Ethereum, Bitcoin users rekindle expansion debate as gas bills rise
The recent increase in transaction fees on Ethereum and Bitcoin seems to have reignited the debate around efficiency and the role of Layer 2s solutions.
Over the past 24 hours, cryptocurrency users have started sharing screenshots showing double and occasionally triple-digit transaction fees on Ethereum and Bitcoin.
One screenshot showed gas fees as high as $220 for a high-priority transaction on Ethereum, while other screenshots showed figures at the $100 mark.
Meanwhile, Bitcoin users have reported fees of around $10 for high-priority transactions. While this is relatively low, the average Bitcoin (BTC) transaction price has hovered around $1 over the past three months, according to BitInfo Charts. BTC payouts haven't been this high since May.
#Saitama #SaitaRealty
To add to the post below
This is not even the height of a bull run.
Already $175.79 in #ETH gas charges stolen.
This is why the 1st opportunity for my #SaitaRealty #Saitama Will Go on #BNB Chain
I just made 2 direct transactions
One on #ETH gas payment is… pic.twitter.com/JnOzNCK35X
— POWELLY (@MPowelly01) November 9, 2023
At the time of writing, a transaction from the Ethereum Hot wallet comes in at $300 on decentralized exchange Uniswap with a network cost of $45.65, according to a test transaction conducted by Cointelegraph.
The increase in gas fees has prompted Solana and other blockchain proponents to talk about how much cheaper transactions are on those chains.
One X (ex-Twitter) user “Bobby Applerod” stated that Solana only charges $55-60 per minute for all Solana users, while every “poor Ethereum user” had to pay that much for a single transaction.
Lol Dollar charges Solana Planet 1.2 Sol ($55-$60) per minute in total fees.
The average gas fee on $ETH has risen to 160+ gwei, with each feeble Ethereum user paying $60 per transaction.
Mental illness imwo pic.twitter.com/WAtxjk1gzH
— Bobby Applerod // nicefeet.sol (@tofushit888) November 9, 2023
“Currently #PulseChain gas fees are 4'000X cheaper than Ethereum and 14'000X cheaper than Bitcoin,” said “KaisaCrypto”.
The cost of network charges is variable and a result of demand or how congested the network is. Increased activity on the chain usually occurs during bull markets or when market sentiment is strong, but an additional side effect is the impact on low-income users.
“How does this help the unbanked and low-income population,” Lopez said in a Nov. 9 post showing a “high priority” Bitcoin transaction fee of $10.50.
It now costs $10 to transfer money in Bitcoin.
How does this help the unbanked and low-income population? pic.twitter.com/0OBKCFZu3E
— Hector Lopez (@hlopez_) November 9, 2023
Before the fee increase, transaction costs on Ethereum averaged $11.35 on November 8, according to BitInfoCharts. A few weeks ago, on October 14th, it fell to $1.40 – the lowest level since 2023.
Gas fees on Ethereum peaked at $196 in May. 1, 2022, fees were consistently above $20 between August 2021 and February 2022.
Scale the base layer or rely on L2?
The developers of Bitcoin and Ethereum chose to prioritize decentralization and security at the base layer and offload much of the execution environment to layer 2 to make transactions cheaper.
The Lightning Network is used to measure Bitcoin and Ethereum has a 2s layer specifically focused on making Ethereum faster and cheaper, such as Arbitrum, Optimism and Polygon.
Transactions are often less than $1 on these Layer 2 networks, but not everyone agrees that's the right way to tackle sprawl.
Related: Ethereum Gas Fees Freeze After May's Memecoin Frustration
Justin Bones, founder of cryptocurrency investment firm Cyber Capital, believes that the base layer should be the only trading environment.
L2s are a terrific substitute for L1 scale.
In fact, L2s never measure L1; If anything L2s are more competitive than L1 fees
Undermining the safety and economy of L1
All delivering worse UX, lower security and broken fluidity
“L2 scaling” is dependent!
— Justin Bones (@justin_bones) October 28, 2023
It supports a monolithic block architecture where consensus, data availability, and transaction execution are all handled at the base layer. Solana is an example of this.
On the other hand, Bitcoin and Ethereum are modular blockchains as they offload some transactions to a second layer.
All the main display methods can be divided into spectrum in five categories:
1. Modular side chains: ATOM, DOT, AVAX2. Module layer two: BTC, ETH, ADA3. Monolithic sealed coils: XTZ4. Monolithic implementation sharding: EGLD, NEAR, TON5. Monolithic single chain: SOL, BSV
— Justin Bones (@justin_bones) May 19, 2023
However, critics have pointed out the many interruptions caused by network congestion on Solana, and the modular blockchain design is a better way to solve the problem of expansion.
Magazine: Binance's exec exodus, Nasdaq AI orders to trade and SBF loses bailout appeal: Hodler Digest, September 3-9
