Network fees, Ordinals, and Runes
This article will help you to answer the following questions:
- Why did my on-chain voucher include a high network fee?
- What are ordinals? What are runes?
- How can I buy and send small amounts of bitcoin today?
First up, if you need to buy or send small amounts of bitcoin right now, we recommend that you use an Azteco lightning voucher.
These are available for as little as $10 and use the Lightning Network to transfer your bitcoin. Processing fees are usually just a few cents for lightning transactions.
If your bitcoin wallet doesn’t support lightning transactions, we have a few recommendations for you here.
Next up, it’s important to understand that every on-chain bitcoin voucher or transaction includes a network processing fee. Azteco does not set this network fee and does not make any profit from it.
Network fees are set by and paid to the “miners” who process on-chain bitcoin payments using their network of computers. (Lightning bitcoin payments are processed using a different peer-to-peer technology and so lightning fees are usually just a few cents).
Network processing fees increase automatically when more people are making on-chain bitcoin payments. This is completely normal and part of the design of the bitcoin network.
When the volume of on-chain transactions increases, the network fees increase. When the volume of on-chain transactions decreases, the network fees decrease.
If this article is boring you right now and you just want to buy or send some bitcoin, then we understand. Buy an Azteco lightning voucher and use a lightning-compatible wallet to send your bitcoin instantly to anyone, anywhere in the world. Job done.
However, if you want to know more about why network processing fees are so high right now, read on…
Normally, on-chain processing fees increase or decrease in response to the natural volume of on-chain bitcoin transactions.
However, since April 19th, a small group of tech bros have deliberately been flooding the on-chain network with artificial transactions for their new Ordinals / Runes project.
These artificial transactions are not a security threat for bitcoin and will decrease within a few weeks. However, in the short term, these transactions are pushing up the network processing fee.
At the time of writing this article, network processing fees were around $100 per transaction. By comparison, the average network processing fee during 2023 was typically in the range of $1 to $3.
Unfortunately, here at Azteco, we can’t do anything about the network processing fees, other than suggesting that you use a lightning voucher instead.
Meanwhile, if you’re wondering “What’s the point of Ordinals and Runes?”, then you’re not alone…