Ordinals Protocol Sparks Growth in Bitcoin
Bitcoin, the oldest and most secure blockchain, had been facing a decrease in transaction fees due to lack of demand for over two years. With the expected halving of block rewards in April 2024, the revenue for miners was projected to decline further. To support the miners and spur growth, the Ordinals protocol was introduced to Bitcoin in early 2023.
Driving Demand for Bitcoin Transactions
Ordinals, a protocol built on top of Bitcoin, enabled huge demand for Bitcoin transactions. This year alone, over $100 million (USD) worth of transaction fees have been spent to create inscriptions, a type of transaction attributed to Ordinals.
Reviving Bitcoin in the NFT Market
Ordinals also allows Bitcoin to secure and transact other fungible and non-fungible tokens (NFT). While smart contract-based blockchains like Ethereum had dominated this market, Ordinals was starting to capture some of it back on Bitcoin towards the end of 2023.
Evolution of NFTs
NFTs had been advancing and evolving on other blockchains since the introduction of the Non-Fungible Token (NFT) Standard, ERC-721, on Ethereum in 2018. The emergence of on-chain NFTs, where the digital item referenced by the NFT could also be stored directly on the blockchain, presented new opportunities for digital artists.
Using Bitcoin as a Medium for NFTs
Bitcoin, as the oldest, most decentralized, most secure, and highest value blockchain, offered unique expressive constraints. Ordinals enabled Bitcoin to be used as a medium for NFTs, giving them Bitcoin’s impressive security properties.
The Ordinal Protocol
The Ordinal Protocol can be defined by its three main components: the satoshi (sat), the inscription, and the mapping of ownership for the inscription. It defines a unique number for every satoshi in Bitcoin and allows for the tracking of each satoshi through every Bitcoin transaction.
Importance of Community for Ordinals
Galaxy Digital reports that the total trading volume of Ordinals for the first 8 months of 2023 was $596.4 million (USD) and projects a $5 billion (USD) market capitalization by 2025. The success of Ordinals relies on the growing community of developers and NFT enthusiasts who are reinvigorated to build on Bitcoin.
The Ongoing Journey
The Ordinals Protocol has breathed new life into the Bitcoin blockchain, rekindling excitement among developers and NFT communities. Building on the core values of respect, integrity, sustainability, and enrichment, communities like OnChainMonkey (OCM) have embraced the move to the Ordinals protocol and are confident in the future of Bitcoin as a medium for NFTs.
