Improving Bitcoin NFT marketplace infrastructure sets the stage for ecosystem growth

by James · March 24, 2023

Bitcoin NFT subscription activity has remained strong with consistency in the daily number of NFTs subscribed to Bitcoin. At the same time, the infrastructure to promote Bitcoin trading is finally coming along with the development of wallets and marketplaces that support Ordinals.

NFT marketplaces Gamma and Magic Eden added support for Bitcoin NFTs this week. While the initial response from traders has been muted, activity is expected to pick up soon.

Improving the infrastructure around Bitcoin NFTs

Bitcoin NFTs, also known as Ordinals, began with great fanfare in late January as they improved the utility and revenue of the Bitcoin blockchain.

The Dune dashboard from data analyst dgtl_assets shows that Ordinals subscription activity remains robust, with nearly 580,000 NFTs subscribed in less than three months.

Accumulated sum and number of daily BTC NFTs subscribed. Source: Dune

While the daily subscription activity is strong, the trading volume of Bitcoin NFTs remains subdued, which can be attributed primarily to the absence of Bitcoin wallets and supporting marketplaces.

Ordinals require a specially designed Bitcoin wallet that recognizes content files of noticeable satoshis, the smallest unit in Bitcoin, and facilitates the transfer. Hiro and Xverse are the leading wallet providers in the area.

Mark Hendrickson, product manager at Hiro, told Cointelegraph that the “active users for the wallet are up significantly overall this year, around 350%.” Activity has picked up significantly since February, thanks to the Ordinals hype.

On the other hand, Xverse added Bitcoin NFT support on February 15th.

So far, the Xverse Chrome browser extension has been downloaded on over 10,000 browsers, with Hiro’s download count exceeding 90,000. The Hiro wallet has an advantage here as it was originally designed for the Stacks blockchain, a Bitcoin sidechain that supports smart contract capabilities.

Marketplaces come together

Since March 19, there has been significant improvement in the space, with two leading marketplaces, Gamma and Magic Eden, starting to support Ordinals trading on March 20 and March 22. So far, the marketplaces have faced a soft opening with less than $1 million in trading volume in both venues.

In comparison, OpenSea facilitated more than $10 million in daily trading volume on Ethereum NFT trades alone on most days in the first quarter of 2023.

Gamma users have completed around 182 Bitcoin NFT purchases since launch. While Magic Eden has done a volume of almost 18.94 BTC (worth around $530,000) since its launch, with the Bitcoin DeGods collection dominating the volumes at 67%.

Related: Stacks (STX) surges as Bitcoin NFT hype grows, but blockchain activity raises concerns

In addition, Hendrickson noted that Magic Eden enjoys an advantage in the “cross-protocol department given that they have previously rolled out support for Solana, Ethereum and Polygon. This could help serve cross-chain trading needs faster, especially as demand increases for moving. cross-chain liquidity to access their various NFT markets.”

Bitcoin Ordinals Top Collections at Magic Eden. Source: Magic Eden

At the same time, he noted that “Gamma has an advantage among Ordinals marketplaces given their deep focus on Bitcoin-based technologies.” Data provided by Hendrickson shows that the number of Hiro users interacting with Gamma increased significantly to around 2,144 weekly users when the hype around Bitcoin NFTs started.

Number of Hiro clients who connected their wallet to Gamma. Source: Hiro

Bitcoin NFT trading activity is expected to pick up. Ordinals provide superior security guarantees than NFT ecosystems elsewhere. The Ordinals digital media file is stored directly on the Bitcoin blockchain and enjoys the same security guarantees as regular BTC transfers. While other ecosystems like Ethereum store the content file of NFT on third party storage solutions like AWS and IFPS. Hendrickson noted, “Their long-term durability is a huge advantage.”

The views, thoughts and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. All investment and trading moves involve risk and readers should conduct their own research when making a decision.