Bitcoin transaction fees are high: now what?

Bitcoin transaction fees are high!

We’ve seen the recent congestion of the mempool – some are calling it an attack on bitcoin! Regardless, whether innocent or malicious, bitcoin transaction fees are high. Really high. For those of you that DCA on a frequent basis, it makes you question your UTXO management. Those of you that use bitcoin regularly, it makes you question why you didn’t set up more lightning channels (🙋🏻‍♂️). For all of us, this is very annoying. Well… almost all of us.  

How did we get here?

While impossible to say with certainty, this certainly feels like the equivalent of a DDOS attack on Bitcoin. Effectively a bunch spammy transactions looking to flood the network. In fact, as I write this I was checking out the mempool and noticed these recent transactions. It looks like identical transactions of ~ $0.15 being dumped into the blockchain have no value to the sender (obviously). These transactions are costing the sender ~$10-20 due to the high bitcoin transaction fees.

Many theories about this have been circulating about who might be behind these bitcoin transaction fees. Some say state actors. Others say members of the crypto casino. Regardless, it goes to show one of Bitcoin’s very few vulnerabilities – it doesn’t scale very well. The network is being used more than the existing infrastructure can support and the price of bitcoin hasn’t risen to make it feel “worth it”. Last time we had bitcoin transaction fees like this, bitcoin had just done a classic quintuple so it was all high fives and who cares. However, this poses a particular problem for those interested in self-custody and non-custodial businesses.

Non-custodial woes

If you’ve listened to me speak before, seen one of my videos (I go live for 21 minutes 3 times/week!) you’ve heard me say that running a non-custodial bitcoin business is more costly and difficult in every single way. Bitcoin transaction fees are a main reason as to why. Every time you buy bitcoin at bitcoinwell.com/app you get a TXID. This means we pay a miner fee. As you may have seen, we slashed our rates to 0.21%, which means on a $100 transaction we make $0.21 BEFORE our costs. Those costs, among other things, include bitcoin transaction fees – or miner fees. 

There are many ways to combat this, and we plan on implementing all of them eventually, but they come in order of priority of keeping our books balanced (shareholders 🫡). Here are the 3 things we will be implementing to ensure our non-custodial bitcoin platform remains safe and cost effective:

1. Bitcoin network  fee
2. Batching (this will be free for to you!)
3. Side chains like (lightning network)