Bitcoin NFT Enthusiasm Seems To Be Waning A Bit

Bitcoin NFTs have become a hot topic, with Ordinals becoming popular among crypto enthusiasts. Ordinals are digital assets inscribed on a satoshi, the smallest unit of Bitcoin, and are similar to NFTs. The Taproot upgrade on the Bitcoin network in November 2021 made inscribing on satoshis possible.

According to data from Dune Analytics, the number of Bitcoin Inscriptions crossed 200,000 in January. Since then, fees on the Bitcoin network have skyrocketed, passing $170,500 in inscription fees on February 15, 2023. Over $1.31 million in fees have been paid to miners on the Bitcoin network. However, since February 15, the amount of fees paid to miners has steadily decreased to $54,000 on Feb. 20 to currently just over $11,000. The decreasing interest in Ordinals is one of the reasons for this decline in fees.

Bored Ape creators show interest

Yuga Labs, the creator of the Bored Ape Yacht Club, has announced that it will launch its first Bitcoin-based NFT project, TwelveFold, later this week. The collection will consist of 300 generative art pieces, each inscribed to the Bitcoin blockchain using Ordinals, which attach artwork and media to an individual Satoshi, or 1/100,000,000 of a full Bitcoin. The project marks a departure from Yuga Labs’ past Ethereum-based offerings, including the Bored Ape Yacht Club, which consists of 10,000 or more NFTs, and will have no future interactions or utility on Ethereum.

The TwelveFold pieces will feature 3D graphics and hand-drawn elements, with all 12×12 grids representing an homage to the way data is stored on the Bitcoin blockchain. The project was designed and created by Yuga’s in-house art team and will be auctioned later this week. Yuga Labs co-founder Greg Solano noted that the launch of TwelveFold on Bitcoin will be a departure from what is expected from the company but added, “We’re excited about Ordinal inscriptions and what the future holds for digital artifacts on Bitcoin.”

Yuga’s move into the Bitcoin NFT market comes at a time when its Ethereum-based revenue stream is under threat, with OpenSea stopping the enforcement of creator royalties on secondary sales. However, Yuga Labs had previously criticized OpenSea for considering this move. Ordinals have commanded the attention of the NFT world over the past month, with more than 200,000 unique Ordinals minted, including from notable projects like DeGods and OnChain Monkey. Yuga’s TwelveFold is one of the highest-profile launches via Ordinals to date, and it remains to be seen how successful the company’s foray into Bitcoin NFTs will be.

Better understanding the Bitcoin network

Bitcoin transaction fees are determined by the volume of data in the transaction and the speed at which the user wants their transaction completed. Users who want their transactions to go through during periods of high traffic can decide to pay more fees to push their transactions through. Fees rise when the demand for processing transactions outstrips the supply of miners.

On the Bitcoin network, an individual block is 1MB, meaning miners can only confirm 1MB of transactions per block. At the height of the initial craze, users inscribed whatever they could that would fit within that 1MB block size, including a copy of the original Doom.

Understanding the NFT competition

It is essential to compare the Bitcoin blockchain to Solana and Ethereum. Ethereum is the second-largest cryptocurrency platform by market capitalization, and Solana is a newer blockchain platform that has gained traction in recent years. The main difference between Bitcoin, Ethereum, and Solana is the technology they use.

Bitcoin’s blockchain is based on proof-of-work, while Ethereum and Solana use a proof-of-stake consensus algorithm. Bitcoin has a maximum block size of 1MB, while Ethereum can handle a larger amount of data per block, up to 15 transactions per second. Solana can handle even more data per block, up to 65,000 transactions per second.

Ethereum is known for its smart contracts, which allow developers to create decentralized applications (dApps). These dApps can be used for various purposes, such as creating NFTs, DeFi protocols, and gaming. The Ethereum blockchain has a native cryptocurrency called Ether (ETH), which is used to pay for gas fees. Gas fees are the fees charged for executing a transaction on the Ethereum network. Solana is also capable of hosting dApps, and it has its cryptocurrency called Sol.

Will NFTs on Bitcoin Overtake or Destroy Solana and Ethereum?

It is difficult to predict with certainty whether Bitcoin NFTs will overtake Ethereum or Solana NFTs in popularity. Ethereum is currently the most widely used platform for NFTs, but Solana has been gaining traction in the NFT space due to its faster transaction times and lower fees. Bitcoin has recently entered the NFT market, but it remains to be seen how it will compete with the established players.

bitcoin NFT
Generative Art Piece by Yuga Labs “Twelvefold” series created for bitcoin

As for the Solana market, it is impossible to provide a precise probability. However, it is worth noting that any cryptocurrency market can be subject to volatility and market fluctuations, and this can impact the value and adoption of NFTs on the platform. It is important for investors and traders to exercise caution and do their own research before investing in any cryptocurrency, including Solana.

Regarding the chances of the Ethereum NFT market being replaced by the Bitcoin NFT market, it is also difficult to predict. Ethereum has established itself as the dominant platform for NFTs, but Bitcoin’s brand recognition and widespread adoption may give it an advantage in the NFT market. However, it is also possible that both platforms will coexist and serve different niches in the NFT space. Ultimately, it will depend on the preferences of NFT buyers and sellers, as well as the features and capabilities of each platform.

Ordinals and Satoshis

Bitcoin NFTs have gained popularity with Ordinals, which are digital assets inscribed on a satoshi, the smallest unit of Bitcoin. The decreasing interest in Ordinals is one of the reasons for the decline in fees on the Bitcoin network. However, Yuga Labs’ announcement of their TwelveFold project may rekindle the interest in Ordinals. Bitcoin, Ethereum, and Solana are different blockchain platforms with varying capabilities. Ethereum and Solana are known for their smart contracts and dApps, while Bitcoin is a store of value

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