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The average transaction fee for Bitcoin (BTC) fell below $1 due to falling market prices and lower mining difficulty.
Data shows that on August 22, the average Bitcoin transaction fee fell to $0.825. This is the first time to fall below $1 in more than two years.
The Bitcoin ecosystem has also suffered from quite high transaction fees in the past, jumping further over $60 in 2021, such a high fee.
Source: Blockchain.com
Typically, when the usage of the Bitcoin network is high, transaction fees go up. Transactions compete for limited space in Bitcoin blocks. This leads to competition for transaction fees as users race to get their transactions included in the next block.
However, the difficulty of mining new BTC blocks is steadily decreasing as miners recover from a chronic shortage of chips and gain access to cheaper hardware.
This has also become a major contributor to the reduction of transaction fees.
At the same time, the slump in cryptocurrency has also led to a decrease in the number of mining people.
The member pool is much looser than before, and all valid transactions have to wait for the confirmation of the Bitcoin network. If the pool of members keeps getting crowded, then fees will keep going up as people primarily want confirmation over others and vice versa.
Many investors and consumers have opted out of the cryptocurrency market as traders, investors and consumers take a wait-and-see approach to the long-term outlook after Bitcoin’s devaluation.
Bitcoin has fallen more than 60% from its high of $69,000 last year. At the time of writing, the benchmark cryptocurrency was trading at $21,106, according to CoinMarketCap data.
Image source: Shutterstock
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