Bitcoin NFTs Soar Despite Polarizing Reception

NFTs and Bitcoin are rarely mentioned in the same breath; after all, the network doesn’t support kind of smart contracts that have allowed the likes of Ethereum to handle non-fungible tokens. However, this has changed rapidly over the last month, ever since the Ordinals project appeared on January 21. The platform essentially allows users of the Bitcoin network to inscribe JPEGs and other data on satoshis, the smallest unit of Bitcoin.

This deviation was made possible by the Bitcoin Taproot upgrade in November 2021, which allowed the storage of arbitrary data to a Satoshi’s Witness. Ordinals has proven controversial within the Bitcoin space, with various factions debating the benefits and drawbacks to inscribing JPEGs and other data on its blockchain.

Bitcoin maxis see this as stupidity, given that it has increased bitcoin’s block size, thus skyrocketing the transaction fees. According to research published by BitMEX on Wednesday, the sudden influx of JPEGs and other media files on the Bitcoin network has led to the consumption of 526 megabytes (MB) of block space, in addition to costing inscribers approximately 6.77 BTC, or $155,000, to date.

Ordinals Data

Up until 7 February 2023, we have identified:

* Over 13,000 Ordinals transactions
* 526MB of Bitcoin blockspace usage
* 6.77 BTC of Ordinals related spendhttps://t.co/cSNHSPIEs3

— BitMEX Research (@BitMEXResearch) February 8, 2023

Bitcoin NFTs Are Splitting Opinions

Rene Pickhardt, a longtime Bitcoiner, had stern words for Ordinals, accusing the project of spamming Bitcoin with JPEGs. Adam Back is also against Bitcoin NFTs, deeming them as a “sheer waste and stupidity of an ecoding.” He can’t help but wonder why people inscribing NFTs on Bitcoin can’t do “something efficient.” However, he realizes nothing can be done to stop them as Bitcoin is built to be censorship-resistant.

On-chain data expert, Data_Always, agrees, highlighting the rate at which blockspace consumption increases with every new Ordinals NFT inscription. In a tweet, he notes that “Spending to inscribe Ordinals is climbing every day. Still only 12% of total fees and 0.3% of the subsidy, but the rise remains exponential. Biggest mempool backlog since FTX and 3AC collapses.” 

However, others see Bitcoin NFTs as a good thing. Long-term Bitcoin supporter Dan Held says that the “Ordinals is good for Bitcoin.” Alex Adelman, cofounder and CEO of Lolli, seems to agree too. He sees the Ordinals as a “milestone for Bitcoin.”

Hal Finney would like Bitcoin NFTs. pic.twitter.com/z4cO468pcA

— Dan Held (@danheld) February 6, 2023

Bitcoin NFTs May Inspire Solutions To The Network’s Problems

Despite the fact that Bitcoin continues to lag behind Ethereum and Solana in terms of investment and talent dedicated to innovating and developing new applications, Bitcoin NFTs should attract a new wave of interest and capital. This will create opportunities for developers to build new solutions that aid with scalability and efficiency.

That said, since launch a few weeks ago, Ordinals has seen over 47,000 inscriptions as of press time, according to Dune Analytics. February 9 represented the busiest day, with over 22,000 inscriptions, with JPEG images, text, video, applications, and audio files are among the types of data that is being inscribed.

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*All investment/financial opinions expressed by NFT Plazas are from the personal research and experience of our site moderators and are intended as educational material only. Individuals are required to fully research any product prior to making any kind of investment.