The average transaction fee on the Bitcoin blockchain (BTC) has fallen below $1.00 for the first time in more than two years, further strengthening its case for use as a viable major financial system.
High transaction fees across blockchain networks work against users, especially when making low-value transactions. For example, transaction fees on the Ethereum blockchain rose several times during the Non-Fungible Hype (NFT), causing stress on users in general.
While the Bitcoin ecosystem has also bore its fair share of high transaction fees in the past, timely upgrades – including the Lightning Network and Taproot – ensure faster and cheaper transactions over time. As of Monday, the average Bitcoin transaction fee has fallen to $0.825, a number last seen on June 13, 2020.
Average bitcoin transaction fees over the past three years. Source: Blockchain.com
In addition to timely upgrades, the drop in transaction fees can be attributed to multiple factors, including lower market prices and lower mining difficulty. However, the difficulty of mining a new BTC block is seeing a steady recovery as miners gain access to cheaper hardware while recovering from a prolonged shortage of chips.
Bitcoin network difficulty chart. Source: Blockchain.com
As seen above, August also marked the end of the three-month crash in the network’s difficulty – returning to a $28.351 trillion free fall. Thanks to the consistent efforts of the community, the Bitcoin network continues to display telltale signs of a healthy financial system.
Related: Pushing Bitcoin to Become More Scalable with Zero Knowledge Proofs
Although users expect each network upgrade to reduce gas fees and transaction speeds, not all upgrades are built to serve the same purpose. For example, the most anticipated Ethereum upgrade, The Merge, will not reduce gas fees.
As explained by the Ethereum Foundation:
“The consolidation neglects the use of Proof of Work, and goes to Proof of Stake to gain consensus, but does not significantly change any parameters that directly affect network capacity or throughput.”
The consolidation upgrade involves joining the existing implementation layer of the Ethereum mainnet with the Beacon Chain, effectively eliminating the need for energy-intensive mining.