Why Did BTC Transaction Fees Just Skyrocket?

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Late final week, out of nowhere, BTC transaction charges began to skyrocket.

Which made us query…was this due to Gamestop? Had Runes abruptly had an enormous breakout? Or one thing else?

Seems, it was one thing else.

The third largest crypto change on the planet – OKX – simply consolidated a whooole bunch of unspent transaction outputs (UTXOs).

Right here’s what which means:

Think about Seb needed to ship Chevy 5.1 BTC.

Likelihood is, Seb doesn’t have precisely 5.1 BTC in his pockets (particularly if he has completed a number of BTC transactions previously).

So as an alternative of transferring precisely 5.1 BTC, Seb may switch 5.2 BTC as a result of proper now, in Seb’s pockets, there’s 5BTC and 0.2 BTC (see the header pic or watch this video for a greater understanding).

The ‘change’ Seb receives (0.1 BTC minus any charges) would turn out to be the UTXO.

Now, this turns into an enormous downside for a crypto change that sees hundreds of trades per day, with most leading to some quantity of UTXO.

And on occasion an change may consolidate their primary wallets to scale back UTXO’s – all within the plan to scale back the price of future transactions, and cut back congestion on the Bitcoin community for future trades.

Which is precisely what occurred on Friday.

The excellent news is, this isn’t a brilliant widespread factor for exchanges to do (they might do it a few times per 12 months) – however it does really feel like one thing that wants some enchancment.

The Runes Protocol has gone a great distance to assist clear up for this and there are most likely different options being labored on as we communicate.

Cause #4283 why we love crypto: fixed innovation.