Bitcoin Fees Are Near-Higher Than Ever Right Now

With SegWit's activation recently, Bitcoin is finally moving towards lower fees, faster transactions and reduced network congestion... Or is it? Let's take a look at post-SegWit Bitcoins issues.

Unconfirmed Transactions

Just a little before SegWit activation, the amount of unconfirmed transactions in the mempool (the transactions waiting to go into a block and be confirmed, that is) skyrocketed.

[Source]
Things are much calmer today, with only 20K unconfirmed transactions compared to the 100K a few days ago, but fees still remain high. The network is overall not as congested.

This is weird though. With SegWit's activation, Bitcoin's capacity was boosted. You'd think that we shouldn't be able to reach such congestion levels now that Bitcoin can process more transactions per second. As a result, many people believe this issue to be nothing more than spam attacks by miners, who benefit from high fees. This was the case prior to SegWit2Xs announcement, during the BU vs SegWit debate.

Fees

When there are many unconfirmed transactions, people use higher fees in order for their transaction to go first. Therefore the overall required fee for a transaction confirmation increases. This is known as the fee market.

Currently, the recommended amount of fees for a fast transaction is 450 Satoshi per byte. [Source] This in turn results to a fee of 101,700 satoshis, or 0.001017 BTC, for a non-SegWit average transaction, which is 226 bytes.
This currently amounts to $4.46 in fees, for a transaction of ANY value.

[Source]

This poses a huge problem for everyone who wants to use Bitcoin as a currency (as it is meant to be used) instead of as a store of value. Microtransactions are out of the question. Forget about using Bitcoin to buy coffee at this point.

As of right now, the fee market has not adjusted to the significantly reduced congestion. It will take a few days assuming there isn't another spike in unconfirmed transactions.

The Solution

With SegWit's activation, the Lightning Network is now compatible with Bitcoin and on schedule to be implemented sometime in the near future. This will allow for substantially more transactions than possible today, completely side-stepping any congestion problems in the blockchain as on-chain transactions will be significantly less.

What You can do right now to slightly alleviate the issue is to use SegWit-enabled wallets.
There is not a list of wallets that support SegWit right now, but I know that Armory, Bitcoin Core (offline) and blockchain.info (web) support it.

You will have to make a new wallet using these services if the one you currently have was made before your service added SegWit support. If everyone used SegWit from the date of activation, we wouldn't have any such problems whatsoever, so get to it.

Lastly there are other proposed solutions such as a Proof-of-Work upgrade that essentially boots all current miners from the network, but have no clear indicative of solving anything or any support at all, thus I won't be covering them.

Interanvil.

Follow me for more thoughtful and objective posts on cryptocurrency and technology like this. Make sure to upvote and resteem this post if you liked it. You can share it with your friends too, everything helps!