Opinion: High fees on Bitcoin’s network do not threaten on-chain businesses

The hype around BRC-20 tokens in May 2023 led to a rapid rise in fees on the Bitcoin network: miner revenues from transactions in the second quarter increased by 270% compared with the previous period.

Against this backdrop, the Lightning Network (LN) capacity metric rose above $172 million. Nevertheless, representatives of the Bitcoin mixer Mixer.money do not expect a mass shift to LN in the foreseeable future.

In the project team’s view, spikes in fees on the blockchain of the leading cryptocurrency are episodic and short-lived, and therefore cannot threaten on‑chain businesses:

«High fees undoubtedly affect the operations of any on‑chain service, but our statistics show only a minor decline in user activity within normal weekly fluctuations.

As of now, the hype around NFT and BRC20 tokens has cooled: transaction fees are gradually returning to reasonable levels.

Kроме того, нам неизвестно будущего этих активов: немало участников сообщества believe, that transactions “with images” clog the Bitcoin blockchain».

Mixer.money believes that the Lightning Network can serve as a temporary alternative during periods of heavy mempool congestion. However, to date, only a few exchanges have implemented protocol support. Moreover, LN is designed for microtransactions and is not suitable for long‑term investors:

«Holders are willing to pay for the security that the main Bitcoin network provides. They do not transact as often, and historically the upside of digital gold covers any fee costs.

 Even at peak, Bitcoin transaction fees are lower than in many payment systems in the TradFi sector”

The service regards migration to alternative blockchains as unlikely, given that Bitcoin remains the leading decentralised cryptocurrency with a large ecosystem of services.

«High fees do not threaten on‑chain businesses, since their regulation is embedded in the Bitcoin protocol itself. When there is a local spike, the number of new transactions typically falls, and mempool congestion and fee sizes quickly return to normal», — say the analysts at Mixer.money.

They agree with the view that, thanks to the halving, high fees will become commonplace in the Bitcoin network in the long term. Such a forecast was given by its creator Satoshi Nakamoto in 2010:

«In a few decades, when the reward becomes too small, the transaction fee will become the main compensation for mining nodes. I am sure that in 20 years there will be either a very large volume of transactions, or there will be no volume at all».