Cryptocurrency has had some tough times recently, from FTX founder Sam Bankman-Fried’s criminal charges to the crash that has caused digital currency holders to rush toward investments that are more stable. Now they’re facing a new challenge: memes.
Binance, one of the biggest crypto exchanges in the world, recently suspended withdrawals after it experienced “a congestion issue.” New York Magazine‘s Kevin T. Dugan explains that the network that processes bitcoin transactions at one point had 400,000 stuck in a queue. Consequently, fees have increased to conduct transactions—now up to $20, when last month it might have cost 87 cents. However, many of those people are simply trying to send memes.
While the blockchain is primarily handling data that details transactions, users are now able to to write data into said transactions which might include photos or jokes, which is called “inscribing.” A recent upgrade to the network has made inscribing faster and cheaper, but the network is straining under the additional volume. That’s because blockchain is now filled up with NFTs and meme coins. Two coins in particular—one featuring alt-Right troll meme Pepe the Frog and the other based on SpongeBob SquarePants—are having a huge speculative boom and their increased trading volume is gumming up the works.
“There is an increasing demand for BRC-20 tokens which include transferring digital collectibles on bitcoin network,” Oppenheimer analyst Owen Lau told CNBC. “The bitcoin network has gradually supported more different types of tokens like NFTs. This adoption should be a positive sign longer term but it looks like it has slowed down the network.”
Yet, in the short term, the congestion points to a major problem with the blockchain, which is its processing speed. Right now it can handle about seven to 10 transactions per second, compared to MasterCard which claims the ability to process 5,000 per second. To truly become an alternate currency, bitcoin needs to really pick up the pace.