The Bitcoin network has been experiencing a significant increase in fees and transaction volume, with Ordinal inscriptions amassing an impressive 284 BTC (around $7.6 million) as of Tuesday, according to data from Dune Analytics. This boost in activity is linked to the overwhelmi...
The Bitcoin network has been experiencing a significant increase in fees and transaction volume, with Ordinal inscriptions amassing an impressive 284 BTC (around $7.6 million) as of Tuesday, according to data from Dune Analytics.
This boost in activity is linked to the overwhelming interest in the BRC-20 token standard, which has spurred a new era of token and asset creation on the Bitcoin blockchain.
In just one day, more than 372,000 new inscriptions were established on the Bitcoin network, pushing the daily transaction record to a staggering 682,281.
This flurry of activity caused daily network fees to surge to 23 BTC or about $656,000. Trevor Owens, Managing Partner at Bitcoin Frontier Fund, explains that the BRC-20 token standard has been the primary catalyst for this acceleration.
I can't believe my eyes
BRC-20 demand leading to a 700% increase in fees AFTER what we've seen with Ordinal Inscriptions
12,800% increase in fees from BEFORE Ordinal Inscriptions launched
300,000 unconfirmed transactions in the mempool pic.twitter.com/oyLceu6ODe— trevor.btc @ NYC (@TO) May 2, 2023
Introduced in March, the BRC-20 (Bitcoin Request for Comment number 20) facilitated the creation of fungible tokens through the Ordinals protocol.
This innovation prompted a renewed interest in developing NFT-like assets on the Bitcoin blockchain, leading to a significant growth in inscriptions – over 1 million in less than a week, added to the existing 2.5 million.
While the network has seen an increase in JPEG inscriptions, most inscriptions remain text-based due to their lower cost, which is determined by data size.
Owens stated that this has led to a low-cost, high-volume situation for text inscriptions, whereas JPEGs and other digital media are high-cost and low-volume. As a result, the Bitcoin network’s memory usage has doubled, surpassing 650 MB from its original capacity of 300 MB, as per Mempool data.
Some industry insiders argue that the increased demand for computer memory, resulting from the growth in transactions and block sizes, could make running a node more challenging. However, Ordinals advocates maintain that the surge in activity ultimately bolsters the network’s security and stability.
While high fees on the Bitcoin network can benefit miners, prioritize valuable transactions, and enhance security, they also increase the cost of transactions.
Taproot Wizards, a Twitter user, noted that current fees would have made the inscription of their collection worth nearly $1 million, compared to the 80 MB of block space it consumed in February.
In February, we inscribed the Taproot Wizards collection, which took over 80MB of bitcoin block space.
But now bitcoin transaction fees are so high, that if we tried inscribing the 80MB of wizards today, the fees would’ve cost us…
32 BTC.
Almost $1 million dollars.
— Taproot Wizards (@TaprootWizards) May 2, 2023
Despite these concerns, Owens argues that the advent and expansion of the Ordinals protocol has been beneficial for Bitcoin, as it has introduced new use cases without requiring changes to the base protocol. Attracting liquidity, users, and developers to improve user experience and explore new applications, he contends, will drive mass adoption and increase the value of Bitcoin.