Something about transaction fees

[Cryptohunterkill]

Since last year, transaction fees have been lower than they were in the last bull run. Right now, they’re still cheap, while in the past they sometimes went over $100. What caused this change? Will low fees last, or will they rise again if Bitcoin’s price jumps?

[CamilaStar]

Look, The main reason fees are low now is that Ordinals NFTs and BRC-20 tokens are no longer clogging the mempool. This clogging caused very heavy congestion before, but most people have abandoned them.
This wasn’t the first time the Bitcoin mempool got crowded, and I don't think it will be the last. If it happens again, it will eventually clear up like it always does. No one knows exactly when congestion will return, but it won’t last forever.

[SilverCryptoBullet]

Since last year, transaction fees have been lower than they were in the last bull run. Right now, they’re still cheap, while in the past they sometimes went over $100. What caused this change? Will low fees last, or will they rise again if Bitcoin’s price jumps?

Some main reasons

- Segwit adoption with more people use Segwit with wallets that support bc1q and bc1p addresses.
- Lightning Network adoption.
- Non custodial wallet adoption. More people see danger of custodial wallets and very expensive withdrawal fees from centralized exchanges, so they choose non custodial wallets and broadcast transactions with lower fee rates.
- Declines of Ordinals and Runes Protocol usages in the last one year.

[TastyChillySauce00]

It's definitely because ordinal is losing steam.

I still remember how any ordinal transactions were spamming the blockchain making it unusable for ordinary people and right now I think adoption for lightning network is increasing.
Just see how even tether is trying to get into lightning network game with their stablecoin through RGB.

[KiaKia]

Bitcoin ordinal are no longer a thing today but are we really out of the woods yet? I can't say for now because anything is still possible, now that BTC dominance is tanking to the lows we could see some money move into alternative coins in the space.

I would rather see Bitcoin DeFi projects take advantage of the money flow than that ordinals again, I really want that shit to be dead because it makes no sense in the first place, ordinals did nothing than makes the living hell out of Bitcoin.

At that moment I thought it's over for Bitcoin, in terms of making payment I mean, if somehow ordinals become a thing again which I don't hope for, it will be a big problem once again.

[X-ray]

At that moment I thought it's over for Bitcoin, in terms of making payment I mean, if somehow ordinals become a thing again which I don't hope for, it will be a big problem once again.

I can't see ordinals waking up again. Most of ordinals has been going down ever since with no sign of waking up. Most of them already -95% of their ATH or even worse for some of the ordinals.

It reflects that the market aren't interested in them anymore and probably gonna be a forgotten trend. 2023 was truly the last peak for ordinals.

[adaseb]

Transactions on bitcoin have been low for many years. Last time when they were consistently high was maybe 2017-2018 or so, or maybe during the 2021 bull market. But many people moved on to other networks.

Ethereum transactions have been awful from 2017 till perhaps 2025 (or 2024). I do mostly stablecoins on ETH and this year is the first time when I have been able to send USDT using maybe $0.02 fee. This was unheard of in the past. I remember having to pay like 500 Gwei which was like $50 for a single ERC20 transaction. And you can forget about trading onchain. I dont even think Bitcoin blockchain was ever that expensive.

[Plaguedeath]

- Non custodial wallet adoption. More people see danger of custodial wallets and very expensive withdrawal fees from centralized exchanges, so they choose non custodial wallets and broadcast transactions with lower fee rates.

I disagree with this one.

Many people now choose to use custodial wallets because they can trade Bitcoin easily, cheaper and don't need to pay fees (if they wan to send coins to someone, they will ask the account of that CEX, so the transaction fees would be zero).

Some people might use non custodial wallets, but they just hold instead of spend it.

Remember in 2017 the fees surge a lot, ordinal wasn't popular in that year, so it must be from transactions.

[BitGoba]

Since last year, transaction fees have been lower than they were in the last bull run. Right now, they’re still cheap, while in the past they sometimes went over $100. What caused this change? Will low fees last, or will they rise again if Bitcoin’s price jumps?

Transaction fees are falling because nowadays most everyday Bitcoin transactions happen through the Bitcoin Lightning There is no major congestion in on-chain transactions..Bitcoin Lightning  is steadily growing continuously with more and more users, and it is increasingly used for transferring Bitcoin.

Lightning is not a like shitcoins Layer 2 solution like many people think, and it’s often mistakenly compared to Layer 2 solutions on shitcoins.

 Lightningis an addition to Bitcoin that allows you, if you run your own Bitcoin node, to open Lightning channels with anyone as a 2-of-2 smart contract. It’s trustless  both parties can close the channel whenever they want. You can send and receive Bitcoin through that channel, and when the channel closes, the final settlement happens on-chain.unfortunately, very few people run their own Bitcoin full nodes, and most use custodial Lightning services, which means they trust third parties to manage their funds instead of having full control themselves. We need to work on raising awareness so that more people run their own Bitcoin nodes and open and control their own Lightning channels.

[brownn]

Look, The main reason fees are low now is that Ordinals NFTs and BRC-20 tokens are no longer clogging the mempool.

Because they have become irrelevant now ? Or they found another way to proceed with transaction ?

[Dunamisx]

Since last year, transaction fees have been lower than they were in the last bull run. Right now, they’re still cheap, while in the past they sometimes went over $100. What caused this change?

As you have received from previous replies above, the cause was NFT ordinance, the got the mempool too congested then and we barely afford to see a bitcoin transaction with lower transaction fee getting confirmed, but aside that, the fee may also increase if the mempool is congested and once not, it reduces.

Will low fees last, or will they rise again if Bitcoin’s price jumps?

Fees don't rise along the market price of bitcoin, what determines the increase in the transaction fee is base on how flooded the mempool is or not, if it is more busy, then expect the transaction fee to increase because every transaction will be striving for it block to get confirmed by pumping their fee, while if the mempool is less congested, then we have lesser transaction and the least we can always have is 1sat/vbyte

[melinoe]

Look, The main reason fees are low now is that Ordinals NFTs and BRC-20 tokens are no longer clogging the mempool.

Because they have become irrelevant now ? Or they found another way to proceed with transaction ?

Yep, I do think because there is no interest in such a thing that has only hype on its head written in bold red letters.

[pooya87]

What caused this change?

There are multiple reasons for different fee spikes. So when you see fees going up, it can be because of one or more of these reasons:
1. No blocks having been found for a longer than usual time
Because of the way PoW works (you may get unlucky and not find any blocks), there are times where no miner finds any blocks for a while. It could be an hour for example, which means instead of having found 6 blocks (1 per 10 min) only 1 were found so 5x block_tx_count transactions would be left unconfirmed therefore creating a congestion.
This one doesn't last that long since the congestion is not that big and they are rather rare.

2. Major price movements
Whenever price goes up or down, suddenly and big, a lot of traders move their coins to and from exchanges. That increased on-chain activity increases the "demand" for the limited block space therefore increases the fees.
This is why we always have congestion during big bull runs. And these ones last longer than #1 but the duration depends on the market activity.

3. Spam attacks
Spam attack is basically when an entity or a group starts intentionally injecting a large number of transactions into the mempool that serve no purpose other than creating a congestion. I recorded some of the cases a couple of years ago here.
These types of congestion can last a lot longer than any others because they are intentional.

We can categorize abusive transactions such as those involved in the Ordinals Attack as a spam attack as well because they did the same thing by abusing the system.

Will low fees last, or will they rise again if Bitcoin’s price jumps?

Yes, that would be reason #2

[Guccho]

Since last year, transaction fees have been lower than they were in the last bull run. Right now, they’re still cheap, while in the past they sometimes went over $100. What caused this change? Will low fees last, or will they rise again if Bitcoin’s price jumps?

It is a combination of network demand, scaling solution adoption, and behaviour of transactions. In the previous bull run, the queue of unconfirmed transactions (mempool) was sometimes filled with transactions. No one was willing to wait to have his transactions approved and that bidding war pushed fees as high as $100 at one point. Since that time a few factors have assisted in reducing the fees.
A large one has been the adoption of SegWit. SegWit addresses make the transactions smaller, thereby limiting the amount of space they occupy in the blocks, thus minimising costs. Exchange and service transaction batching also aids: the exchanges and services do not transmit hundreds of discrete transactions but rather bundle them together. And the Lightning Network also begins to process smaller payments off-chain, which puts additional load on the main chain.

Will low fees last? Partly it is a matter of activity. Should the price of Bitcoin skyrocket and the on-chain transactions explode such as they did during the last bull market, fees may once again increase but this time likely not to the magnitude we have previously seen, courtesy of these scaling solutions. Currently, the system is more effective and daily transactions are significantly cheaper than they were before.

[sunsilk]

As mentioned who's the real reason why the fees have become that much, I hope that they won't have a come back story anymore.

We're already happy enjoying the transaction fees that are stable from 1-3 sats/vB per transaction.

Fortunately, it's not happening this time on a bull run and we need this the most at these times because once the price fluctuates a lot again and then, there's a network spam. You'll feel bad to pay those sats valued at a high price.

[coyhasmon]

Many people now choose to use custodial wallets because they can trade Bitcoin easily, cheaper and don't need to pay fees (if they wan to send coins to someone, they will ask the account of that CEX, so the transaction fees would be zero).

Nobody who understands Bitcoin uses custodial wallets. You are mistaken. Most users of non custodial wallets remain on these wallets, as progressively other people are moved from custodial to non custodial as they learn the issues regarding non ownership. The only people who use custodial wallets are those who don't understand Bitcoin, don't care or those who are only here for fiat mostly users who are still new.

Remember in 2017 the fees surge a lot, ordinal wasn't popular in that year, so it must be from transactions.

That is not relevant. You can't look at charts like this without knowing the context in which something happened.

Look, The main reason fees are low now is that Ordinals NFTs and BRC-20 tokens are no longer clogging the mempool. This clogging caused very heavy congestion before, but most people have abandoned them.
This wasn’t the first time the Bitcoin mempool got crowded, and I don't think it will be the last. If it happens again, it will eventually clear up like it always does. No one knows exactly when congestion will return, but it won’t last forever.

Funny, right? People ask and complain when it is empty, and people ask and complain when it is full. 

[Abu-Naim]

The time we had a high transaction fee was the time the Bitcoin network was congested due to Ordinals and BRC 20. When Ordinals were spamming the blockchain to slow down the transaction, it resulted in giving miners more work to do in processing transactions. But now that they are no more, the transaction fee is now average because there is no more congestion in the blockchain, so it will take a short time to mine blocks.

Now people that prefer using the centralized exchanges with lower fee then can now comeback to use the right channel for privacy sake because we can’t trust CEX with our Bitcoin.

[Obim34]

Many people now choose to use custodial wallets because they can trade Bitcoin easily, cheaper and don't need to pay fees (if they wan to send coins to someone, they will ask the account of that CEX, so the transaction fees would be zero).

Nobody who understands Bitcoin uses custodial wallets. You are mistaken. Most users of non custodial wallets remain on these wallets, as progressively other people are moved from custodial to non custodial as they learn the issues regarding non ownership. The only people who use custodial wallets are those who don't understand Bitcoin, don't care or those who are only here for fiat mostly users who are still new.

Many users in the forum uses CEX which is a custodial wallet, the reason for using custodial wallet is to buy and sell Bitcoin, there have been discussions refraining users from custodial wallets in the case of choosing to hold their investment there. Custodial wallet best serves for purchasing Bitcoin before sending into a non custodial wallet where it is safe. Not everybody uses CEX but it is what the majority use, but never ideal as a holding wallet.

Adding to what Plaguedeath said, through the use of UID from the same CEX, users can send Bitcoin or any crypto without paying fees. If you are going to use CEX, it should be for a few reasons, never store your Bitcoin there, "not your keys, not your coins".

[DubemIfedigbo001]

Since last year, transaction fees have been lower than they were in the last bull run. Right now, they’re still cheap, while in the past they sometimes went over $100. What caused this change? Will low fees last, or will they rise again if Bitcoin’s price jumps?

Besides ordinals which was congesting the mempool but seems to have lost patronage now, the increased adoption of lightening network layer 2 solution which diverts little transactions off the mempool and has been of great help to the decongestion of the mempool for a seemingly longer period of time

See the charts below

 
https://www.datawallet.com/crypto/best-layer-2-cryptos

[coyhasmon]

Many users in the forum uses CEX which is a custodial wallet, the reason for using custodial wallet is to buy and sell Bitcoin, there have been discussions refraining users from custodial wallets in the case of choosing to hold their investment there. Custodial wallet best serves for purchasing Bitcoin before sending into a non custodial wallet where it is safe. Not everybody uses CEX but it is what the majority use, but never ideal as a holding wallet.

Those people are here farming money, they don't care about Bitcoin. OGs and real Bitcoiners use non custodial wallets only.

Adding to what Plaguedeath said, through the use of UID from the same CEX, users can send Bitcoin or any crypto without paying fees. If you are going to use CEX, it should be for a few reasons, never store your Bitcoin there, "not your keys, not your coins".

You are always paying fees, nothing is free. Just because the cost is hidden or not direct ion monetary terms, that does not mean it is not there. In this case the data about you is how you are paying for it.