Ethereum users have been hit this week by higher than usual transaction fees. At one point on July 15th, the Ether transaction fee was hovering around the $3.50 mark, while Bitcoin’s fees remained closer to $0.60. This reversal in fortune isn’t exclusive to this week, at the beginning of the month Ether’s fees rose to an all-time high of $5.50. These momentary high fees could be responsible for Ether’s bearish outlook so far. It could also be the reason behind it posting lower than usual gains when compared with Bitcoin and other altcoins.
An Attack on the Ethereum Network
While the Ethereum network’s transaction fees have spiked severely this month, it isn’t quite enough to be called an attack. Quite simply, the reason behind the transaction fee climbing is down to a few users spending millions on the network, most likely through an ICO or the FCoin exchange. FCoin was responsible for the all-time high gas prices on the Ethereum network earlier this month, so it stands to reason they were manipulating the network by spamming it with transactions once again. The reason behind why FCoin was doing this is yet to be known, which only adds to the controversy.
Heading Back to Normal
Almost overnight the Ethereum network transaction fee fell by $3 back to normal levels. This is a clear sign that it was indeed an attack or a group of people spamming the network with transactions. The Ether gas prices are back to their normal range once again, roughly $0.30. This type of attack is not new to the crypto world, Bitcoin suffered from a similar style of attack whereby a group spammed the network with fake transactions, causing a huge pileup in the mempool. Bitcoin suffered from this style of attack most recently on June 19th and prices climbed to $6.85 per transaction.
Bitcoin Lowering Transaction Fees
During Q2 2018 Bitcoin implemented SegWit technology, and thanks to this it has managed to slash transaction fees. Users have reported seeing transactions as low as 1 Satoshi, and with the Lightning Network well on the way – with multiple companies launching payment gateways and wallets – it won’t be long before these fees are permanently this low. It’s important to note that processing transactions on the Ethereum and Bitcoin networks is still considerably cheaper than using a bank, especially when amounts are running into the thousands, they will often take 1% – if you’re lucky.
Vitalik Remains Jovial Over the Recent Transaction Price Spike
The creator of Ethereum remained rather jovial given the fact his network was under attack. Instead of turning all centralized and exercising his power to ban the offending users and applications, he decided instead to calculate how much the attack cost the group behind it. “According to my estimates, the recent tx spam on the ETH network cost up to ~$15m USD (~= 5m green teas, ~75 lambos, ~25 Coinbase seed rounds, ~0.9% of Telegram ICO),” Buterin mused on his Twitter account.
According to my estimates, the recent tx spam on the ETH network cost up to ~$15m USD (~= 5m green teas, ~75 lambos, ~25 Coinbase seed rounds, ~0.9% of Telegram ICO)
Free market principles prevent me from being too upset at someone using the ETH blockchain as they wish, but wow.
— Vitalik “Not giving away ETH” Buterin (@VitalikButerin) July 16, 2018