On-chain data shows that Bitcoin has flipped Ethereum in another metric, as the transaction fees paid on the BTC network are now higher than those paid on the ETH network.
Bitcoin Total Transaction Fees Is Now Higher Than Ethereum’s
As pointed out by analyst James Van Straten in a post on X, the Bitcoin transaction fees have once again flipped that of Ethereum. The “transaction fees” here naturally refer to the fees that all senders on any network have to attach their transfers as a reward for the validator who handles them.
The fees on the blockchain are generally related to the activity it’s serving at the moment. During times of high traffic, the mempool can become congested. As the validators only have a limited capacity to process transactions, transfers can remain stuck waiting for a while.
Investors who don’t want to wait simply slap higher-than-average fees on their transactions, so the network prioritizes them. In especially active periods, many senders can compete against each other in this manner, thus severely raising the network average.
The total transaction fees of the blockchain naturally shoot up at such times. On the other hand, periods of low activity generally have the validators receiving low transfer fees, as users have little incentive to go for any high amounts.
Now, here is a chart that shows how the total transaction fees (in USD) have compared between Bitcoin and Ethereum over the past year:
The two metrics appear to have crossed each other in recent days | Source: @jvs_btc on X
Ethereum has usually had a reputation for having higher transaction fees than Bitcoin, and as the above graph shows, that has indeed been the case for the majority of the past year.
It is quite remarkable that BTC has surpassed ETH in fees on several occasions in the last few months, though, as the latter network has rarely lost to the original cryptocurrency in this metric during the last five years.
From the chart, it’s evident that the highest disparity between the two blockchains in favor of Bitcoin came back between the end of 2023 and early 2024.
This increase in the BTC transaction fees was partly driven by the Inscriptions, a method of directly inscribing data onto a satoshi (sat), the smallest unit of Bitcoin.
Inscriptions are used in many different applications on the blockchain, like non-fungible tokens (NFTs). Transactions related to the Inscriptions are handled by the network like any other, so they naturally influence the economics related to transaction fees.
The Inscriptions had a big boom earlier, so Bitcoin sharply surpassed Ethereum in fees. Inscriptions have again been gaining traction recently, which is at least partly why the latest flip between the two has occurred.
It’s unclear whether this would sustain, though, as even the boom last time ended before too long and the fees dropped back to normal levels.
BTC Price
Bitcoin has been trying to mount recovery attempts in the last few days, but each has failed so far, as the cryptocurrency has returned to $62,400.
Looks like the price of the asset has observed a drawdown recently | Source: BTCUSD on TradingView
Featured image from Pierre Borthiry – Peiobty on Unsplash.com, Glassnode.com, chart from TradingView.com
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Author: Keshav Verma
