The Bitcoin network is changing because BRC-20 tokens are becoming more popular. BRC-20 tokens are a new standard for fungible tokens on the Bitcoin blockchain. They were inspired by the ecosystem of ERC-20 tokens on the Ethereum blockchain.
Domo, an anonymous Twitter user, made the BRC-20 standard and put it into use just over a month ago. It uses the Bitcoin-based Ordinals protocol and inscriptions to handle token contracts, token minting, and token transfers.
The Ordinals protocol, which came out at the end of last year, is a new way to name each Satoshi. (One BTC is made up of 21 million Satoshis.) An “inscription” is when data is added on top of a Satoshi.
Even though it is only around for a month, the BRC-20 has already taken over the Bitcoin system.
Dune built a dashboard to track the new standard and its growth. On Tuesday, BRC-20 tokens made up more than 60% of all transactions on the Bitcoin blockchain and paid 42.8% of all fees.
And the increase in BRC-20-related activity has happened at the same time as an increase in Bitcoin transactions as a whole and an exponential increase in the fees for Bitcoin transactions.
According to figures from Glassnode, the number of Bitcoin network transactions that happen every day hit a record high of over 543,000 on Monday.
The average transaction fee in BTC was just over 0.0011 BTC on Monday, which was close to a three-year high.
There is a cost to the rise in interest in BRC-20 tokens and the rise in network transaction fees that come with it.
Even though the number of daily transactions is going up, other measures of network activity are going down.
The amount of active addresses that connect to the network every day is getting close to being at its lowest point in two years.
In the meantime, the number of new addresses that connect is getting close to its lowest point until 2022.
As expected, higher transaction fees are reducing the number of people who want to use the Bitcoin network.
But the rise in fees is good for the people who mine Bitcoin.
Miners usually get their money from the creation of new Bitcoin, which happens at a rate of 6.25 BTC per block, or about once every 10 minutes.
Most of the time, transaction fees are a very small part of how much a miner makes.
But the Bitcoin Fee Ratio Multiple has been falling sharply in recent days. This number is equal to the Bitcoin miner’s income from the new BTC split by the Bitcoin miner’s income from transaction fees.
As of Monday, it was around 2.34, which was down from a high of above 68 in the middle of April.
A bigger network of miners could mean that the Bitcoin network is safer and more stable, which should be good in the long run.
The implementation of the Ordinals protocol on the Bitcoin blockchain last year and the current rise in popularity of the BRC-20 token standard show a big change on how people think about the uses of the Bitcoin blockchain.
Before, the Bitcoin blockchain was seen as a static crypto-blockchain that only served as the record for a digital currency. However, new developments could make the Bitcoin blockchain look more like a smart-contract-enabled chain.
We don’t know if this will change Bitcoin’s basic value so that it is no longer “digital gold” in the long run.
In the short term, the spike in transaction fees and related events, like Binance’s decision to stop Bitcoin transfers twice over the weekend, seems to have hurt Bitcoin’s reputation.
BTC was last traded below its 50DMA in the mid-$27,000 range, close to the lows of last month.
Some people think that Bitcoin will retake key support in the mid-$25,000 range in the coming days and weeks if it also falls below support in the $26,500-$27,000 range. This is because Bitcoin has lost near-term technical momentum.
But upcoming macro risk events could boost mood and send Bitcoin back towards $30,000. If US inflation data released tomorrow and Thursday is weaker than expected, it could push crypto prices up as more people bet on a Fed rates cut in the second half of this year.
© 2015-2023 Coinposters. All rights reserved!