Transaction fees is a bottleneck for new investors to use Ethereum and Bitcoin blockchains.
Since the onset of the pandemic, the world experienced an economic downturn. It resulted in an influx of millions of people to crypto exchanges to invest their money.
Ethereum and Bitcoin Transaction Fees is the Culprit
But many of these new retail investors have not been able to transact on the Bitcoin and Ethereum blockchain, courtesy of the high transaction fees. That’s why they are not able to use any Decentralized Applications (DApps) hosted on an Ethereum blockchain.
Bitcoin is the reserve currency of the cryptoverse.
On the other hand, Ethereum is the godfather of Decentralized Finance (DeFi).
Both are out of reach of newbies. It defeats the purpose of decentralisation.
These newbies then have only two options either to keep their money in the hot wallets of the Centralized Exchanges (CEX) they use or transact on other chains like Polygon, Binance Smart Chain, Solana, Arbitrum, etc.
Possible Solutions
The transaction fees is high primarily due to the congestion of the network. To circumvent this, Ethereum scaling solutions emerged from the shadows. They provide a fast and cheap alternative. Transactions take place on a different layer but are kept secure through the consensus mechanism of layer-1.
Who knows someday, even the blockchains of these scaling solutions would become expensive to use?
The issue of high transaction fees on Ethereum and Bitcoin is becoming a huge bottleneck in the further decentralization of the networks. If this becomes the case with every blockchain, as they become popular, only the early adopters would be able to use them to their full capacity.
Many community members think that Ethereum’s transition from Proof of Work (PoW) consensus to Proof of Stake (PoS) consensus might bring relief. But, congestion can raise the gas fees even in PoS secured chains. For Bitcoin, it is difficult to deploy smart contracts on its blockchain; on account of that, its successful scaling solutions are not there. Only time will tell how successful PoS networks will be.
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