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Having trouble sending a Bitcoin transaction? That's because blockchain is absolutely breathless right now – although for a different reason than some might expect.
According to mempool.space, a medium priority bitcoin transaction currently costs $34.08. The rest of the 333,400 unverified transactions have to wait online with Tsunami.
Like most Bitcoin payments, crypto Twitter has responded by bemoaning Bitcoin's limited transaction volume, pushing for the adoption of efficient layer 2s and sidechains. Others have acknowledged the increase as a drop in revenue for Bitcoin miners, who double the bitcoins they earn per block.
However, the cause is not ordinary or runes: Bitcoin tokenization protocols are already known for car payments.
According to CryptoQuant, the culprit for the Bitcoin boom is OKX, the Seychelles-based crypto exchange currently ranked third in the world by transaction volume.
“A lot of activity from the OKX exchange today, mostly related to insider transactions to reinforce the result,” CryptoQuant head of research Julio Moreno wrote on Twitter. This resulted in an increase in fees.
Individual Bitcoin transactions are stored in users' wallets as unused transaction tokens (UTXOs). When that user wants to send their Bitcoin back to another wallet, they have to pay a transaction fee for each individual UTXO held in their wallet, which can add up if they make large transfers.
This problem is particularly relevant to exchanges, because frequently small transactions come in and large ones go out. So when network fees are relatively low, exchanges “consolidate” their UTXOs by issuing their UTXOs at once, pooling all inputs into a larger output in the same wallet.
That said, a large exchange participating in this feature has the power to increase fees across the entire network, making transactions difficult for everyone.
Some crypto devs have criticized OKX for choosing to consolidate this way, losing thousands of dollars in the process.
“It's really not that hard for an engineer to spend a few hours writing an alert for transaction fee changes greater than X standard deviation,” says Kasa founder Jameson Lopp.
Edited by Ryan Ozawa.
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