Surge in BRC-20 Tokens Congest Bitcoin Network, Sending Users and Exchanges Scrambling for Alternatives

Surge in BRC-20 Tokens Congest Bitcoin Network, Sending Users and Exchanges Scrambling for Alternatives

By Miles

09 May 2023 (about 1 year ago)

3 min read

Share:

The recent surge in BRC-20 tokens on the Bitcoin blockchain has led to congestion and soaring fees, causing users and exchanges to seek alternative solutions.

Bitcoin's blockchain has been experiencing a surge in activity related to the Ordinals protocol, resulting in soaring costs for users. The protocol allows for the creation of inscriptions, or non-fungible tokens (NFTs), by adding arbitrary content to sequentially numbered satoshis or "sats," the smallest units of Bitcoin. The inscriptions can also be used to mint fungible tokens, known as BRC-20s, which have recently gained popularity.


However, the increase in BRC-20 tokens has congested the Bitcoin network, causing delays and pushing the operational limits of the blockchain. Fees to send coins are skyrocketing, with transactions waiting longer in the queue. This has caused some users and exchanges to look for alternative solutions, such as the Lightning Network, a layer 2 scaling solution designed to make Bitcoin transactions faster and cheaper.


Anita Posch, a Bitcoin educator and founder of Bitcoin for Fairness, expressed her concern over the impact of high fees on users in Africa. She tweeted, "Can anyone explain how I'm going to onboard people with these fees? They really need BTC, while you're just playing around."


Binance, the world's largest cryptocurrency exchange, temporarily halted bitcoin withdrawals due to fee miscalculations caused by the surge in fees. This has caused frustration and distress among residents in certain parts of Africa and Latin America, where some rely on bitcoin for everyday payments.


BRC-20 tokens are inscriptions of JSON data, or snippets of code that port data structures across different platforms. The ability to mint large amounts of tokens has caused hysteria among users and angst among those who rely on base layer payments. Recent blocks have been chock full of BRC-20 transactions, with fees reaching up to $20 per transaction, an 800% increase from the typical $1-2 per transaction fee seen in most of 2022.


The surge in fees has had an undeniable impact on users who rely on base layer payments, leading them to seek alternatives such as the Lightning Network. This network allows for a collection of interconnected computers to route bitcoin payments off-chain, resulting in cheaper and faster transactions. Binance is currently integrating Lightning due to the sudden spike in bitcoin fees.


However, even the Lightning Network requires an initial on-chain transaction to establish a payment channel. Posch argues that costs are so prohibitive that even this single transaction is out of reach for many. "Can't use on-chain, can't open channels. Makes custodial Lightning the only option. And all that because some people think it's fun to break Bitcoin."


Some believe that the surge in BRC-20 tokens is a coordinated attack on the Bitcoin blockchain. While some see it as harmless fun, others believe that meme-loving hackers are testing the limits of the blockchain.

Share:
Go back to All News
Previous article

Argentina's Central Bank Prohibits Payment ...

Argentina's Central Bank Prohibits Payment Service Providers from Supporting Cryptocurrencies
Next article

US Crypto Exchange Bittrex Files ...

US Crypto Exchange Bittrex Files for Bankruptcy