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Bitcoin’s Ordinals Take Over

by Carolina Lynch

Non-fungible tokens (NFTs) have recently become a popular feature on the Bitcoin network, and their adoption is growing rapidly. According to a report from BitMEX, the number of Ordinals transactions per block has skyrocketed since February 2023, surpassing an average of 225 on February 5. Ordinals transactions are identifiable by an “ord” OP_Push string within their Taproot input script. Taproot was a Bitcoin upgrade activated in late 2021, bringing more privacy and smart contract capability to Bitcoin.

Ordinals allow individuals satoshis (the smallest unit of Bitcoin) to be identified on the network, and inscribed with data such as images or videos. Transactions of this sort are much life NFTs that circulate on blockchains like Ethereum – except their image data is embedded directly within Bitcoin’s blockchain. As of February 7, over 13,000 Ordinals transactions had taken place, and data from Dune analytics shows that inscriptions are ramping up exponentially by the day. There are even instances of Ordinals being sold for high prices – one Ordinals punk sold for 9.5 BTC (~$200,000) earlier this week.

However, some Bitcoin developers are worried that Ordinals may have unintended consequences. One of their chief worries surrounds blockchain bloat – filling up block space that could otherwise be used for purely financial transactions, thus making the network slower and more expensive for standard users. BitMEX’s data shows that Ordinals now take up over 500 megabytes of cumulative block space, after only a few weeks of significant use. Proponents argue that higher fees could be good for Bitcoin in the long term, giving miners a more sustainable source of fee revenue as the network produces less new BTC over time. BitMEX declined to comment on the pros and cons associated with Ordinals in its report.

NFTs have quickly become a popular feature on the Bitcoin network, and their adoption is growing exponentially. Ordinals transactions are identifiable by an “ord” OP_Push string within their Taproot input script, and allow individuals satoshis to be identified on the network and inscribed with data such as images or videos. This has led to some Ordinals being sold for high prices, and has caused a significant amount of blockchain bloat, filling up block space that could otherwise be used for purely financial transactions. However, proponents argue that higher fees could be good for Bitcoin in the long term, giving miners a more sustainable source of fee revenue as the network produces less new BTC over time. BitMEX declined to comment on the pros and cons associated with Ordinals in its report.

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