Fees have gone up while its price tumbled down.
On June 16, South Korean exchange Bithumb—the sixth largest in the world, said they noticed unusual access to their hot wallet. They acknowledged that the hack resulted in $30 million worth of cryptocurrencies in damage, adding that they will compensate customer losses (although they deleted the Tweet).
As seemingly standard protocol for the online community during incidents of hacks, rumours of an inside job rose, with some suggesting it had something to do with their $28 million pending tax obligation. While these rumours are, of course, unfounded, the effect is felt by the community—not just in terms of their confidence in the exchange. Not only did the hack drag down the trading value of BTC, it also spiked up average transaction fees on the legacy chain (BTC). This is the exact opposite of the ideal scenario for a blockchain payment system: fees down, values up.
While this spike may be short-lived, the fact that fees can rise by that much within a 24-hour period is not comforting at all, and the fact that it took just one exchange moving its funds around to mess up the fee market even temporarily. While it has yet to be determined if there are any other possible contributing factors to the spike, users point to Bithumb as the culprit.
Users have noted that BTC fees have spiked up, and are attributing it to Bithumb moving their funds from their hot wallet to a cold wallet, where it can be protected from further attack. And because the exchange holds large amounts of cryptocurrencies, the volume it’s moving is driving the fee average up.
Currently big backlogs and high fees on the bitcoin network. Just confirmed that it is Bithumb, cleaning out their hotwallet. pic.twitter.com/21ENfmZj56
— Sergej Kotliar (@ziggamon) June 20, 2018
— Eli Afram (@justicemate) June 20, 2018
As of last check, average transaction fees on the legacy chain have gone up to $6.85 from its $2.95 average on June 19 (over 230% jump), which is actually a 1,160% spike from its $0.59 average on June 18. Before this, the highest average fee for the month of June was $1.16.
For merchants looking to integrate BTC payments into their business, this isn’t encouraging. Not only are they losing the battle against other cryptocurrencies like Bitcoin Cash in terms of fees, its actually cheaper to use traditional money transfer services than BTC at the moment.
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