The last several months have shown the world that Bitcoin’s price is a force of nature. From the $3,600 bottom shortly after COVID-19 hit the news to the near all-time-high of $19,500, BTC has certainly swung wildly enough in price to give anyone a case of vertigo. But behind this price action are many moving parts that facilitate each transaction. Most of these functions are invisible to most people: mempool backups, nonces, tx hashes, etc. But some are very visible. In particular, Bitcoin fees have been neglected of late, despite being a significant influence in the past. Additionally, they require multiple confirmations and can take hours to process.
Bitcoin Has Fees
Indeed, Bitcoin does have fees. In the early days, they were close to zero, maybe a few satoshis per byte. However, as volume and the price of Bitcoin increases, these fees become much higher as users bid to push through their transactions. Users can still send their Bitcoin for a few pennies, but it will take much longer to get to the intended address, perhaps up to 24 hours. In just the last month, we have seen fees range from $3.00 to $14.77 for any amount of Bitcoin sent.
For comparison, at Bitcoin’s last all-time high in 2017, the price to send a single transaction was $33.82. These kinds of fees were not what Satoshi envisioned, nor are they conducive to conduct everyday transactions in Bitcoin.
It is for these reasons, and more, that wrapped Bitcoin has become so popular. Wrapped Bitcoin allows BTC to be moved on another blockchain, such as Ethereum. Recent fees aside, Ethereum is a faster and less expensive blockchain to use than Bitcoins. Wrapped Bitcoin also allows BTC to participate in Decentralized Finance, or DeFi. Maximalist may scoff at the idea of “tarnishing” Bitcoin by moving it to another blockchain, but DeFi is currently one of the hottest sectors in crypto.
Instead of merely sitting in a hardware wallet or cold storage, BTC in DeFi allows it to earn rewards for holders while still retaining its value passively. Far from being a fad, DeFi is quickly swallowing value across both Ethereum and Binance Smart Chain (BSC).
One project tackling the high Bitcoin fees and slow transaction times on the Bitcoin blockchain – which a transfer to Ethereum only partly solves – is TIXL.
The TIXL team has created a system that allows BTC to be transacted on their Autobahn Network. With the Autobahn, TIXL creates an onramp for billions of dollars of Bitcoin and other cryptos to flow quickly and with zero fees.
Perhaps more exciting is that TIXL’s mainnet is coming soon. The team is planning an AMA on December 7th to discuss Bitcoin’s debut on its network and plans for additional cryptos, liquidity pairs, exchange notes, etc.
There is no telling what will happen to Bitcoin’s price. Predictions range from $33k to $250k over the next year. However, what is certain is that if prices do reach anywhere near these levels, the fees will go back to outrageous levels. Instead of waiting for confirmations on the BTC blockchain, we may begin to see a mass exodus to TIXL, where fees are non-existent.
The Daily Chain
*Disclaimer – This content is made possible with TIXL’s support. The above article does not represent financial, investment, or trading advice, and we do not recommend the purchase of any cryptocurrency or product without consulting a financial aid. The Daily Chain strongly encourages you to do your own research before making any investment decisions.