Imagine digitally recording 3D images of objects like colorful spheres onto a tiny bitcoin shard. Then imagine that you are selling them for $16.5 million.
Just when you thought cryptocurrencies couldn’t get any weirder, Bitcoin accidentally spawned a new generation of NFTs.
The newcomers emerged in 2023 after an upgrade to the bitcoin network that allowed each satoshi — the smallest denomination of bitcoin, or one hundred millionth — to store several megabytes of data, ranging from text and images to audio and video.
Data retention was an unintended consequence of updates. Since January, crypto enthusiasts have injected a total of 385,000 “lists” known as Ordinals into Bitcoin, including over 200,000 image files and over 150,000 text files, according to Glassnode Market Intelligence.
“I think this is really the start of a fundamental change in what you can do with bitcoin,” said Alex Miller, CEO of the Hiro bitcoin developer network.
The colored balls are part of TwelveFold, a collection of 300 images of 3D objects presented in a square grid created by Yuga Labs, an NFT developer best known for its Bored Ape Yacht Club. The company calls this set a “visual allegory” for blockchain data.
They became a profitable parable this month when the company sold 288 of them at auction for $16.5 million, according to research firm Delphi Digital.
Other top-selling ordinals named after a software protocol that facilitates registration include images of boulders and crown shadows in JPEG format, which sold for $213,845 and $273,010, respectively, according to Galaxy Digital Research.
While the bitcoin NFT market has only been around since January, Galaxy estimates it could be worth $4.5 billion by 2025 based on factors such as the growth of the Ethereum NFT market, being more established and the fact that bitcoin is by far the most popular cryptocurrency. .
However, be careful: it seems difficult to predict the highly unpredictable market for non-fungible tokens with any accuracy.
According to CryptoSlam data, total NFT sales, excluding ordinals, were about $1 billion last month, a recovery from November’s $324 million but still a downturn, which is roughly $5 billion last January and 2 .7 billion dollars in May.
However, the Bitcoin NFT gained momentum in a short amount of time. Satoshi registered in NFTs account for approximately 7% of total transactions on the Bitcoin blockchain, according to Glassnode.
GRAPHICS: many transactions – https://www.reuters.com/graphics/FINTECH-CRYPTO/WEEKLY/klvygnxeavg/chart.png
TYPE OF LIGHTNESS
One of the biggest challenges for this new category of NFTs is the lack of user-friendly marketplaces, with early transactions being over-the-counter on shared online spreadsheets, according to market participants.
According to Delphi Digital, this lack of infrastructure is a real barrier to entry.
Not everyone is happy with this resumption of activity, especially some bitcoin purists who believe the cryptocurrency should only be used for payments.
The average bitcoin transaction fee, measured over a seven-day period, jumped to $1,981, the highest level since November, due to a spike in transactions on Ordinals when it was below $1 in early February, according to the data. from Blockchain.com.
“We want transactions to be as cheap as possible so that people everywhere can do business and send money,” said Corey Clippsten, CEO of Swan Bitcoin, a financial services company focused on bitcoin. a set based on a non-monetary use case, which is pretty frivolous.”
According to Blockchain.com, the average seven-day time it takes to confirm bitcoin transactions reached over 186 minutes at the end of February, the highest since bitcoin’s price crash in November.
Since then, that time has shrunk to over 124 minutes, although it’s still well beyond the 12.8-35 minute range in January and February.
“Ordinals have brought more attention to the network,” said Brandon Sedo, blockchain developer at Core DAO. “But the bitcoin NFT detracts from the core purpose of the network, which is to serve as a permissionless network accessible around the world, around the clock and without censorship.”