More people use Bitcoin now, but transaction fees are much lower than during the 2017 bull run.
As Bitcoin (BTC) keeps hitting new all-time highs past $20,000, its network fundamentals paint a different picture compared to the previous 2017 bull run.
Three years ago, on this very day, Bitcoin reached its first major all-time high of $20,000, recording up to 2,000% gains for that year. Over the course of 2020, Bitcoin enjoyed another price rally pushing its price to new historic highs and crossing $23,500 on Dec. 17 for the first time ever.
Comparing the bull runs of 2017 and 2020, one may think that December has a special significance for Bitcoin. But other than this coincidence, the rallies are very much different in terms of institutional demand and adoption levels. From a fundamental perspective, this year’s Bitcoin bull run is nothing like 2017 — especially in terms of transaction fees.
Transaction fees down more than 90% in 2020 bull run
Bitcoin’s 2020 bull run is significantly healthier in terms of costs per transaction. The miners’ revenue per transaction — a metric that also includes block rewards — amounted to $130 in December 2017 and about $60 on Dec. 14, 2020, according to data from Blockchain.com.
Raw transaction fees are significantly cheaper. According to monitoring resources like BitInfoCharts, the average BTC transaction fee is down to $5 in December 2020 from $50 in 2017.
The contrast is even more evident when looking at total BTC transaction fees, which are down from around 1,500 BTC on Dec. 21, 2017 to just 70 BTC on Dec. 14, 2020, according to Blockchain.com.
Some mainstream media outlets highlighted the surprisingly low BTC transaction fees recently. On Dec. 13, an unknown user paid just about $12 for a 32,253 BTC ($628 million) transaction, Finance Magnates reported. BTC transaction fees still saw major spikes over the course of 2020. In October 2020, BTC transaction costs surged about 200%.
Bitcoin hash rate increased almost tenfold
Bitcoin’s 2020 rally is also different in terms of hash rate — one of Bitcoin’s key metrics indicating the computing power and overall network security as well as resistance to attack.
According to data from Blockchain.com, the BTC hash rate has been steadily growing over time, with total hash rate surging from about 14 million terahashes (TH) per second in December 2017 to over 130 million TH/s in December 2020.
As previously reported by Cointelegraph, Bitcoin hash rate has recorded some significant movement in 2020. In early November 2020, BTC hash power jumped over 40% in two days after seeing a sharp drop in October.
It is worth noting that the increase in hash rate can also be attributed to more efficient mining devices that appeared in the past three years. Compared to 2017 miners, they produce approximately three times more hashes per watt of energy. Still, the network is unquestionably more secure than at the same point in the 2017 bull run.
Number of confirmed BTC transactions rises
As cryptocurrency adoption continues to grow each day, the number of daily confirmed transactions has been steadily increasing each year. Despite BTC transaction fees staying much lower than in 2017, the Bitcoin network is processing significantly more transactions than three years ago.
Bitcoin processed around 320,000 transactions on Dec. 14, 2020, compared to around 280,000 transactions in mid-December 2017, according to data from Blockchain.com. The all-time high in the number of confirmed transactions was recorded in May 2019, when BTC price started to recover from its drop to the low of about $3,000.
2017 bull run saw more unconfirmed transactions
The number of unconfirmed transactions in the Bitcoin network is another sign that Bitcoin’s 2020 bull run is much healthier in terms of network fundamentals.
Amid the BTC rally of 2017, about 120,000 transactions were stuck in the BTC network in mid-December. According to the latest recorded data on Blockchain.com, the number of unconfirmed BTC transactions was just 68 on Dec. 16.
As Bitcoin’s rally keeps gaining momentum, it remains to be seen whether the ongoing bull run keeps its positive trend in terms of network fundamentals.
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