Bitcoin has come a long way from the prolonged bear market of 2022 to its rally throughout January 2023. But owing to negative regulatory developments, the dominant coin has retraced back to its late 2020 levels.
However, for the first time in Bitcoin’s 14 years of existence, the emergence of a new class of assets has led to a significant uplift in Bitcoin network activity and increasing fee pressure.
The primary source of this uptick in the coin’s network usage of late is due to Ordinals, which carry a larger payload of data and new active users.
According to a recent report by the top data analytics platform Glassnode, the introduction of Ordinals—Bitcoin nonfungible tokens [NFTs]—has propelled the total number of addresses with non-zero balances to a new record high of 44.06 million addresses.
Since the capitulation event brought on by the FTX bankruptcy, the monthly average of the New Addresses joining the network has exceeded the year average, which is a promising development, the report noted.
Not only that, but Ordinals’ impact on the Mean Block Size has been significant, with the upper range of mean block size rising from a steady 1.5 to 2.0MB, to between 3.0 and 3.5MB over the last week.
Ordinals, A “New And Unique Moment In Bitcoin’s History”
“The emergence of Ordinals and Inscriptions was an unexpected one, and it has manifested as a non-trivial expansion in demand for blockspace, even though it may not be the classic transfer of coin wealth between investors”.
Terming it a “new and unique moment in Bitcoin history”, the report observed that this is the first time where an “innovation is generating network activity without a classical transfer of coin volume for monetary purposes”.
Launched on Jan 21, by software engineer Casey Rodarmor on the Bitcoin mainnet. Ordinals allow the direct inscription of digital artifacts like pictures, text, programs, and even video games on the blockchain.
While the BTC community is still divided over this asset class, a study conducted by research firm FSInsight remarked that the inclusion of these non-fungible data might play a role in bitcoin’s next bull run.
As reported by TronWeekly, the paper went on to claim that NFTs might be a good source of demand for block space while the digital asset “travels up the acceptance curve as money.”