Stacks price more than doubled due to bitcoin ordinal hype, but why?

Recent reports by Matrixport have suggested that Stacks (STX) – A smart contract layer that runs on top of bitcoin (BTC) – may be destined to become a “billion-dollar token” thanks to its association with the new bitcoin– Based on (BTC) non-fungible token (NFT) protocol Bitcoin Ordinals protocol, but how close are the two protocols?

According to data from Dune analytics, approximately 178,000 Bitcoin altcoins have been “pushed” to the Bitcoin blockchain permanently, with $1.273 million spent in fees — all of those fees being BTC. This innovation also had the effect of increasing the size of Bitcoin blocks and already added approximately 3.3 GB to the data that any full node would be forced to download even though it only launched on January 21, 2023.

As described in a recent analysis, Bitcoin Ordinals is taking advantage of the subtracted block space — by 75% — allocated to Taproot Snippets introduced on November 12, 2021 to save short videos, images, and other types of content directly on-chain and offer an all-in-one decentralized NFT solution. However, this was not the intended use of this feature with Bitcoin allowing only 80 bytes of transaction space for non-financial data in the form of an OP_RETURN entry, while such NFTs could easily take most of the block on their own.

Many feel that the Bitcoin Ordinals arrangement is an abuse of the Bitcoin blockchain that may outperform some of its financial applications and reduce the decentralization of the network by placing additional pressure on full nodes. However, none of the Bitcoin Ordinals features take advantage of anything that isn’t part of the underlying protocol: in other words, Stacks are not included.

However, Stacks lists a total of 21 decentralized applications (DApps) that include NFTs based on their protocol — of those, only three mention the keyword “Ordinals” on their website. Of these three, one is a data platform, and the other only mentions Bitcoin Ordinals in a blog post. The third is Gamma, a service that allows its users to register Bitcoin Ordinals.

A video tutorial published by Gamma a couple of weeks ago shows that it allows users to create a Bitcoin Ordinal that contains an image or text – interestingly, only BTC is involved in the transaction. Where the stacks are pictured on the Gamma auction page, where Bitcoin Ordinals are listed with prices in STX.

In other words, when it comes to the Ordinals ecosystem, Stacks’ primary involvement is the means of paying for auctions for those assets and serving as the equivalent of the OpenSea NFT market. However, whether that will be enough to make STX become a multi-billion dollar token as suggested by Matrixport as reported by Coindesk remains to be seen.

OpenSea already supports eight blockchains and is now likely to add one more to its pool. Whether Stacks will become the primary protocol to power the Bitcoin Ordinals exchange is still largely unknown given how young the ecosystem is. OpenSea – the world’s largest NFT exchange with its eight supported protocols – has reached a valuation of $13 billion with a Series C funding round in early January 2022.