Many more people are using Bitcoin these days, but the cost of fees is significantly lower than in 2017
While the price of Bitcoin (BTC) continues to rise well above the previous wall of $20,000, the network’s fundamentals paint a far different picture than the bull run of 2017.
At the end of 2017, when it touched the then all-time high of nearly $20,000, the price of Bitcoin was up 2,000% from the beginning of the year. Over the course of 2020, the cryptocurrency’s value increased just as significantly, touching a peak of $23,500 in recent hours.
Comparing the 2017 bull run with the 2020 bull run, one would think that December represents a special month for Bitcoin. But this is merely a coincidence, and in reality the two rallies turn out to be very different from the perspective of adoption and institutional demand.
Transaction cost 90% lower than in 2017
First, Bitcoin’s current bull run is significantly healthier from a transaction cost perspective. According to data from Blockchain.com, in 2017 the revenue generated by miners per transaction was around $130, while it currently stands at $60.
The cost of commissions is also significantly lower. According to Bitcoin Rejoin Review, right now the average fee on the Bitcoin network is about $5 compared to $50 in 2017.
The contrast is even more pronounced when looking at overall transaction fees, which have dropped from around 1,500 BTC on December 21, 2017 to just 70 BTC on December 14, 2020.
Some mainstream media outlets have also highlighted the surprisingly low cost of Bitcoin transactions. On December 13, Finance Magnates reported how an anonymous user paid just $12 to transfer 32,253 BTC, a figure then equivalent to nearly $630 million.
Hash rate increased tenfold
Bitcoin’s 2020 rally is also different from the point of view of hash rate, one of the cryptocurrency’s key metrics, which indicates the computing power and overall security of the network.
According to data from Blockchain.com, Bitcoin’s hash rate has grown steadily over time, from 14,000,000 TH/s in December 2017 to 130,000,000 TH/s this month.
Bitcoin’s hash rate increased especially in the last months of 2020: in November, this parameter grew by 40% in just two days, after the big drop in October.
However, it must be stressed that the increase in hash rate is partly due to the new generation mining machines, about three times more efficient than those of three years ago. Regardless, the network is undeniably more secure today than it was in 2017.
Number of confirmed transactions on the rise
The number of confirmed transactions on a daily basis is increasing every year. Despite the fact that the current cost of fees is quite a bit lower than in 2017, the Bitcoin network processes more transactions than three years ago.
Specifically, on December 14, 2020, the network processed 320,000 transactions, while in mid-December 2017 only 280,000. The maximum number of confirmed transactions was recorded in May 2019, when the price of BTC had begun to recover from its collapse to around $3,000.
There were many more unconfirmed transactions in 2017.
The number of unconfirmed transactions on Bitcoin’s network also highlights that this bull run is much healthier than in 2017.
As of mid-December 2017, there were approximately 120,000 unconfirmed transactions in the Bitcoin mempool. According to the latest data from Blockchain.com, there were only 68 transactions pending confirmation on the network on December 16.