A research paper, recently published, shows that the cryptocurrency derivatives platform, BitMEX, has increased the transaction fees for everyone in the Bitcoin network.
BitMEX Increases Transaction Fees on the Bitcoin Network
The price of conducting transactions on the Bitcoin network spikes up every day for an hour, during the mid-morning New York time. It does so worldwide before returning to normal. According to researchers, the primary cause of this spike in transaction fees is the cryptocurrency derivatives platform, BitMEX.
The report, which was published by OxB10C, revealed that the technologies used by the trading platform are the reason why the trading fees are higher. The researchers suggested that if BitMEX was using more efficient techniques when broadcasting transactions, then they would be saving users around the world 1.7 Bitcoin (worth over $15,000) in fees every day. This amounts to a total of 7% of total daily fees paid on the Bitcoin network, OxB10C added.
The daily broadcast of transactions has a significant impact on the Bitcoin network and the fees paid by users. According to OxB10C, the observation that BitMEX broadcasts transactions daily at around 13:00 UTC is not new. The transactions are usually withdrawals by BitMEX users and other internal UTXO consolidations. BitMEX’s wallet security practice sees them review and process all withdrawals by hand. According to BitMEX, doing so multiple times a day would not be feasible. They argued that while spreading the transaction broadcast over the day would decrease the burden on the network, it would then also decrease the user’s experience.
Whenever a user triggers a BTC transaction, a small fee is added. The fees fluctuate at all times, depending on the level of congestion of the Bitcoin network. This is because there is limited space for transactions to be carried out. If there are too many transactions at the same time, miners tend to focus on those with higher fees and keep the lower fees waiting.
Since BitMEX broadcasts thousands of transactions every day at 13:00 UTC, it leads to a massive spike in trading fees within that period, OxB10C concluded. OxB10C also added that the effects of sending multiple megabytes of optimized transactions lead to a notable spike in the fees rate, which estimators recommend and the users pay. The practice by BitMEX has been going on since September last year.
OxB10C was able to gather such information using the Bitcoin Transaction Monitor they built. It is a data tool for exploring transactions on the network in detail.
Bitcoin Wallets Use Fee Estimators
Several Bitcoin wallets have an in-built estimator that estimates the fees a user would pay to ensure that a transaction is completed swiftly on the Bitcoin network. If the network is carrying out a large number of transactions and the fee is too small, it tends to take longer for the transactions to be completed.
Since BitMEX transactions go through at once, it clogs the Bitcoin blockchain, leading to estimators increasing their fees and users having to pay for it.
Although users like to pay lower fees, the higher fees tend to strengthen the Bitcoin network’s security, especially as the block rewards decrease every four years, OxB10C argued. The next halving of mining rewards is coming up in a week, and it has shown the long-term worries about the security of the Bitcoin network.
Developers and Bitcoin followers have been encouraging big crypto exchanges and wallet providers to implement scaling technologies that would cut fees and allow the network to operate more efficiently. Some of these technologies include Segregated Witness, or SegWit, a scaling upgrade that has been available to the Bitcoin community since 2017.
John McAfee Says His $1M Bitcoin Price Prediction is Nonsense
John McAfee has dismissed his previous prediction of Bitcoin, telling people to wake up to the reality.
Bitcoin Reaching $1M is Nonsense
British-American entrepreneur John McAfee has come out to dismiss his earlier prediction of the Bitcoin price reaching the $1 million mark. According to the eccentric cryptocurrency advocate, the thought of the BTC price reaching $1 million is nonsense, adding that people are absurd for believing in his prediction and should, therefore, wake up.
He tweeted that to look at it in a different way, if Bitcoin should hit $1million, its market cap would surpass the GDP of the countries in the North American continent combined. The idea seems ridiculous that he believes only an idiot would take his prediction seriously. He added that a whale is more likely to enter the Olympics Stage than for BTC price to reach that target.
In his tweet, McAfee used the entire North American economy as an example to show how ridiculous it is to think of the Bitcoin price reaching a million dollars. He referenced that Bitcoin price reaching that target would see its total market cap surpassed the entire North American continent’s GDP, which he believes is a joke to even think about.
The latest comment from McAfee comes after he stated that he has moved on from Bitcoin. He labeled Bitcoin as the most crippled cryptocurrency technology, and as such, he stated that he would not be involved with it again.
Earlier this year, the tech entrepreneur noted that Bitcoin’s technology is ancient and that his prediction of $1M for BTC was a way to attract and lure more people into the cryptocurrency space.
McAfee recently launched his privacy-focused digital currency dubbed Ghost. According to him, Ghost and another cryptocurrency HEX could successfully lure more people into the cryptocurrency world faster and more efficiently than Bitcoin ever could. McAfee admitted that his privacy-focused cryptocurrency Ghost was basically copy-pasted from another open-source anonymity coin called PIVX. Thus, implying that there is no creativity behind his cryptocurrency, and it is a coin that is only backed by marketing and nothing more.
Bitcoin Price Struggles to Reach $10K
The price of the leading cryptocurrency is struggling to reach the $10,000 mark despite the massive influx of people into the cryptocurrency world. The recent halving event of the BTC mining reward attracted more people into the crypto space as they anticipate a bull run on the price of Bitcoin. Historically, the price of Bitcoin has gone on a massive rally following the halving event. However, the cryptocurrency has been trading between the $8,000 and $9,000 region over the past few weeks.
The cryptocurrency market started the year excellently, but the effects of the coronavirus on the global financial system affected its performance, with Bitcoin struggling to surpass the $10k mark ever since.
The recent halving has seen mining rewards on the BTC network drop from 12.5BTC to 6.25BTC per block. As such, several cryptocurrency mining hardware is no longer profitable, and some miners have shut down operations to stop them from running at a loss.
Despite the performance of Bitcoin at the moment, several cryptocurrency enthusiasts believe that the price could surge higher before the end of the year. As such, more investors are moving their BTC stash to cold storage wallets for safe-keeping as they await the much-anticipated bull run.
Top Australian Regulated Investing App Adds Bitcoin Option for Users
The increase in demand for cryptocurrencies has seen a leading Australian regulated micro-investing app add the Bitcoin investment option for its users.
Raiz Adds Bitcoin Investment Option
Raiz, formerly known as Acorns, has added the Bitcoin investment option to its platform as demand for cryptocurrencies in the country increases. Raiz is a regulated micro-investment app in Australia that allows people to invest in a wide range of assets with a small amount of money.
At the moment, Raiz is one of the leading regulated micro-investment apps in Australia, providing services to thousands of investors in the country. The company announced on Tuesday that it launched a portfolio with a BTC allocation. The new portfolio, dubbed Sapphire, has been in development for the past 18 months. The portfolio aims to provide investors’ with exposure to Bitcoin in a managed, risk-adjusted way.
The CEO of Raiz, George Lucas, stated that while the latest portfolio from the company is high risk, the positive feedback from the customers is a sign that they have an appetite for an investment strategy that allows them to gain exposure to cryptocurrencies.
Raiz, in its post, added that most of their investors are millennials, which means that they are more inclined to push their funds into cryptocurrencies rather than the traditional assets. This follows a report by U.S. brokerage firm Charles Schwab last year, which shows the hunger for Bitcoin and other cryptos amongst millennials.
The Growth of Raiz
Formerly known as Acorns, Raiz broke off from its original U.S. Acorns brand and became an independent Australian company. The broker revealed that it would trade and store the Bitcoin with Gemini, one of the largest crypto exchanges in the United States, founded by the Winklevoss twins. Gemini is currently a New York trust company, and it is regulated by the Department of Financial Services in the state.
Gemini is happy with the partnership with Raiz. According to the exchange’s Managing Director of Operations, Jeanine Hightower-Sellitto, Raiz is boosting its micro-investing app via this latest portfolio as it provides customers with the opportunity to invest in Bitcoin in a regulated and thoughtful manner.
An increasing number of people around the world have been showing interest in Bitcoin and other cryptocurrencies. The halving event of Bitcoin has attracted more people to the industry as the interest in BTC has spiked over the past few months.
The Sapphire portfolio is said to have 5% of the total funds invested in Bitcoin, with the remaining amount invested in ETFs of the U.S, Australia, European, and Asian large-cap equities. The portfolio would invest in money markets and Australian corporate debt. According to the company, Raiz is not a trading tool, which means that Sapphire is a secure way to gain exposure to Bitcoin without the complexities of trading. By investing 5% in Bitcoin, the Sapphire portfolio provides investors with the opportunity to enjoy the potential of Bitcoin while limiting their exposure in a risk-adjusted manner. Despite that, due to the risks associated with cryptocurrency investments, the minimum recommended investment timeframe for this portfolio is over five years, Raiz added. In addition to Raiz’s Sapphire portfolio, the investment platform also offers nine other ETFs (exchange-traded funds), with various asset allocations and risk profiles.
Bitcoin Transaction Fees Drop as Network Decongests
The Bitcoin network is experiencing a decrease in transaction fees as congestion eases following recent developments.
BTC Transaction Fees on the Decline
The transaction fees paid to miners on the Bitcoin network has declined as the congestion has started to ease following the halving event. According to data provided by Glassnode, a blockchain intelligence firm, the total fees paid to miners on Tuesday was 80 BTC, down from the 201 BTC paid to them on May 21. This decline is closing in on the 57 BTC recorded on May 3.
The data also showed that the percentage of miner revenue from transaction fees dipped by 9.4% from the 21-month high recorded a week ago. The founder of the virtual currency platform Coincurve and CEO of Interlapse Technologies, Wayne Chen, stated that the drop in the transaction fees was due to a return to normal transaction activities and recent mining difficulty changes, which takes place every two weeks.
Users on the Bitcoin blockchain pay fees to miners for processing their transactions. Miners on the network also receive a fixed amount of BTC (6.25BTC) per block mined. The number is halved every four years, and the recent halving occurred on May 11, 2020.
The transaction fees are determined by the current state of the network (congestion level) and the size of the transaction. The block size of Bitcoin is 1MB, which implies that miners can only mine 1MB worth of transactions per block approximately every 10 minutes. However, if the block size surpasses 1MB, the network gets congested, and miners tend to prioritize transactions that have higher fees.
The report from Glassnode shows that network congestion, which is represented by the BTC’s memory pool, has been declining since May 18 when it surpassed the 28-month high of 267,608. By then, the total block size reached 78.5 MB. Since then, transaction fees on the network have been declining.
The Bitcoin memory pool exploded towards the end of April and remained congested a few days after the halving event as investors continued to show increased interest in the cryptocurrency. Chen added that the increased network congestion led the miners to increase the mining fee so that the higher paying clients would have their transactions confirmed faster.
Block Interval Time Also Declines
The decline in fees could be due to the decreasing adjustment in the mining difficulty of the network, hence, resulting in a decrease in the block interval time. The mining difficulty measure shows how hard it is to mine blocks on the blockchain. The mining difficulty dropped by 6% to 15.14 terahashes per second on May 20. This is because the mining power allocated to mine blocks on the Bitcoin network dropped following the halving.
The seven-day rolling average of the network hashrate declined from 120 exahashes per second (EH/s) on May 11 to a lower level of 90 EH/s to May 23. Also, the halving increased the cost of mining by two, which led inefficient miners to close down their rigs. After that, the time it took to mine blocks and confirm transactions increased, putting more pressure on the prices. The mining difficulty reduction at the moment is enticing miners to come back to the Bitcoin blockchain.
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