Bitcoin transaction fees have risen from $2 per transaction to a huge $37 in just over two months. This is a huge rise, and it could all be down to a simple reason – the network is completely overloaded.
The initial increase came in early December, at the same time that Steam announced that it would stop accepting Bitcoin payments for games. They used the payment system BitPay, which has some high profile customers, including Microsoft, NewEgg and APMEX. This system lets merchants accept Bitcoin as payment, in exchange for their goods, and whilst many are citing BitPay as the reason behind the fees soaring, in reality, they only represent a small portion of the total cost of a typical transaction.
Others are pointing their fingers towards the Bitcoin miners. Mining Bitcoins is incredibly expensive to do, and so, because of this, in order for the miners to make money, the transaction fees are simply going up. There is an element of supply and demand to this too – if more people want it, the miners have to work harder, therefore, their fees go up.
On top of this, investors have to consider the network fees as well, which are collected from the payment processors, such as BitPay. These fees will again fluctuate depending on how busy the network is.
Don’t think that just because the price of Bitcoin goes up, so will the fees, as this does not always follow. What does have an impact though, is indirectly related to the volatility in price in that, a higher price leads to more people buying and selling the cryptocurrency, which has meant that there are more transactions to record, and this has led to the increase in fees, which has ultimately led to this huge increase in Bitcoin fees.