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Bitcoin Mempool Decreases by 90%, is Fee Market Being Manipulated?

Bitcoin Mempool Decreases by 90%, is Fee Market Being Manipulated?

Bitcoin Mempool Decreases by 90%, is Fee Market Being Manipulated?

​The speed in which bitcoin transactions are approved, confirmed and verified by miners across the globe largely depend on the size of the bitcoin mempool and blocks. The optimal or recommended fee also depends on the size of the bitcoin mempool. Users may spend only a fraction of the usual transaction fee if the size of the bitcoin mempool significantly decreases.

The size of the bitcoin mempool represents the aggregate size of transactions waiting to be confirmed. In essence, bitcoin mempool is the holding area for all transactions waiting to be picked up and confirmed by bitcoin miners.

Over the past few months, since the beginning of 2017, bitcoin fees have increased substantially, to a staggering $2 average fee. Various bitcoin fee estimators including 21 Inc’s Bitcoin Fees show that the fastest and cheapest transaction fee at the time of reporting is 74,580 satoshis or 330 satoshis/byte, considering the size of median bitcoin transaction which currently stands at around 226 bytes.

6.19.2017_Mempool_Bitconnect

In January, the recommended fee for bitcoin transactions remained below $1. Over the past six months, the bitcoin mempool demonstrated a strange development trend. The mempool, which often cleared the majority of transactions over the weekend, started to struggle in clearing transactions. The size of the mempool surpassed 100 million bytes and for a substantial period of time, the size of the bitcoin mempool stayed in the 100 million-byte region.

Many analysts and investors have stated in the past that the explosive growth of the bitcoin mempool is likely manufactured and filled with spam transactions. Bitcoin Core developers including Luke Dashjr also stated in the past that there are some activities within the community to intentionally spam the bitcoin network to increase bitcoin block size and push an agenda for scaling.

A chart shared by Alistair Milne, a bitcoin investor at Altana Digital Currency Fund, revealed that the year-long trend of the bitcoin mempool size and development has been disproportionate and irregular. An increasing number of analysts have begun to speculate that the development of the bitcoin fee market and mempool size have been manipulated.

As the size of the bitcoin mempool began to drop, recommended bitcoin fees also started to decrease, making it easier for bitcoin users to send and receive transactions. The average recommended fee dropped back to the $1 region and bitcoin fee estimators of most wallet platforms are recommending a fee that is lower than 300 satoshis / byte, which usually results in a fee of around $1.5.

Author : Joseph Young

Joseph Young is a finance and tech journalist based in Hong Kong. He has worked with leading media and news agencies in the technology and finance industries, offering exclusive content, interviews, insights and analysis of cryptocurrencies, innovative and futuristic technologies.

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