Your guide to Bitcoin, Ethereum and Web 3.0
The emerging Bitcoin NFT ecosystem – virtually non-existent just months ago – could reach $4.5 billion in market size by 2025, according to a report released Friday by Galaxy Research.
Analysts reckon the Bitcoin Ordinal frenzy of the past two months is no blip. They estimate that the demand for the ability to store NFTs on the world’s oldest and most established blockchain will only grow in the years to come. Galaxy researchers say that even by the summer of this year, an entire infrastructure of products and services designed to cater to this growing market will be fully developed.
“In just two months, wallets have already started offering the necessary support to improve user experience, and marketplaces are already emerging, the report said.
IN the end of Januarya project called Ordinals launched NFT-like features on Bitcoin, allowing users to enter satoshis – the smallest unit of Bitcoin, representing 0.00000001 BTC – with unique data like photos and video. Although that registration process can be time-consuming, and the process of putting these assets on the Bitcoin chain is expensive, the project was an immediate success.
The number of Bitcoin Ordinal inscriptions made since the end of January has passed 200,000 earlier this week; As of this writing, over 267,000 have been created, according to public blockchain data compiled Dune Analytics.
Yuga Labs 4 billion dollar company behind dominant Ethereum NFT collection Bored Ape Yacht Clubannounced on Monday its first ever Bitcoin-based NFT project, signaling the spread of Ordinals’ appeal to the top tier of the established, predominantly Ethereum-based NFT ecosystem.
“Yuga’s commitment [in Bitcoin NFTs] will push other artists to enter, which in turn is likely to bring the big NFT marketplaces like OpenSea,” Friday’s report concluded.
The Bitcoin NFT market will likely look different from its competitors, due to the cost of entering the network. For example, entering 10,000 Bored Ape Yacht Club NFTs on the Bitcoin network would cost approximately $229,000 by Galaxy’s estimate.
Creators will likely want to avoid such eyebrow-raising costs; For example, Yuga’s debut Bitcoin collection, TwelveFold, is a limited edition of only 300 works of art. For that reason, Galaxy predicts that Bitcoin will become home to much rarer “high-quality” and valuable one-of-a-kind art projects, while other chains such as Ethereum will continue to host massive multi-thousand-piece PFP collections. lower costs for creators.
However, Galaxy’s rosy outlook for Bitcoin NFTs is contingent on the continued success of the broader NFT market.
“If the NFT ecosystem largely does not continue to grow, demand for Bitcoin-native NFTs will be limited,” analysts wrote on Friday.
The market has struggled to recover from all-time highs in early 2022, just before Terra’s collapse triggered the current crypto winter and cratered NFT prices and demand. NFT sales only voted his best month since the bear market started. But this increase in trading volume comes largely from controversial trading practices on the new Blur NFT marketplace, which encourages users to engage in high-volume trades in exchange for valuable loyalty rewards.
Blur’s sudden rise, past the once dominant OpenSea, has spurred a crisis in the established NFT market. Creates royalties, once the cornerstone of NFT’s value proposition, has been cut of NFT marketplaces in a race to attract customers from competitors. Royalties, usually set between 5% and 10% of a sale price and paid by the seller, are how most NFT projects generate revenue. Almost all NFT marketplaces have now made it optional to pay such fees, which is attractive to traders since they now have a larger profit on each sale, but devastating to creators who lack other sources of income.
Those hoping that a major new NFT market like Bitcoin might change that paradigm may be out of luck. Bitcoin does not yet meaningfully support smart contracts, meaning there is no way for new Bitcoin NFT marketplaces to enforce royalties on creators, or to block rivals who fail to honor them.
“The broader trend in the NFT ecosystem is a race to zero on royalties, or complete non-enforcement, and nothing about inscriptions is likely to change that course, Galaxy’s report said.
