Imagine digitally inscribing 3D images of objects such as multi-colored spheres onto a tiny fragment of bitcoin. Then imagine selling them for $16.5 million. When you thought cryptocurrency couldn’t get much stranger, bitcoin unintentionally gives birth to a brand-new breed of NFTs.
The new players appeared in 2023 as a result of enhancements to the bitcoin network that allowed each satoshi, or one hundred millionth of a bitcoin, to hold a few megabytes of data, including text, photos, audio, and video.
The enhancements’ unanticipated side effect was the data storage. According to Glassnode Market Intelligence, since January, crypto fans have added a total of 385,000 “inscriptions” known as Ordinals to bitcoin, comprising more than 200,000 image files and more than 150,000 text ones.
According to Alex Miller, CEO of bitcoin developer network Hiro, “I think this is truly the beginning of a fundamental shift in what you can accomplish with bitcoin.” The rainbow balls are a component of TwelveFold by Yuga Labs, creators of the Bored Ape Yacht Club and NFT developers. TwelveFold is a collection of 300 photos of 3D objects rendered in a square grid. The set is described as “a visual allegory” for blockchain data. This month, the corporation sold 288 of them at auction for $16.5 million, turning them into a profitable allegory, according to research firm Delphi Digital’s findings.
According to Galaxy Digital Research, JPEGs of rocks and shadowy crowned figures, which have sold for $213,845 and $273,010 respectively, are other top-selling Ordinals, which are named after the software protocol that makes inscription possible. Galaxy estimates that the market for bitcoin NFTs, which only started in January, could be worth $4.5 billion by 2025. The company bases this optimistic prediction on a number of variables, including the expansion of the more mature Ethereum NFT market and the fact that bitcoin is by far the most popular cryptocurrency.
‘KIND OF FRIVOLOUS’ According to market participants, one of the main obstacles for this new type of NFTs is the lack of user-friendly platforms, with early transactions taking place over the counter on shared online spreadsheets. According to Delphi Digital, this absence of infrastructure is a definite barrier to entry.
This rise in activity hasn’t been well received by everyone, notably some bitcoin purists who think the cryptocurrency should only be used for payments.
According to data from Blockchain.com, the average fee for a bitcoin transaction, calculated over a 7-day period, has risen to $1.981, its highest level since November, as Ordinals trading increased compared to under $1 at the beginning of February.
According to Cory Klippsten, CEO of bitcoin-focused financial services company Swan Bitcoin, “we want transactions to remain as inexpensive as possible so people around the world can run businesses and send money.” He sees issues with “having it priced out through this non-monetary use case that’s kind of frivolous.”
According to some detractors, Ordinals are also clogging up the network; according to Blockchain.com, the 7-day average of the time it takes to complete a bitcoin transaction increased to over 186 minutes in late February, its highest level since the bitcoin selloff in November.
Although it has since decreased to around 124 minutes, the range of 12.8 to 35 minutes of transaction time in January and February is still much greater. Brendon Sedo, a programmer at the Core DAO blockchain, claimed that “ordinaries have brought some more eyes to the network.” NFTs on the bitcoin network, however, are a diversion from the network’s primary goal of acting as a permissionless network that is accessible from everywhere in the world, around the clock, and uncensorable.