Latest reports say the cost of bitcoin transactions has hit a 7-seven-year low. According to a transaction fee tracking website, transaction costs for the cryptocurrency have fallen by more than 70-fold with the median transaction fee now below 40 sats/byte.
In December 2017, when bitcoin traded at a record $19,000 the cost of transactions appeared to move in lock step, skyrocketing to $60 per transaction with some reports even claiming that fees reached nearly 40% of the total transaction value.
In many ways the high transaction cost is largely reflective of the number of operations being handled on the bitcoin algorithm. So as the number of bitcoin users increased and trading reached feverish levels last December, the network became overloaded resulting in slower transaction time and higher transaction fees.
Indeed, bitcoin’s problem with slow transactions and high fees led to its split (hard fork) into bitcoin and Bitcoin Cash in August 2017. Its developers say Bitcoin Cash would solve the problem of scalabilty, high transaction cost and reduce the time taken to process data on the blockchain.
Creating a cryptocurrency with a significantly improved transaction speed while retaining the high level of security and decentralization of bitcoin has proved to be a challenge for developers. Bitcoin cash is currently built on an increased block size that is 32 times as large as bitcoin, designed to provide high-volume, faster payment system.
The increased block size of bitcoin cash has however come at the expense of the decentralization that is integral to the nature and value of bitcoin, while also prompting concerns about the security of the new cryptocurrency.
Many cryptocurrency experts believe the long term survival of bitcoin rests on its future as a currency or legal tender. This they say rests on the ability of cryptocurrency developers thinking of their technology as a transaction medium. To achieve mainstream adoption, bitcoin must go beyond being an instrument for speculative investment and become useful for everyday spending.
“Bitcoin only can become a currency if its value stabilises and if the transaction fees become negligible,” Dr Arthur Gervais, cofounder of Liquidity Network said in a recent interview with the Independent.
Notably there has been some movement in that direction as it is now possible to pay for goods and services with cryptocurrencies like bitcoin and ethereum through several third-party platforms that convert digital currencies into fiat currencies like pounds and dollars to facilitate transactions.