Bitcoin (BTC) Ordinals — also known by some as Bitcoin NFTs — could renew developer enthusiasm for Bitcoin and boost mining fees, according to cryptocurrency investment firm Grayscale.
In an April 27 “Market Byte” blog post, the firm suggested that Ordinals provide two key benefits to the growth and development of the Bitcoin ecosystem.
#Ordinals have generated a great deal of attention in the crypto ecosystem by introducing #NFT-like assets on the #Bitcoin blockchain. @mzhao8 and our research team explore their potential in our latest Market Byte:
— Grayscale (@Grayscale) April 28, 2023
The first is a substantial increase in fees paid to miners, which has been seen since the launch of the protocol in January, according to Grayscale.
“The advent of ordinals has led to an increase in total fees paid to miners […] which could potentially establish a sustainable baseline level of transaction fees to incentivize miners.”
Grayscale argued that this would ensure “continued network security throughout the lifetime of the Bitcoin network.”
As reported by Cointelegraph, in less than two months after its launch, more than $600,000 was paid to Bitcoin miners, solely as the result of fees generated by Ordinal inscriptions. As of the time of publication, that figure now exceeds the $6.5 million mark.
Fees spent on inscribing Ordinal NFTs on the Bitcoin blockchain. Source: Dune Analytics
The investment firm also believes that Ordinals and the “velocity of NFT adoption” could also attract new Bitcoin users and spark more development on the Bitcoin network.
“We believe the emergence of ordinals is likely to promote a development-oriented community and culture in support of the Bitcoin network.”
On April 30, Ordinals reached a new record, with the number of daily inscriptions topping 300,000.
Around the same time, the number of Bitcoin transactions neared peaks not seen in a number of years, according to blockchain data firm IntoTheBlock.
Related: Magic Eden launches marketplace for Bitcoin Ordinals
The meteoric rise of Ordinals has been a controversial topic in the wider Bitcoin community, having been extensively criticized by Bitcoin maximalists for straying from the original purpose of Bitcoin as a peer-to-peer electronic currency and clogging up valuable block space.
One such critic is Blockstream CEO Adam Back, who has made a number of comments in which he declared Ordinals to be “useless,” and claimed that he is “more into Bitcoin as a currency.”
“you can’t stop them” well ofc! bitcoin is designed to be censor resistant. doesn’t stop us mildly commenting on the sheer waste and stupidity of an encoding. at least do something efficient. otherwise it’s another proof of consumption of block-space thingy.
— Adam Back (@adam3us) January 29, 2023
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Author: Tom Mitchelhill