Ethereum dominates the NFT space, but a novel project may provide an additional use case for the premier crypto
Bitcoin’s use case has been a hotly debated topic even since its inception. The proponents believe that it provides a great to conduct decentralized financial transactions, while others believe it has more value as a long-term asset. The critics, however, point to its limitations like slow transactions and the highly energy-intensive network. The best projects are those, which continue to evolve and improve. Although Bitcoin set the standard for wider crypto adoption, being the pioneer is only going to get you so far.
And talking about improving the network, Bitcoin’s network underwent an important upgrade at the end of 2021. Dubbed Taproot, it is aimed at improving the privacy and scalability of the network. It allows for the creation of more complex smart contracts and transactions on the Bitcoin network. With Taproot, users would be able to create multi-signature transactions, shielded addresses for privacy, and cross-chain atomic swaps, among other things.
This upgrade didn’t make waves till recently when a project called Ordinals introduced an interesting & controversial use case to the Bitcoin network — BTC NFTs. The recently launched project named Ordinals has enabled the creation of Bitcoin NFTs, also known as inscriptions, as a part of its capabilities. This possibility was made available through the Taproot upgrade, which expanded the length of Bitcoin transactions to nearly the entire size of a block.
Ordinals is working to enable NFTs on the Bitcoin network by leveraging the Bitcoin Script language and the Simple Ledger Protocol (SLP) to create a new type of Non-Fungible Token (NFT) called a Bitcoin NFT. The project has developed a number of tools and solutions that make it easier to create, manage, and trade Bitcoin NFTs, including a developer-friendly interface and a suite of APIs and libraries.
Talking about NFTs, they fizzled out in 2022, after an explosive 2021. And with most of the cryptos coming alive in the new year (2023), NFTs are seeing a resurgence in interest too. This is reflected most prominently in Ordinal NFTs than anywhere else (chart below).
Since the start of February, the popularity of Ordinal NFTs has skyrocketed as they have been used to store a range of media such as images, videos, and even documents on the blockchain. Despite network fees being relatively low compared to historical levels, the rise in Ordinal NFT activity has led to a 25% increase in average network fees per block and has consumed almost 30% of the maximum block space.
While it’s evident that Ordinal NFT activity has spurred up by over 300x, there are still groups debating whether this is good for the Bitcoin network or not. The ones in favor obviously point to an additional and important use case — paving the way for storing additional data such as roll-up proofs and enabling sovereign smart contract rollups, others believe this will hurt Bitcoin’s financial and transactional use case.
I personally favor the first narrative. Nevertheless, we are still in the exuberance stage, Let’s keep our fingers crossed and see how this plays out.
Originally Published on Medium
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