Bitcoin is going through another growing pain…
And like any parent who deals with their kids going through growing pains, it’s creating a lot of angst.
Over the past month, we’ve seen transaction fees on the bitcoin network rise from $0.89 to over $30 – an increase of 3,300%.
According to a report in Bitcoin Magazine, the fees have gotten so high, they’ve surpassed the block reward for the first time ever outside of a bull market.
As a refresher, miners provide the computing power necessary to run the bitcoin blockchain. They solve complex equations to verify transactions and keep the network humming along.
The incentive for devoting their time and processing power is a daily bitcoin reward, which is now worth about $27 million.
The fee increase has some people freaking out…
A recent report on Yahoo Finance called it a huge “controversy” attacking bitcoin’s core fungibility… and Forbes claimed it was the result of “enormous hype.”
I’ve even had subscribers email me concerned about the fee increases.
Today, I’ll tell you what’s causing this growing pain… And why the fee increase we’re seeing – while temporary – will benefit bitcoin in the long run.
What’s Behind the Fee Increase
You can attribute the recent rise in bitcoin transaction fees to one major development: bitcoin ordinals.
I won’t get too deep into the weeds… But ordinals allow you to create the equivalent of non-fungible tokens (NFTs) on the bitcoin network.
Basically, ordinals allow users to ascribe information like text or images to a Satoshi, which is the smallest unit of bitcoin. You can then buy, sell, or trade your ascribed Satoshis like you can with NFTs on the Ethereum network.
Here’s a simple analogy I borrowed from the website CoinMarketCap…
Imagine two one-dollar bills. Both are completely fungible but have a serial code, which allows us to identify each dollar bill as unique.
But if one bill was signed by Muhammad Ali and George Foreman, it becomes a “dollar NFT.” You could still spend it as a regular dollar, but the signatures make the bill’s value skyrocket.
Ordinals work in the same manner. They take advantage of the fact that each individual Satoshi can be uniquely identified by its equivalent of a “serial code.”
The ability to mint NFTs on the bitcoin networks has resulted in a frenzy of activity. That’s why we’ve seen transaction fees skyrocket.
But it’s also caused some controversy.
Some purists believe bitcoin should remain a currency that’s only used for financial transactions, which was its original use case.
Others argue that as the most secure and robust blockchain known to man, bitcoin can expand its network to store any type of data – not just financial information.
It’s an interesting argument… But I come down on the side of the latter.
I believe the maximal value of the bitcoin network (not to be confused with the bitcoin token, as the two should, in my opinion, be viewed separately) will come from its ability to store all types of data securely and transparently.
Just think about it…
You can’t hack or corrupt the bitcoin network. And its ledger is open for anyone to see. It’s the closest thing to an absolute “truth” you can find on this planet.
In the future, I believe people will pay good money to document their most important records on what will become the world’s most trusted information storage network.
Right now, most of the developed world’s recordkeeping is done on centralized databases that are targets for cybercriminals. And in developing nations, some records are still kept on index cards in file cabinets.
How can we trust governments or businesses won’t tamper with these documents… whether in their digital or analog forms?
I can foresee a future where every important document – from contracts to national constitutions – are posted on the bitcoin network for posterity. Generations down the line will know that the documents they’re reading are the real deal.
Can you imagine how valuable such a network would be?
These Are Just Growing Pains
Every time a new development comes to bitcoin, we get knee-jerk reactions from people who don’t understand these growing pains are normal for a maturing asset class.
I witnessed similar concerns when bitcoin “forked” during the “Nerd Wars” of 2017–18.
At the time, things got so contentious that a major bitcoin holder even threatened to crash the price over a split involving the crypto Bitcoin Cash (BCH).
Yet despite those very real threats back then… Here we are today. Bitcoin is still the king of crypto.
Friends, I don’t own bitcoin for what it is today… but for what I believe it will become in the future.
It’s the same reason why I got involved in internet companies in the early 1990s.
Back then, you didn’t buy internet companies for what the internet was… That’s because it was slow, expensive, and difficult to use. People thought it was just for geeks.
There were no practical applications on the early internet. Everybody was excited about it… But nobody knew how to make money from it.
I looked at it and said, “I’m not exactly sure how all this is going to work out… But it is transformative, And I’m going to bet that – in the future – some group of people will figure out how to monetize it. And I’ll make money from them monetizing it.”
Over time, the internet got easier to use. Developers created more and more apps. And adoption exploded. Today, more than 5 billion people use the internet.
Companies like Alphabet, Amazon, Apple, and Microsoft eventually figured out how to monetize the internet. And those who bet on them early saw life-changing gains.
That’s the same bet I’m making with bitcoin.
Let the Game Come to You!
P.S. There’s a new crypto development brewing beneath the surface that I believe will be much more impactful than the creation of ordinals.
This development is set to drive crypto user growth to 5 billion by 2030 – accelerating the growth of crypto at twice the speed of the internet.
Yet you simply won’t hear about this in the mainstream media.
As this new development drives crypto firmly into the mainstream, the crypto market will begin a maturing process as we move out of this bear market…
The market will start to trade more like the stock market… It will become less volatile…
And the days where you can get in on the foundational crypto projects that will shape our future for pennies on the dollar… Well, they’ll be gone forever.
On Wednesday, June 7, at 8 p.m. ET, I’ll fill you in on the details of this new crypto development, as well as the special sub-sector of cryptos that’s springing out of this development…
These cryptos are set to lead crypto’s next bull run… handing those who get in now the biggest gains.
Plus, when you become a VIP attendee for the event, you can claim two bonus reports:
BIG T’s SECRET: How to Make an Extra $1.4 Million in the Next Crypto Bull Market.
This 33-Cent Pick Will Ride AI and “Crypto’s New Development” to Breathtaking Gains.
I’ll also grant you access to a VIP “ask me anything” session. All you have to do is click here to register. (Please note I can’t give personal financial advice.)