The buzz about Ordinals is real, and NFT news now always take up more than half of Bitcoin block space.
In two months, Bitcoin miners have made about $600,000 from Ordinals, a controversial new nonfungible token (NFT) technology that has gotten a lot of people interested.
Since Ordinals were introduced in the middle of December 2022, users have inscribed about 74,000 NFTs into the Bitcoin blockchain, paying miners a total of $574,00 in BTC transaction fees.
The “digital artifacts” that make up these non-fungible tokens are copies of projects like CryptoPunks and the Bored Ape Yacht Club collection.
Demand for space in Bitcoin blocks is rising
The Ordinals protocol is made possible by the Bitcoin network soft forks Segregated Witness (SegWit) and Taproot, which are coming in 2017 and 2021, respectively.
SegWit, for example, increased the size of a Bitcoin block to four megabytes (4 MB).
In the same way, the Taproot version lets you verify and batch up to 4 MB worth of transactions. With this function, data like photos and videos can be put into Bitcoin blocks.
Early in February, when Ordinals were added, the average size of a Bitcoin block jumped from 1.5 to 2 MB to between 3 and 3.5 MB.
At the same time, the number of SegWit and non-SegWit blocks waiting to be processed in the Bitcoin mempool has grown by a lot, reaching its highest level since the FTX crash.
BitMEX Research says that Ordinals’ data has sometimes taken up more than 50% of the space in a Bitcoin block.
In its weekly report, Glassnode said, “This describes a growth in the user base and an upwards pressure on the fee market from usage beyond the typical investment and monetary transfer use cases.”
“Ordinals are a new frontier […] to observe how it affects and manifests in both on-chain network and investor behavior.“
Ordinals could be a new way for Bitcoin miners to make money
Most of the money that Bitcoin miners make comes from the network’s block subsidy, which is paid out when new blocks are found, or “mined.” On the other hand, transaction fees only make up about 3% of miners’ income.
Miners now get 6.25 BTC for each block that is added to the Bitcoin network. This subsidy, on the other hand, will go down by 50% to 3.125 BTC in the spring of 2024 as part of an annual halving. As a result, more of the miners’ income is likely to come from transaction fees as block rewards become less valuable.
Some people say that Ordinals add miner extractable value, or MEV, which used to be part of Ethereum mining.
MEV is, in a nutshell, the maximum value that miners can get from making new blocks, on top of block rewards and transaction fees.
The NFT community is moving to BTC, where Ordinals have brought true scarcity to collectibles.
— Jason A. Williams (@GoingParabolic) February 12, 2023
I forever inscribed “The Blonde Don” BAYC #1626 on the world's scarcest and most secure chain burning him off ETH forever using TeleBurn.
It's done. Over. Not coming back to ETH. pic.twitter.com/jmKpSSPybm
Critics, on the other hand, say that Ordinals is a “attack” that would price out real financial activity and hurt Bitcoin’s reputation as a trustworthy P2P payments network.
Adam Back, co-founder and CEO of Blockstream, said that Bitcoin is made so that it can’t be censored.
“[It] 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.“
Content Source: cointelegraph.com
Cover Image Source: coindesk.com