Bitcoin

Bitcoin Processing Fees Skyrocket

Bitcoin’s value isn’t the only thing topping the charts: New data by BitInfoCharts shows that people are currently paying $28 on average to make transactions using the digital currency.

CNBC reported that users of cryptocurrency exchanges, such as Coinbase, incur such transaction fees when transferring money to external bitcoin addresses, which are like virtual bank account numbers where users can store their tokens.

Last week, a journalist said on Twitter that he paid $15 to send $100 worth of bitcoin from a digital wallet to a hardware wallet. And earlier this month, another person on Twitter claimed that he had to pay a $16 fee to send $25 worth of bitcoin from one bitcoin address to another.

Bitcoin transaction fees are proving to be profitable for bitcoin "miners," who work out complex cryptographic puzzles to add transactions to the blockchain and are paid in bitcoin for their services. On Monday, the total value of all transaction fees paid to miners exceeded $11 million for just that one day.

These fees have put more emphasis on the debate surrounding bitcoin transaction times and fees. Currently, it takes an average of 78 minutes to confirm a bitcoin transaction. On Sunday, however, the average time was as high as 1,188 minutes.

Slow transaction speeds and fees have led to a number of splits in the original blockchain. In August, the blockchain was forced to split in two, which led to the creation of a spinoff called bitcoin cash. Then in October, another split resulted in another digital asset called bitcoin gold.

With this in mind, the CEO of blockchain firm Ripple is skeptical about the use of bitcoin for payments and transfers. "I don't think bitcoin is well-positioned to solve the payments problem," said Brad Garlinghouse, who added that his firm's cryptocurrency was "enabling transactions in seconds," and that the cost of transactions was "a fraction of pennie."

"Two years ago, people thought bitcoin would solve all transactions, and I think what we're seeing is that's not the way it's going to play out," he said.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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