This causes them to take up a lot of memory space in each bitcoin block, leaving less room for standard transactions with lower fees to be processed efficiently.
On the other hand, high fees generate higher profits for bitcoin miners, incentivizing them to continue protecting the network.
According to Hashrate Index, more than 12% of rewards for bitcoin mining pool FoundryUSA this month come from transaction fees alone, amounting to 0.77 btc per block on average.
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