A Bitcoin user has recently paid 4 BTC (worth over $173,000) as the network fee to complete a single transaction of 2.9 BTC (worth approximately $124,000).
Bitcoin User Spends 4 BTC as Network Fee
When users complete an on-chain transaction, a network fee is paid to the miner or validator who confirms the trade. Since Bitcoin is a blockchain network that utilizes the proof-of-work (PoW) consensus mechanism, miners are the entities that add blocks to the Bitcoin blockchain and receive a block reward.
High network fees incentivize miners and validators to prioritize the trade and confirm them sooner, hence, faster trade. Whether the investor used the high transaction fee as bait to settle a faster transaction or not is uncertain.
According to the blockchain analytics platform YCharts, the Bitcoin network currently charges an average network fee of about $12. This implies that the whopping 4 BTC that the aforementioned Bitcoiner has spent is significantly higher than what the user ought to have expended.
The miner who receives the overpriced network fee can either retain the excess gain or refund the Bitcoiner. In one instance, the Bitcoin mining company F2Pool refunded an excess of 20 BTC to the fintech platform Paxos.
More Outrageous Fees!
Like the recently revealed transaction, several Bitcoiners have parted ways with large chunks of funds due to high transaction fees. In November 2023, a Bitcoin user saw 83 BTC, worth $3.14 million at the time, spent as a network fee to settle a single transaction. The fee, mined by the Bitcoin mining platform Antpool, represented the highest amount spent on a single transaction.
In September 2023, a Bitcoiner spent 19 BTC, worth over half a million dollars, as a transaction fee.
These overpriced transaction fees have become a reason for Bitcoin sceptics to criticise the network’s efficiency and scalability. This, however, has not stopped Bitcoin proponents from investing in the leading cryptocurrency.
The much-anticipated spot Bitcoin exchange-traded fund (ETF) was recently approved in the United States, allowing investment companies to offer the investment vehicle to investors. As a result, these users have poured billions into the Bitcoin-backed financial product. Today, Bitcoin trades at $43,300.
