A new and relatively controversial project called Ordinals allows users to place NFT-like media assets on Bitcoin’s (BTC) blockchain. This project has seen increasing activity throughout this week.
New NFTs result in higher transaction costs
In fact, last Thursday, Ordinals registered their highest number of new NFTs, but network costs appear to be rising as a result.
More than 1,000 Bitcoin NFTs have already been created through Ordinals. On Thursday alone, 420 new “inscriptions” were created on the blockchain. That is more than 3 times as much as just a day earlier.
However, on Thursday, average transaction fees on the Bitcoin network were also at their highest level in more than a month, with $1.53 worth of BTC, according to data sourced from YCharts. That is the highest since December 27, 2022.
A discussion has been sparked
The launch of the Ordinals project has sparked some heated debate within the Bitcoin world. Among other things, questions have been asked about whether JPEGs should be registered on the original blockchain. The Taproot upgrade has enabled Ordinals to add basically everything from knockoff Bored Apes to video games to Bitcoin’s blockchain.
NFTs are unique digital assets associated with digital or physical content, such as artwork, movies, and music files, that prove ownership or membership in an item or exclusive group. Blockchains like Ethereum and Solana have been associated with NFTs, but digital asset allocation to blockchain networks has been around on Bitcoin since 2014, with prominent projects like Counterparty and Stacks.
Rising transaction costs are a side effect
Rising transaction fees are a well-known side effect of integrating NFTs into the Bitcoin mainnet. The cost of Bitcoin transactions is determined by the amount of data and the speed at which the transaction needs to be completed. During busy periods, users often opt for higher costs to guarantee speed of their transaction.
However, according to Ordinals developer Casey Rodarmor, blocks must be full for this. “If blocks are not full, no one has a reason to pay more than the minimum fee to have their transactions included in a block. As a result, blocks must be full,” he said.
Still, Rodarmor is not necessarily in favor of increasing block size in Bitcoin. Still, Ordinals apparently influence how people use the Bitcoin network, which can only fuel the ongoing debate about their value and use.
On January 21, at the launch of Ordinals, Bitcoin transaction fees peaked at 2.10% of the block reward for miners, but on January 24, the fees rose to 3.44% according to data from the Hashrate Index. On Thursday, this percentage reached 3.86%.