Bitcoin (BTC) Ordinals, also referred to as Bitcoin NFTs, have the potential to reinvigorate developer interest in Bitcoin and increase mining fees, according to cryptocurrency investment firm Grayscale.
In a blog post dated April 27, the company outlined two key advantages of Ordinals for 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:
https://t.co/7muc9Lyrok— Grayscale (@Grayscale) April 28, 2023
The first advantage is a significant increase in fees paid to miners, which Grayscale says has been observed since the protocol’s launch in January. According to the company, “the advent of Ordinals has resulted in an increase in total fees paid to miners […] which might possibly establish a sustainable baseline level of transaction costs to incentivize miners.” Grayscale argues that this would ensure “ongoing network protection throughout the life of the Bitcoin network.”
Less than two months after the launch of Ordinals, over $600,000 was paid to Bitcoin miners in fees generated solely by inscriptions. As of publishing, that figure has surpassed $6.5 million.
According to Grayscale, Ordinals and the “velocity of NFT adoption” could also entice new Bitcoin users and encourage more growth on the Bitcoin network. Grayscale believes that the emergence of Ordinals is likely to encourage a development-oriented community and culture in support of the Bitcoin network. On April 30, the number of daily inscriptions reached a new high of over 300,000.
Around the same time, the number of Bitcoin transactions approached peaks not seen in a number of years, according to blockchain data firm IntoTheBlock.
Related: Magic Eden launches marketplace for Bitcoin Ordinals
The rapid rise of Ordinals has been a contentious subject in the broader Bitcoin community, as they have been extensively criticized by Bitcoin maximalists for diverging from Bitcoin’s original purpose as a peer-to-peer electronic currency and clogging up valuable block space. One detractor is Blockstream CEO Adam Back, who has called Ordinals “useless” and said 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
