But what does that “potential” actually mean?
Bitcon growth reported
According to a recent report released by Galaxy Research, the Bitcoin NFT market could increase to a size of $4.5 billion by 2025. While the Bitcoin NFT ecosystem did not exist until recently, the report suggests that the recent growth is just the beginning of what could be a much larger industry.
Galaxy researchers predict that the demand for the ability to store NFTs on the oldest and most established blockchain in the world will continue to grow in the coming years. The report also suggests that a fully-developed infrastructure of products and services that cater to this growing market will be available by summer 2023.
In January 2023, a project called Ordinals launched NFT-like capability on Bitcoin, enabling users to inscribe satoshis with unique data such as images and video. The project was an immediate success, with over 267,000 inscriptions made since the end of January.
Yuga Labs, the $4 billion company behind the Ethereum NFT collection, Bored Ape Yacht Club, recently announced its first-ever Bitcoin-based NFT project, which signifies the spread of Ordinals’ appeal to the top echelons of the established, predominantly Ethereum-based NFT ecosystem.
A different market
Galaxy predicts that the Bitcoin NFT market will look different from competitors because of the cost of inscribing on the network. For example, to inscribe 10,000 Bored Ape Yacht Club NFTs on the Bitcoin network would cost roughly $229,000.
Due to this cost, creators will likely avoid Bitcoin for massive multi-thousand piece PFP collections, and instead, Bitcoin will become the home of much rarer, “high quality” art projects, and valuable one-of-ones. Ethereum and other chains will continue to host massive multi-thousand piece PFP collections at much lower costs to creators.
Yuga labs’ Bitcoin NFT offering is a collection of 300 randomized high-quality images
However, the report’s rosy outlook for Bitcoin NFTs is contingent on the continued success of the broader NFT market. If the NFT ecosystem does not continue to grow, demand for Bitcoin-native NFTs will be limited. The market has struggled to recover to the all-time highs of early 2022, just before Terra’s collapse triggered the current crypto winter, which caused NFT prices and demand to plummet.
Although NFT sales just notched their best month since the bear market kicked off, the surge in trading volume is primarily coming from controversial trading practices on the emergent Blur NFT marketplace. Blur’s sudden rise, overtaking the once-dominant OpenSea, has caused a crisis in the established NFT market. Creator royalties, once the cornerstone of NFTs’ value proposition, have been slashed by NFT marketplaces in a race to attract customers from competitors.
Royalties, typically set between 5% and 10% of a sale price and paid by the seller, are how most NFT projects generate revenue. Nearly all NFT marketplaces have now made paying such fees optional, which is attractive for traders since they now pocket greater profits on each sale but devastating for creators who lack other sources of revenue.
Bitcoin Punks are soaring in value
Investors in NFT and web3 technology should take note of the potential for Bitcoin NFTs to grow in popularity, although the report’s predictions depend on the continued success of the NFT market. Trading Bitcoin NFTs could be more viable than trading NFTs on blockchains such as Solana and Ethereum, which will likely continue to host massive multi-thousand-piece PFP collections at much lower costs to creators. The cost of inscribing on the Bitcoin network may discourage creators from inscribing massive collections, but the Bitcoin NFT market could become the home of much rarer, “high quality” art projects, and valuable one-of-ones.
The future of the NFT market is cloudy at best when it comes to stating where real growth and adoption will occur, with other blockchains already far ahead in the game it will be interesting to see where Ordinals and Bitcoin go. There is no guarantee when it comes to NFTs lately as proper utilities are still being worked on but the technology is there and NFTs remain a staple and viable component of the web3 revolution.