- Bitcoin 2023 Conference in Miami: Insights from Dan Held on Transaction Fees and Scaling Solutions.
- Rising BTC Transaction Fees: Challenges and Opportunities for Bitcoin Users and the Community.
- Educating Users and Exploring Solutions: Addressing Transaction Fee Concerns in Bitcoin and Embracing Layer-2 Technologies.
During the Bitcoin 2023 conference in Miami, Florida, crypto enthusiasts and experts gathered to exchange ideas. Notable among the attendees was Dan Held, an educator and the chief marketing officer at Trust Machines. In a Cointelegraph interview, Held covered several aspects of Bitcoin, such as transaction fees, scaling solutions, and the changing perception of Bitcoin as a payment method.
One of the significant concerns discussed during the interview was the recent spike in BTC transaction fees and its impact on the community. Held highlighted that the increased costs were driven by the growing demand for Bitcoin’s block space, especially with the emergence of ordinals such as Bitcoin nonfungible tokens and BRC-20 tokens. Held stated:
“This is a good thing for Bitcoin, as it solves its long-term security model. Fee spike is a good reason for folks to look at different solutions and start to plan around that.”
Bitcoin’s Shift from Payment Method to Settlement Network
Held acknowledged the anticipated shift of Bitcoin from a payment method to primarily a settlement network. He referenced Nic Carter, who presented this possibility at the MIT Bitcoin Expo in 2018. He drew an analogy between cargo ships and containers, explaining that layer-2 solutions like the Lightning Network allow for the bundling of numerous transactions, reducing the load on the base layer. He said:
“Transaction containers are like little L2 transactions that are bucketed [and] brought together into one L1 transaction.”
Held further emphasized that Bitcoin on the base layer would primarily be for large-value settlements, and transaction fees would rise even higher than the current levels.
In the interview, Held also stressed the importance of embracing various Bitcoin layers and not fixating solely on solutions like Lightning. He mentioned other layer-2 options, such as Liquid and Rootstock, as viable alternatives. Held urged the Bitcoin community to be open and agnostic, avoiding any form of punishment towards developers working on different layers or chains.
Furthermore, Held highlighted the need to educate users in regions like Africa and South America about the benefits of layer-2 solutions. These solutions can facilitate low-fee transactions and provide alternatives for users facing high transaction fees.
Bitcoin Usage Trends in Africa
Bitcoin users in Africa increasingly turn to the Lightning Network and stablecoins due to soaring transaction fees. The Lightning network, built on top of the Bitcoin network, enables faster transaction processing. Some users have already been utilizing these tools and are less affected by the fee spikes.
However, instability has been observed even in Lightning network wallets. As a result of the higher fees, there has been a shift in demand from customers who now prefer stablecoin transactions, while those with low volume transactions opt for Lightning network transactions over the base layer.
The spike in transaction fees is partly attributed to the introduction of ordinals on Bitcoin, allowing the creation of nonfungible tokens and BRC-20 tokens associated with some memecoins. Day-to-day users of Bitcoin for transactions such as cross-border payments and remittances have been significantly affected.
In line with this, Pierre Rochard, VP of Research at Riot Platforms, tweeted that Bitcoin transaction fees exhibit volatility rather than being consistently high or low. Generally, they tend to trend downwards, but during periods of market frenzy, there can be sudden spikes in fees.
The cryptocurrency community continues to explore ways to mitigate the impact of transaction fees and enhance the overall user experience while promoting education and inclusivity across different regions.
At the time of writing, Bitcoin was trading at $26,756, down 2% on the day and 0.45% over the last seven days. Its 24-hour trading volume stood at $12.55 billion and had a market capitalization of $518.4 billion, according to data from CoinMarketCap.