Resume:
- The average cost to send a single transaction on Bitcoin’s blockchain rose to nearly $20, its highest since April 2021.
- It appears that the increased demand for BTC blockchain space was driven by increased activity on the Ordinals protocol and tokens issued using the BRC-20 standard.
- Binance had to stop withdrawing BTC twice on Sunday as network congestion peaked, though the crypto exchange later resumed operations after moving $4.4 billion in assets.
Bitcoin (BTC) transaction fees rose to their two-year high amid growing interest in the Ordinals protocol and demand for BRC-2O tokens issued on BTC’s blockchain.
According to on-chain data, BTC transaction fees hit $19.21, a two-year high. The cost of sending a transaction on BTC’s blockchain has not risen this high since April 2021, when the cost skyrocketed to $62.
A drastic increase in meme tokens issued on Bitcoin’s network, along with a sharp rise in Ordinals activity, appear to be the main reasons for exorbitant transaction fees. Memecoin mania also drove up gas costs on the Ethereum blockchain.
Ordinals create congestion in the Bitcoin network
Introduced in January 2023 by developer Casey Rodarmor, the Ordinals protocol allows users to write data to any satoshi, the smallest unit of BTC. This encouraged users to experiment with fungible token standards and non-flippable tokens, known as NFTs.
Data from Dune Analytics indicated that more than 3 million NFTs have been issued on the BTC blockchain since Ordinals was introduced. Most of these NFTs are text-based and created through a process called “subscription.”
Shortly after Rodarmor unveiled the Ordinals protocol, a developer known by the pseudonym Domo leveraged the protocol to build the Bitcoin Request for Comment (BRC-20) token standard. BRC-20 enables transferable assets on BTC’s blockchain, allowing users to issue and trade tokens on crypto’s largest network by market capitalization.
Indeed, it seems that the BRC-20 token standard has breathed new life into the BTC blockchain as more than 11,000 tokens have been issued using the Domo standard. OrdSpace data showed that tokens created under BRC-2O have a combined market cap of nearly $1 billion.
Believed to be the first BRC-20 token and native token of the Ordinals marketplace, ORDI leads the pack with over $220M in market cap and over 7,000 unique holders. BRC-20 also opened BTC’s blockchain to memecoin hysteria, as tokens like Pepe, VMPX, and Meme brought in hundreds of millions in daily trading volume.
In particular, the Pepe token on the BTC network should not be confused with the Pepe memecoin issued on Ethereum.
Crypto commentators and BTC Maxis suggested that Ordinals ushers in a new era for BTC and its network, boosting utility and boosting network activity. The extra network demand also affected a major crypto exchange.
Binance paused BTC withdrawals twice on Sunday before resuming normal operations and planning to integrate the Lightning Network, a layer 2 scaling solution built on top of the BTC mainnet.