Bitcoin Fees Soar as Ordinals Inscriptions Clog the Network

Bitcoin users suffered a last week as average transaction fees abruptly spiked to $27.55. The December 6th peak coincided with over 249,000 unconfirmed transactions awaiting blockchain verification – and a relentless trend toward size-efficient inscriptions occupying valuable block space.

Keypoints

Bitcoin transaction fees spiked to an average of $27.55 on December 6th
There is currently a backlog of 249,000 unconfirmed transactions awaiting verification
Ordinal inscriptions are taking up over 50% of daily transactions and contributing significantly to fees
Inscriptions benefit from SegWit discounts, making them efficient users of block space
Analysts argue inscriptions enhance value and efficiency within Bitcoin’s block size limit

Inscriptions refer to small text and data files etched into Bitcoin’s immutable ledger by users. These messages allow creativity but contribute no financial value. Lately they have mushroomed, accounting for 50% of daily transactions on the network.

Unlike payments, inscriptions benefit from Bitcoin’s SegWit scaling upgrade allowing discounted fees for space-saving transmissions. This makes bombarding the blockchain with textual snippets irresistible for some. The resulting data bombardment contributes between 20-40% of total daily miner fees according to Glassnode analysts.

With inscriptions clogging Bitcoin’s circa 1 megabyte blocks, transaction queues and fees inevitably pile up. Hence average fees hit a multi-month high of $27.55 per transaction as the mempool backlog swelled to almost 250,000 on December 6th. Compare this to the $5-$7 range seen the prior week and the friction becomes clear.

By December 13th, averages dropped to $13.93 per transfer with media fees at $10.75. However, with inscriptions unrelenting and now tallying 47.77 million etched on chain, pressure persists. Performance reflects the strained state of affairs, with over 287 blocks pending clearance to revert transaction times to more reasonable levels.

Opinions diverge on inscription trends. Supporters argue micro-payments for etching data generate “value” by deepening Bitcoin’s culture and testing infrastructure limits. Furthermore, segwit-style validation enables new efficiencies that could aid scaling. Squeezing data into the blockchain signals openness at Bitcoin’s settlement layer.

Yet critics see negligible public benefits and large costs from what amounts to graffiti. With each tiny message occupying precious block space, fewer financial transfers fit into Bitcoin’s rigid 1MB ceilings. Resulting backlogs clog the network, defeating Bitcoin’s mission as fast, affordable peer to peer cash. This denies service to good faith users.

As fees and delays surge due to factors beyond their control, it’s understandable that frustrations boil among bitcoiners. While inscription trends highlight deep ideological divisions in the community, clearer perspectives may emerge in time. For now, Bitcoin users must grapple with growing pains as creative developers clash with those focused solely on payment utility. The coming months will prove decisive in determining which philosophy wins out.