Bitcoin Transaction Volume Decreases With Batching, Not Due to Lack of Demand


It is often difficult to find positive reports about Bitcoin. Too many transactions cause a spike in overall fees. Fewer transaction makes media outlets believe the interest in Bitcoin is slowing down. The uptick in SegWit adoption is indeed reducing the number of transactions, but that is a positive trend It seems a lot of people aren’t familiar with transaction batching.

The Reduction in Bitcoin Transactions

The Bitcoin network has always been a curious creature. It is impossible to find any constant features as far as this ecosystem is concerned. This is especially true when it comes to transactions over the network. In the past, an increase in Bitcoin transactions was not always a good thing. Given the low throughput of the original network, delays and increasing fees were all too common, unfortunately.

It now seems the overall number of Bitcoin transactions is decreasing. While that may seem like a worrisome sight at first, it is completely normal. Multiple factors contribute to this rather unusual phenomenon. First of all, indicates fewer people are sending Bitcoin transactions. This only represents a fractional minority of what is going on for the rest of the network, though.

The reality is how we now see more Bitcoin transactions being batched into one. As such, there are seemingly fewer individual transactions, even though that is not entirely the case either. Whenever transactions are batched into bigger groups, the outputs will drop as much as transaction count. Batched transactions create many outputs, which in theory can halve the number of outputs being created.

Batching is a Good Thing

If Bloomberg is to be believed, the current decrease in Bitcoin transactions is the beginning of the end. More specifically, their article quotes Charles Morris as saying how the hype-cycle is cooling down. While it is true the Bitcoin price is still lower than late last year, it is evident things are slowly improving once again. At the same time, this lack of understanding how Bitcoin works rears its ugly head once again.

Morris went as far as calling for a Bitcoin bear market. This is mainly based on the reducing number of Bitcoin transactions, rather than anything else. With the number effectively being cut in half, it is evident the batching solution seems to work just fine. With SegWit now becoming easier to use, it is not unlikely we will see even fewer outputs in the future. This does not mean people are using Bitcoin less often, though, as the opposite may be true.

Additionally, other factors contribute to this change as well. Batching only tells one part of the story in this regard. We also see fewer spam transactions on the Bitcoin network, which is a good thing. It is evident bathing is difficult to understand for the uninitiated, albeit it makes perfect sense to everyone else. Things are heading in the right direction for Bitcoin in every regard.