Overpriced transactions, overcrowded blocks, congestion in the mempool: Bitcoin Ordinals are the subject of heated debate. Rightly so?
Ordinals - no topic is more controversial in the Bitcoin bubble. The hype around NFTs and BRC-20 tokens took the network by surprise: transactions reached records, blocks were crowded, fees rose. A chain reaction, as already seen on Ethereum during the NFT boom in 2021. But the trend around the "blockchain inscriptions" also shows its bright side: Miners are making returns, the variety of applications on the blockchain has expanded, a growth spurt for the Bitcoin ecosystem. The community is divided, but ordinals seem to be less of a problem for the network than initially feared.
Bitcoin ordinals break record high
For some months now, data such as texts, images, audio files or videos have also been entering the Bitcoin blockchain via the ordinals protocol. Adding such data to a Satoshi, the smallest Bitcoin computing unit, is called an inscription. While ordinals are not tokens like NFTs or Ethereum ERC-20 tokens, they can be used for similar things. And they have quickly become a hit in their own right. Around ten million ordinals are now immortalised on the Bitcoin blockchain, according to Dune.
A lucrative business, especially for miners. 44 million US dollars have been paid in fees for ordinals alone. After the wave of bankruptcies in the mining sector, "Bitcoin NFTs" have picked up the profit margin again. However, the hype was bought dearly with horrendous fees. At the beginning of May, the average cost of a bitcoin transfer rose to 30 US dollars. The losers of this trend seemed quite clear: the users. The network and block size reached their limits, unconfirmed transactions piled up in the mempool. And a dispute quickly flared up about the sense and nonsense of NFTs on the Bitcoin blockchain.
Much excitement for nothing?
In retrospect, the Bitcoin culture war seems overdone. The number of ordinals written daily to the blockchain is decreasing, transactions from the mempool are being processed, and fees have now dropped to three dollars.
After the initial FOMO flurry, the ordinals market is moving into day-to-day business. The fact that the Bitcoin network will continue to serve as a focal point for NFTs, i.e. fees can run riot every now and then, is something that Ordinals critics will probably have to get used to.
In the meantime, Bitcoin is the second largest network for NFTs after Ethereum, ahead of Solana or Polygon. Blockchain bridges like Bitcoin Miladys are supposed to create NFT synergies between the blockchains; after the dry spell of the last few months, the market could be in for a second spring. However, the example of Ethereum also shows that the problems exacerbated by ordinals can produce solutions. Fees on Ethereum also rose drastically during the NFT hype wave - and fell again. The scaling problems were largely tackled by second-layer solutions. The Lightning network has therefore recently collected many arguments that scaling solutions could ultimately benefit from the ordinals trend and contribute to an overall better user experience - necessity is the mother of invention.
