Bitcoin transactions may be taking longer to clear and cost more than usual for some, but that may be because the network is handling more than it has in a long time.
According to data from monitoring resource transactionfee.info, this month has seen Bitcoin process a record number of payments per day—just under 800,000 on January 9th.
This number beats the amount of payments reached in late 2017 as Bitcoin approached the peak of its $20,000 bull run. At that time, however, transaction delays and fees were a major headache for many users.
Despite there being more payments in 2021, however, neither fees nor processing times have witnessed apocalypse or even come close to levels seen three years ago.
“Given this, it's astonishing how well the mempool is holding up […] and how comparatively low the transaction fees are,” Sergej Kotliar, CEO of payment gateway Bitrefill, summarized the phenomenon in a series of tweets on Monday.
Bitcoin’s mempool refers to the size of unprocessed transactions waiting to receive confirmations from miners. When referring to the mempool, it is important to note that each Bitcoin node maintains its own version of the mempool and keeps it synchronized with the Bitcoin network. Mempool statistics often use data from a number of Bitcoin nodes in order to create an accurate representation of the mempool status.
When there are many Bitcoin transactions, particularly those sent by users who opt out of tools that improve capacity, such as Segregated Witness (SegWit) or batching, the mempool size can increase quickly and significantly.
Most of the time, Bitcoin transactions can be sent on-chain for as little as 1 satoshi per byte, but if the mempool is full, it might reject low bids, causing them to fall back to the sender as miners choose more profitable transactions.
This was a frequent occurrence in 2017. But analyzing chart data, this year doesn't appear to be anywhere near this level of congestion, even when Bitcoin reached its recent all-time high of almost $42,000.
At press time, there are around 60,000 unconfirmed transactions in the mempool, according to mempool.space. At its highs in late 2017, the mempool counted over 250,000 unconfirmed transactions.
“[The] biggest contributing factor to this is that most exchanges have now implemented payment batching which scales incredibly well for when many people are buying and withdrawing coins,” Kotliar explained.
“Had that upgrade not happened, we would have been in a much more dire situation now.”
Bitcoin has thus avoided the ire of those touting altcoins as a superior alternative for payments in 2021. Perhaps ironically, it is the largest altcoin Ether which has become notorious for high fees in recent months, thanks to a surge in volume accompanying the decentralized finance (DeFi) movement and stablecoin usage. Ethereum's mempool reached new all-time highs this month, while cumulative ETH fees passed the $1 billion mark for the first time on January 16th.
As BTC Times reported, so-called layer two solutions have further seen progress throughout the last year, theoretically expanding Bitcoin's network capacity by allowing users to move non-critical transactions off-chain.