Would you be willing to pay too much to have your blocked Bitcoin transaction processed faster? The data shows you most definitely would.
The use of Replace by fee —a transaction feature on the Bitcoin network that allows increasing the fee once the transaction is submitted— more than doubled in 2021, in what may be a sign that Bitcoin adoption has also led to increased competition among users to put their transactions on the next block.
Replace with Fees: The Old Hidden Secret Some Bitcoiners Are Uncovering Today
According to statistics compiled by Bitcoinops, the use of Fee Replace transactions has increased from 14% to 28% so far this year.
The data shows that out of every 144 Bitcoin blocks, almost a third of the transactions had used the fee-boosting option first implemented in 2016 when GreenAddress (now Green Wallet) started to support this solution.
The use of Replace By Fee did not have a huge impact in its early years of existence. In 2018, it managed to beat the target of 5% of transactions, and it would take another two years to reach the usability of 10% of BTC transactions.
As early as the third quarter of 2020, the story changed. The user base increased, the cryptocurrency boom hit the institutional world, and people started sending Bitcoin like crazy. The proportion of Replace by Fee transactions touched 15% in October 2020, 20% in April 2021, and closed the year nearing 30%, with a peak of 27.5%.
As the Bitcoin Ecosystem Grows, Alternatives to Improve User Experience Become More Popular
The trend is clear. The number of RBF trades is increasing and does not appear to have a clear, short-term percentile cap.
On the other hand, in terms of daily transactions processed, the network has fallen well below the peak of nearly 450K reached in 2019. Currently, about 260K are processed every day, which already represents an increase in Bitcoin activity of almost 20% since June of this year, when transactions fell to less than 200K per day in the midst of a price recession.
The use of RBF is a key statistic in terms of usability as it shows a growing interest in fast processing of transactions. As more companies start to offer a more user-friendly face for bitcoin, options like Replace with Fees or Child pays for parent are helping create a more flexible system for users.
For example, a payment processor, exchange, or service provider can require up to 6 block confirmations to accept a payment. The fee calculation is already something that many wallets offer automatically. Still, in case of an error —and urgency on the part of a buyer— the use of Replace by Fee can save the user from unexpectedly long waiting times.
And if paying more for a faster Bitcoin transaction seems insulting to your new bitcoin loving friend, it might be a good idea to steer clear of popular NFT projects and DeFi protocols.
