Bitcoin NFTs via ordinals are gaining popularity despite the transaction gas fees remaining flat. Similar to Ethereum’s NFTs, Bitcoin users are now starting to store assets on the blockchain, but this increased activity doesn’t come without a price. This week has seen a dramatic increase in interest in Ordinals, a contentious new project that allows users to store audiovisual assets similar to NFTs on the Bitcoin network.
The amount of Ordinals coins mined in a single day increased to a new high on Thursday, however, this may have led to higher network costs. This comes after several reports that NFTs were on for a mini-Bullrun
Waiting for the ordinals party to kick off. pic.twitter.com/J7BlZ12TW1
— emergent_reasons#100🌵 (@EmergentReasons) February 7, 2023
Bitcoin transactions fees hit new high as ordinal produced NFTs increase
According to public blockchain statistics compiled by Dune, more than a thousand Bitcoin NFTs have been produced using Ordinals, with Thursday exceeding that figure with 420 new “inscriptions” put on the blockchain. That’s over three times as many NFTs as were created on Bitcoin using the same method on Wednesday.
YCharts data shows, however, that the average Bitcoin transaction fee reached $1.53 on Thursday, the highest level in over a month. Since December 27, 2022, that’s the highest it’s been. Ordinals’ release reignited a contentious discussion in the Bitcoin community about the optimal size of blocks, the validity of transactions, and whether or not media like JPEGs should be recorded in the blockchain. As a result of the Taproot upgrade, Ordinals now supports the addition of arbitrary content to the Bitcoin blockchain, including rip-offs of Bored Apes and even video games.
While NFTs are most commonly associated with Ethereum and Solana blockchains, Bitcoin has had projects like Counterparty and Stacks pioneering the practice of committing digital assets to a blockchain network since 2014.
Why the rise in transaction fees?
Adding NFTs to Bitcoin’s mainnet will likely lead to higher transaction costs. The amount of money spent on a Bitcoin transaction is based on two factors: the amount of data being sent and how quickly the user needs it processed. Users can choose to pay higher fees to guarantee the success of their transactions during peak usage times. Some Bitcoin maximalists have criticized Ordinals, claiming they violate the Bitcoin spirit due to the rise in transaction costs. Yet some have voiced concerns that the idea may open the door to spamming on the distributed system.
https://twitter.com/LukeDashjr/status/1621569004631658496
But Ordinals creator Casey Rodarmor disagrees with that assessment. According to him, Bitcoin blocks must be full before consumers would be motivated to pay more than the bare minimum transaction price. He adds that if blocks are not full, then no one will pay more than the base charge to have their transactions included in a block. Therefore, it’s imperative that all of the blocks be completely occupied.
Casey further emphasized that he prefers complete Bitcoin blocks but is opposed to raising block size.
“I would not advise increasing the block size,” he said emphatically.
Nonetheless, Ordinals seem to be influencing how individuals utilize the Bitcoin network, which might add gasoline to the fire of the ongoing argument about their worth and use.
