Why is blockchain fee so high?

Network congestion on the blockchain has emerged as a significant factor driving up miner fees for Bitcoin transactions. This phenomenon is rooted in the fundamental economics of supply and demand, where an increased number of transactions seeking confirmation on the blockchain outpaces the limited capacity of miners to process them.

The Bitcoin blockchain's design specifies a block size of 1MB, imposing a physical constraint on the volume of transactions that can be included in each block. This limitation, coupled with the fixed frequency of block creation (approximately one block every ten minutes), creates a bottleneck during periods of heightened transaction activity.

As the number of transactions waiting to be processed exceeds the capacity of a single block, miners are faced with a choice: prioritize transactions based on various criteria, including the fees attached to them. This mechanism incentivizes users to attach higher fees to their transactions to ensure faster confirmation.

Consequently, during times of network congestion, miner fees for Bitcoin transactions rise competitively, as users compete to have their transactions included in the next block. This dynamic underscores the delicate balance between the scalability of the Bitcoin network and the economic incentives that drive its security and decentralization.

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