Bitcoin NFT mania has hit over 100k ordinal
The Bitcoin (BTC) non-fungible (NFT)-based Ordinals protocol has mined over 100,000 NFTs despite only launching on January 21, 2023 — but some believe it should never have launched.
According to data from Dune analytics, nearly 107,000 ordinals have already been launched, showing significant interest in the project, but many believe the project is wasting precious Bitcoin blockchain space to save what they see as nothing more than useless data.
This is because ordinal NFTs — called “patterns” — are stored entirely on-chain, including the content represented by the tokens, resulting in the media being stored directly on the blockchain.
This means that the patterns result in data such as images, short videos, and PDF versions of the bitcoin whitepaper being stored directly on-chain. This is all data that all full nodes of the network will have to download in order to function, which greatly increases the storage requirements of the hardware the node software is running on.
Traditionally, non-financial data was stored on Bitcoin’s blockchain in so-called OP_RETURN entries limited to 80 bytes — enough for eighty ASCII characters, essentially a short sentence — after an increase from the previous limit of 40 bits.
None of these limits were allowed for images or PDFs, let alone videos, but the recent introduction of the Taproot upgrade activated on November 12, 2021, provided a workaround to this limitation. Instead of using the OP_RETURN entry,
Patterns are stored in the script entries for the OP_FALSE, OP_IF, and OP_PUSH script path of the Taproot script.
The Taproot was intended to facilitate the development of more advanced smart contracts on the Bitcoin blockchain, but developers Ordinal also found that it provided an easy hack to pry through larger than normally allowed amounts of data on the blockchain.
The situation is a good example of why introducing new and more complex features into blockchain systems that are supposed to be as reliable and robust as Bitcoin can be a daunting process.
With how the Bitcoin blockchain currently works, there is no limit other than the block size, with the underlying Bitcoin software limiting the size of this data to just 400,000 bytes or 0.4MB – a tenth of the block. This is because with the introduction of SegWit back in 2017, the transaction size limit was raised to 400,000 wt, with the current block size being equal to one byte each.
Thus, it is now possible to store 5,000 times more data on the Bitcoin blockchain, and there is no way to stop this use of the blockchain without another protocol upgrade. Such transactions can easily gobble up the block space that financial transactions would also need, further driving up transaction prices and slowing processing times.
SegWit also offered a 75% discount on witness transaction data – the type of data NFTs are stored in – which means that NFT minting is also more cost effective per byte stored in the chain than simple financial transactions.
This also does not play in favor of Ordinal’s proponents’ claim that this system subsidizes miners by paying a large amount of transaction fees.
Data from Dune Analytics shows that a total of $129,000 in BTC was spent on registration fees for Ordinals NFTs. Also, Taproot usage has skyrocketed, according to another chart.
Similarly, the average daily Bitcoin block size has also seen a significant increase, though the average number of transactions per block has not followed the same pattern since the introduction of the Ordinals.
Ordinal items are transferred by transferring a specific satoshi stored in the wallet of the NFT owner, which means that other transactions do not enjoy any particular fee discounts and do not put any significant pressure on the network. The minting of new NFTs has only been viewed as controversial by many participants in the network.
NFTs are unique digital assets that are stored on the blockchain, which is a decentralized digital ledger that allows secure transactions to take place without the need for a central authority.
Each NFT is unique and can represent anything from digital artwork to tweets, music or videos. Unlike cryptocurrencies such as Bitcoin or Ethereum (ETH), which are fungible and interchangeable with each other, each NFT is unique and has its own value based on its scarcity, authenticity, and demand.
The findings come on the heels of recent reports that Reddit’s Collectible Avatars has given away millions of free NFTs to users, including for the first time.