The minimum transaction fee for Bitcoin has fallen by 90% - A positive signal or a cause for concern?

The debate over whether Bitcoin should primarily be used as a means of payment or as a store of value has resurfaced once again – this time, stemming from the significant fall in transaction fees on the network.

According to the blockchain tracking platform Mempool, users can now send transactions with a low fee of just 0.1 satoshi per vByte (sat/vByte). With 1 satoshi equal to 0.00000001 BTC, this is the almost minimum fee that the network accepts.

Previously, the minimum fee for a processed transaction was 1 sat/vByte. However, due to the current low activity on the Bitcoin network, miners have been forced to reduce the required fee by 90% to encourage more transactions and create new blocks for the blockchain.

The sat/vByte unit reflects the "weight" and processing priority of a transaction. When the network is congested, transaction fees will increase to ensure faster processing. The significant reduction in fees indicates that the demand for "blockspace" is currently decreasing – in other words, users are no longer sending as many transactions as before.

The Bitcoin network is currently operated mainly by large-scale mining facilities, with expensive computer rigs specialized in processing transactions and recording them onto the blockchain. For each block processed, miners receive a reward of 3.125 BTC ( equivalent to approximately 367,000 USD) along with transaction fees.

However, when the demand to send Bitcoin, engrave Ordinals (NFT on Bitcoin), or perform other activities falls, the total fees collected also decrease – causing miners' revenue to drop significantly.

According to the anonymous miner Econoalchemist's sharing with Decrypt, transactions with a fee of 0.1 sat/vByte are still permitted by the Bitcoin protocol. However, some nodes may ignore transactions with fees that are too low. The movements from Mempool and relevant parties this week indicate that the community is gradually reaching a consensus on accepting low-fee transactions.

"In the long run, policy rules will gradually approach consensus rules, and most transmission limits will be lifted," he said.

In the past, many prominent figures in the payment and cryptocurrency industry have also expressed concerns about the fall in activity on the blockchain, including Twitter founder and Block CEO – Jack Dorsey. As a long-time supporter of Bitcoin, Dorsey has emphasized that Bitcoin can only succeed if used for its original purpose: as a daily payment tool.

"If Bitcoin does not pivot towards payment and find real-world use cases, it will increasingly become irrelevant," Dorsey shared during a podcast in April.

However, reality shows that Bitcoin is succeeding in a different way – as an investment asset that stores value. "I believe time will tell, but clearly Bitcoin is shifting towards the role of a store of value rather than a medium of exchange," said Scott Norris, CEO of mining company Optiminer.

He added: "As long as the price continues to rise, people will not use Bitcoin for transactions. Bitcoin is like a piece of digital land – very valuable and continuing to rise. Although it is still new and has not peaked, it is currently not suitable for transactions. People want to leverage Bitcoin rather than spend it."

An important point to note: the sender of the transaction is the one who decides the fee level. If they want their transaction to be processed faster, they can pay a higher fee to be prioritized in the block.

Nevertheless, on Crypto Twitter ( today is X), some people are still excited as transaction fees fall significantly. The account Mandrick wrote: "I like transactions under 1 sat/vByte in the Mempool," while stating he wants to "pay as little as possible."

When countered that "fees are necessary to secure the network," Mandrick replied: "Just like those wealthy libertarians whining that they aren't taxed enough. Then just send more money to the IRS – they would be very happy to receive it!"

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