Bitcoin suddenly becomes the second largest NFT blockchain

Bitcoin suddenly becomes the second largest NFT blockchain

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Ordinals, the latest incarnation of NFTs on Bitcoin since the counterparty rare pepes and opcode easter eggs, has plunged into the industry. Although Ethereum still surpasses all other blockchains in NFT transaction volume, Bitcoin has suddenly become the world’s second most popular blockchain for NFTs.

In the last 30 days, Ethereum has processed $390 million in NFT transactions on the chain, and Bitcoin is approaching half of that number. In the same period, Bitcoin NFT transactions totaled $173 million – more than triple the $49 million on Solana.

Just a few months ago, no one would have predicted that Bitcoin would process almost half as many NFT transactions as Ethereum. Since its inception, Ethereum has processed a staggering 38 million NFT transactions – dwarfing Bitcoin’s 320,000. Nevertheless, the explosive popularity of Ordinal is reimagining the world’s oldest blockchain as a place to store art, movies, collectibles, tickets and even video games .

Of course, NFTs on Bitcoin are nothing new. Satoshi Nakamoto minted the first NFT in 2009, when they entered Ordinal #1 using opcode data on the genesis block: “The Times 03/Jan/2009 Chancellor on brink of second bank bailout.” For over a decade, Bitcoiners have used plaintext and hashes to write memories on the chain, including the Bitcoin Whitepaper itself.

Bitcoin NFT Ordinals vs Inscriptions

Casey Rodamor’s Ordinals protocol assigns serial numbers to individual satoshis – the smallest subdivision of a bitcoin – using non-Bitcoin Core wallet software. The ex-Bitcoin Core developer wrote and debugged custom “wordwallet” software as a year-long passion project.

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His order numbers are akin to the serial numbers on dollar bills. Although all dollar bills are worth at least $1, special serial numbers add extra numismatic value to rare bills.

The Bitcoin protocol itself will always value one satoshi for one satoshi, but the Ordinals software allows collectors and NFT traders to pay extra to collect certain satoshis in their wallet.

Although Ordinals usually only matter to curious and NFT traders, they have driven huge transaction fees to miners.

  • Rodamor intended the term “ordinal” to refer to the sequence number of each satoshi, but NFT traders have chosen the term.
  • The NFTs inscribed with an ordinal satoshi are now commonly referred to as an “ordinal”.
  • Alternatively, some NFT traders use the “correct” terminology and call each NFT an “inscription”.

Inscriptions can use just about any type of data. Thanks to Bitcoin’s Taproot upgrade, each inscription can use up to 4MB of data apiece using Bitcoin’s SegWit witness data discount (Luxor mined the first inscription over 3.9MB and called it ‘The Big Wizard’).

Because most inscriptions are NFT-like digital art, many people refer to inscriptions (or ordinals) as NFTs. Someone entered a clone of the video game Downfall on one inscription.

Casual users might understand Inscriptions as similar to Star Trek fans drawing Spock’s face on Canadian $5 bills. Suddenly, anyone could see which bills had been “Spocked” before they even scanned the serial number. The Bank of Canada called the practice “legal but inappropriate.”

BRC-20s use Ordinals

Other inscriptions are not NFTs at all, but rather traditional altcoins. Ordinals allow Bitcoin to use an experimental standard called BRC-20, which allows the minting of non-BTC tokens on the Bitcoin blockchain. Its supporters say it is similar to Ethereum’s popular ERC-20 standard. There are endless examples of ERC-20 tokens, including USDC, SHIB, BUSD, DAI, APE, and UNI. Today, the most popular BRC-20 token is the aptly named ORDI.

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The BRC-20 standard allows token creators to associate them with Ordinals by adding a JSON file that defines the token’s properties. Activity on OrdinalsWallet shows attempts to create BRC-20 tokens by adding the JSON file. BRC-20 supporters say the standard allows DeFi, tokenization and experimentation with new features directly on Bitcoin.

Read more: Bitcoin Verdict Close to Reversing Ethereum NFTs in Daily Volume

Using overwritten Ordinals requires a wallet that can support them. Many wallets do not support them. Bitcoin Core doesn’t recognize the standard by default, for example.

Purists say that Satoshi Nakamoto believed that Bitcoin was exclusively for peer-to-peer transactions. However, Nakamoto’s previous statements indicate support for experimental features and applications such as a theoretical BitDNS (later renamed Namecoin), a proposed registrar for DNS-like blockchain domain names. Nakamoto also proposed a way to handle BitDNS that sounded like merge-mining Drivechain.

Big numbers attract NFT traders to Bitcoin

Inscriptions have driven up the amount of data that needs to be processed on the Bitcoin network. Since inscribed Ordinals became popular, the number of pending transactions in Bitcoin’s mempool has increased dramatically. Transaction fees reached $30 some days this month.

Attracted by the novelty and profit potential, traders have flocked to Bitcoin Ordinals. Certain inscriptions can be sold for above 50 bitcoin. ORDI, an Ordinals-based BRC-20 token – non-existent a month ago – has its own market cap of $160 million.

Enrolled ordinals can increase in trading volume. An Inscription Collection, Bitcoin Frogs, Card passed the Ethereum-based Bored Ape Yacht Club in trading volume. Three Ordinals collection cards reached top 10.

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