- Bitcoin’s average daily transaction fees have surpassed Ethereum’s, driven by increased activity related to the Ordinals Protocol.
- The Ordinals Protocol has sparked a significant rise in asset inscriptions, leading to over 800 BTC in fees and a notable increase in Bitcoin’s transaction costs.
A New Trend in Crypto Transaction Fees
In a remarkable turn of events, Bitcoin‘s average daily transaction fees have overtaken those of Ethereum. This shift, driven by a surge in activity linked to the Ordinals Protocol, marks a significant change in the fee landscape of major cryptocurrencies.
Bitcoin’s Fee Surge Linked to Ordinals Protocol
Bitcoin’s average daily fee reached a six-month high on November 16, peaking at $18.67, while Ethereum’s fees stood at $7.90. The data from BitInfoCharts indicates a distinct rise in Bitcoin‘s fees, overtaking Ethereum’s for the first time in several months.
The core cause of this increase lies in the growing popularity of the Ordinals Protocol – a tool that enables the creation of non-fungible token (NFT)-like assets and BRC-20 tokens on the Bitcoin network. This renewed interest in Ordinals-based assets, following a period of relative inactivity, has resulted in a dramatic surge in transactions and fees on the Bitcoin network.
Exponential Growth in Ordinals Inscriptions
Analysis from Dune Analytics reveals that the number of Ordinals inscriptions has grown by over 6 million since late October. This spike in asset creation has translated into more than 800 BTC in transaction fees, amounting to approximately $30 million, being redistributed within the Bitcoin network.
Impact of Market Developments on Bitcoin Fees
The increase in transaction fees was further fueled by key market events. Notably, the listing of ORDI, the second-largest BRC-20 token by market cap, on Binance on November 7 led to a significant surge in BRC-20 token trading. The price of ORDI alone jumped over 50% following the listing.
Moreover, on November 17, the Taproot Wizards, a project based on the Ordinals Protocol, announced a substantial $7.5 million seed round, indicating growing investor interest in Ordinals-based projects.
Understanding the Shift in Transaction Fees
This shift in transaction fee dynamics showcases the influence of blockchain innovations and market activities on the economics of major cryptocurrencies. The Ordinals Protocol, initially seen as a niche application within the Bitcoin ecosystem, has now become a significant driver of network activity and fee structures. As the crypto landscape continues to evolve, such developments underscore the dynamic and interconnected nature of blockchain technology and digital assets.