After a rally in December which caused anger to bitcoin users, transaction fees have finally begun to decline, although Segwit adoption is still low.
In the first few days of 2018, the bitcoin network shows signs of reduced fees, according to data reported by sites monitoring the issue. At the moment of writing this article, Bitcoinfees.info reports an average daily fee of $17.10 to have a transaction mined within the next hour (six blocks). In BTC jargon, you need an average of 440 satoshis per byte to have your transaction confirmed in the next 6 blocks. The price rises to 496 satoshis/byte if you want the transaction mined in the next block.
Of course, an average of 17 dollars per transaction is far from acceptable for casual users, but compare that to the 36 dollars per transaction we experienced on December 21 and you see that it is way better now.
It has to be said however, that transaction fees will be vital for Bitcoin in coming years, especially after miner reward halvings. As BitGo engineer Jameson Lopp suggested fees have increased to 31.7% in 2017 relative to the block subsidy. If the fee rates remain the same in terms of satoshis/virtual byte, then Bitcoin's computational security will be self-sustaining.
Meanwhile, the number of unconfirmed transactions in the mempool is still above 100K. Blockchain.info reports more than 157,000 unconfirmed txs at the moment, although btc.com reports just over 119,000.
Segwit Adoption Lags
The bitcoin community has put a lot of faith to solve the transaction fees problem in the adoption of segwit, which occurred last August. However, despite recent positive announcements by wallets, most transactions are still between non-segwit addresses. According to site segwit.party, segwit transactions have fallen below 10% during the last three days. At the moment of writing (block height 502548), segwit transactions accounted for only 9,02% of total bitcoin txs - although it has reached even 17% in the past fee months.
Nevertheless, Localbitcoins.com and BTC.com have added recently Segwit support to both its mobile and desktop wallets.. In a blogpost, mining pool and bitcoin wallet provider BTC.com wrote: “As a BTC.com wallet user, you will experience a drop in the transaction fees and faster transaction times when you send bitcoin to another address.”
The online wallet Localbitcoins.com, used extensively in countries as diverse as the Dominican Republic and Poland, has also adopted Segwit.
However, there will be some time before recent Segwit adoption by wallet providers has an important impact on average bitcoin fees across the network. Furthermore, Coinbase has yet to formalize plans for introducing the Segregated Witness technology.
Bitcoin pioneer Nick Szabo, meanwhile, has been urging the community to favor Segwit, endorsing another tweet listing Segwit wallets.
2018: The Year of Cheaper Fees?
Bitcoin fees are likely to remain a hot topic throughout 2018 as efforts to lower the median cost of transacting the decentralized currency intensify. With the Lightning Network now having been successfully tested live, there are hopes that the off-chain scaling solution could be introduced sooner than initially expected, bringing with it the prospect of lower fees for all.