Your guide to Bitcoin, Ethereum and Web 3.0
Ordinals, a controversial new project that allows users to stake NFT-like media assets on the Bitcoin blockchain, is seeing increasing activity this week. On Thursday, Ordinals recorded its largest number of one-day coins – but network fees are apparently growing as a result.
More than 1,000 total Bitcoin NFTs have been minted via Ordinals, according to public blockchain data curated by Dune, topping this total on Thursday when 420 new “inscriptions” were made on the blockchain. That’s more than three times the number of NFTs minted on Bitcoin via the process on Wednesday.
However, Thursday also marked the highest average transaction fee on Bitcoin in more than a month, landing at $1.53 worth of BTC per data from YCharts. That’s the highest it’s been since December 27, 2022
Image: Dune Analytics
The launch of Ordinals revived the heated and long-running debate in the Bitcoin space about block sizes, legitimate transactions, and whether JPEGs and other media should be written onto the original blockchain. Thanks to the Taproot upgrade, Ordinals has allowed everything from knock-off Bored Apes to video games to be added to the Bitcoin blockchain.
NFTs are digital assets that are provably unique and linked to digital (and sometimes even physical) content such as artwork, movies and music files, and they can prove ownership of an item or membership in an exclusive group.
While blockchains like Ethereum and Solana are synonymous with NFTs, the practice of committing digital assets to a blockchain network has existed on Bitcoin since 2014, with projects like Counterparty and Stacks leading the way.
Rising transaction fees are an apparent side effect of adding NFTs to Bitcoin’s mainnet. Bitcoin transaction fees are determined by the volume of data in the transaction and the speed at which the user wants the transaction completed. Users who want their transactions to go through during high traffic periods may decide to pay additional fees to get their transactions through.
On January 21, when Ordinals launched, Bitcoin transaction fees peaked at 2.10% as a percentage of the block reward for miners – but on January 24, Bitcoin fees peaked at 3.44%, according to Hashrate Index data. On Thursday, the figure reached 3.86%.
A closer look at the Hashrate Index data shows the percentage rising at times throughout the day, including to a mark of nearly 8% late Friday afternoon. However, the overall daily average so far has landed at a much lower number amid the rise of Ordinals.
The increase in transaction fees has led some Bitcoin maximalists to call Ordinals a insult to the Bitcoin ethos. Others say the project allows spamming of the decentralized network.
It’s a sentiment that Ordinals developer Casey Rodarmor doesn’t share. He told Decrypt on Monday that Bitcoin blocks must be full to give users a reason to pay more than the minimum fee.
“If the blocks are not full, no one has a reason to pay more than the minimum fee rate to have the transactions included in a block,” he said. “So as a result the blocks must be full.”
He further explained that while he is committed to full Bitcoin blocks, he does not support increasing the block size. “I will not advocate increasing the block size,” he confirmed.
Still, Ordinals apparently influence how people use the Bitcoin network, which may only fuel the continued debate surrounding their value and use.
