Bitcoin’s Latest Protocol: Ordinals and Its Impact on NFTs
Introduction
In early 2023, Bitcoin introduced the Ordinals protocol, aiming to address the low transaction fees and spur growth in the Bitcoin market. The introduction of Ordinals had significant implications for Non-Fungible Tokens (NFTs) and their use on the Bitcoin blockchain. Let’s explore the impact of Ordinals on NFTs and how it is revolutionizing the digital art space.
Ordinals Protocol and Bitcoin
Ordinals is a protocol built on top of Bitcoin that allows Bitcoin to secure and transact other fungible and non-fungible tokens (NFT). While Bitcoin, as the oldest blockchain, had been considered a secure blockchain, the introduction of Ordinals offered newfound opportunities for growth and expansion in the market. The protocol has led to a substantial increase in demand for Bitcoin transactions, with over $100 million (USD) worth of transaction fees spent this year alone to create inscriptions, a transaction type attributed to Ordinals.
Evolution of NFTs on Other Blockchains
In recent years, NFTs have advanced and evolved on other blockchains. Ethereum, in particular, played a significant role in the standardization and proliferation of NFTs with the introduction of the ERC-721 standard. This standardization led to an explosion of NFTs on Ethereum and other blockchains.
Bitcoin as a Medium for NFTs
The Ordinals protocol has positioned Bitcoin as a viable medium for NFTs. In the past, Ethereum and other blockchains dominated the NFT market, but now, because of Ordinals, Bitcoin’s NFT market is rapidly catching up to the top markets on other blockchains. NFTs using Ordinals differentiate from others as the protocol treats Bitcoin as a medium for the NFT, rather than the traditional certificate model for NFTs.
Implications of Ordinals on Bitcoin NFTs
The significance of using Bitcoin as a medium for NFTs lies in the blockchain’s age, decentralization, security, and high value. The protocol enables NFTs to inherit Bitcoin’s impressive security properties, utilizing the same ledger as Bitcoin to record ownership. This results in permissionless, uncensorable, immutable, and complete NFTs, which are referred to as Digital Artifacts, made possible by the Ordinals protocol.
Community and Ordinals: Driving Growth
The development and adoption of the Ordinals protocol have been supported by the Bitcoin community. The total trading volume of Ordinals for the first 8 months of 2023 was a staggering $596.4 million (USD), with projections of a $5 billion (USD) market capitalization by 2025. The revival of the Bitcoin developer community has been attributed to the excitement surrounding Ordinals, as NFT communities and developers are rebuilding on Bitcoin.
Conclusion
The introduction of the Ordinals protocol in early 2023 has not only led to increased demand for Bitcoin transactions but also positioned Bitcoin as a viable medium for NFTs. The implications of Ordinals on the Bitcoin NFT market are significant, as it has driven growth and reinvigorated the Bitcoin developer community. As a result, Ordinals is playing a pivotal role in shaping the future of NFTs and digital art on the Bitcoin blockchain.
I have been writing about crypto for over two years. I have a vast amount of experience in the industry and my work has been featured on some of the biggest publications in the space.
