Recent data from The Block’s Data Dashboard reveals a significant shift in the cryptocurrency landscape: Bitcoin’s average transaction fee has now eclipsed Ethereum’s. In just one week, from November 12 to November 19, Bitcoin’s average transaction fee spiked by 48.4%, jumping from $8.59 to $12.75. This change marks a notable trend, particularly when compared to Ethereum’s average transaction fee, which stood at $7.55 on November 19.
The Impact of Ordinals on Bitcoin
The resurgence of Bitcoin Ordinals, a type of non-fungible token (NFT) on the Bitcoin network, is largely credited for this fee increase. Rebecca Stevens, a research analyst at The Block, highlights that the spike in Ordinals minting and trading is a key driver behind Bitcoin’s higher transaction fees. This resurgence has led to a significant gap between Bitcoin and Ethereum fees, a departure from their brief flip in early October.
Understanding Bitcoin Ordinals
Bitcoin Ordinals, representing NFTs on the Bitcoin blockchain, have gained traction due to several technological advancements. These advancements have simplified and reduced the cost of minting NFTs with metadata on the network. After a peak in trading activity in September, October saw a decrease. However, startups focusing on Bitcoin Ordinals, like Taproot Wizards, have garnered substantial venture capital interest, further signifying their growing relevance.
The Evolution of Bitcoin and NFTs
Bitcoin’s relationship with NFTs has evolved significantly. The first blockchain-based NFTs emerged in 2014 on Counterparty, a protocol built on Bitcoin. However, debates around the appropriate use of the Bitcoin blockchain for NFTs have persisted. Key developments, including the 2017 Segwit upgrade and the 2021 Taproot upgrade, have made it more feasible and cost-effective to store data for NFTs on the Bitcoin blockchain.
The Role of Ordinals in Bitcoin’s NFT Landscape
Ordinals stand out in two significant ways. Firstly, they store the entire NFT data on-chain, unlike many Ethereum NFTs that link to external images. Secondly, these NFTs are associated with individual satoshis, offering a unique approach compared to Ethereum’s more native NFT support. However, this system’s complexity and lack of native support in Bitcoin software present challenges, such as the risk of inadvertently spending NFTs as transaction fees.
Creative Uses of Bitcoin Ordinals
The introduction of Ordinals has sparked a wave of creativity within the Bitcoin community. From minting the Ether Rocks collection to embedding the Trump NFT image on Bitcoin, enthusiasts are exploring various uses of this technology. Notably, these NFTs require individual transactions for minting, contrasting with Ethereum’s batch minting capability.
