BRC-20 meme coins surge overwhelms Bitcoin network

Meme coins are transitioning to the BRC-20 token standard, leading to an increase in Bitcoin transaction fees. Over the weekend, this raised concerns on Twitter about a possible Denial of Service (DoS) attack on the network.

As of May 8, 2023, the average transaction fee for Bitcoin is $19.20, or 0.00068 BTC, according to BitInfoCharts. At the same time, Mempool Space shows that 459,341 transactions are pending on the network.

The high demand for transactions has caused the total fees per block to exceed the block subsidy reward of 6.25 BTC on May 7, indicating the strain on the network.

Many analysts have already linked the surge in fees to the recent meme coin craze caused by the introduction of the BRC-20 standard on Ordinals Protocol. According to Dune data, daily minting fees for BRC-20 tokens reached a new record of 247 BTC on May 7. Fees generated by these Bitcoin Ordinals totalled 641 BTC. A chart of the fees shows a sharp increase at the end of April, which coincided with the increase in daily Bitcoin transactions through the use of Ordinals.

At the time of writing, activity has slowed down a bit and fees have dropped below the block reward again, according to Memepool Space explorer.

The high demand for Ordinals has also led Binance to stop BTC withdrawals twice over the weekend. Binance stated on Twitter:

To prevent a similar recurrence in the future, our fees have been adjusted. We will continue to monitor on-chain activity and adjust accordingly if needed. Our team has also been working on enabling BTC Lightning Network withdrawals, which will help in such situations.

Some, however, speculated that there is a DoS attack on Bitcoin.

Others assure that Bitcoin isn’t under attack, but the increase is due to demand:

Bitcoin mempool finally gets some usage and the maxis are framing it as a DoS attack on the network. They really have not considered even the most basic scenarios, like “bitcoin becomes popular and people are willing to pay to use it.”