Bitcoin NFTs Gain Traction, But Trading Volume Remains Low Due to Infrastructure Gap
Bitcoin NFTs, also known as Ordinals, have been gaining traction since their launch in January 2023. The daily number of NFTs inscribed on Bitcoin has remained consistent, with nearly 580,000 NFTs inscribed in less than three months, according to data from Dune. However, the trading volume of Bitcoin NFTs has been low due to the absence of supporting infrastructure such as Bitcoin wallets and marketplaces.
Hiro and Xverse are leading wallet providers for Bitcoin NFTs. Hiro's active users have increased significantly, up 350% since February, while Xverse added Bitcoin NFT support in mid-February. Xverse's Chrome browser extension has been downloaded on over 10,000 browsers, while Hiro's wallet has surpassed 90,000 downloads.
Bitcoin NFTs gain traction with Hiro and Xverse leading the way: A comparison with Ethereum's OpenSea marketplace
In terms of marketplaces, two leading marketplaces, Gamma and Magic Eden, began supporting Ordinals trading in March 2023. Gamma and Magic Eden have facilitated less than $1 million in trading volume so far, while OpenSea has facilitated over $10 million in daily trading volume on Ethereum NFT trades alone in Q1 2023.
According to Mark Hendrickson, the product lead at Hiro, Ordinals provide superior security guarantees than NFT ecosystems elsewhere. The digital media file of Ordinals is stored directly on the Bitcoin blockchain and enjoys the same security guarantees as regular BTC transfers, while other ecosystems like Ethereum store the content file of the NFT on third-party storage solutions like AWS and IFPS.
Bitcoin NFTs Poised for Growth as Infrastructure Develops, Cross-Chain Trading Needs Increase
Despite the initial subdued response, the Bitcoin NFT trading activity is expected to pick up as the infrastructure to foster Bitcoin trading comes together with the development of wallets and marketplaces supporting Ordinals. The growing demand for moving liquidity across chains to access various NFT markets may also increase cross-chain trading needs. With its unique security advantages, Bitcoin NFTs could potentially offer long-term durability and stability.
