Binance Supports Bitcoin NFTs (Ordinals)
Binance Supports Bitcoin NFTs (Ordinals)
Will This Break the Bitcoin Network?
GM DOers!
If you thought NFTs were dead, think again! We’re seeing a resurgence of blockchain-based JPEGS. 📈
Only it’s not happening on Ethereum anymore. It’s occurring on the big-boy chain: Bitcoin. 🥇
You got it: We’re talking about Ordinals, aka Bitcoin NFTs.
Why now? Yesterday, Binance, the crypto-giant, announced support for Bitcoin Ordinals on its NFT Marketplace. 🎉
Ordinals is a new protocol on the Bitcoin blockchain.
Is it magic? No, but it allows for the storage of non-fungible tokens (NFTs) by inscribing content onto sequentially numbered satoshis, also known as "sats".
This innovation has split the community: some see it as an exciting expansion 🚀 and others as a deviation from Bitcoin's original mission. 🤔
We're diving deep into the Ordinals onchain activity, its impact on Bitcoin, the concerns it's raising, and the truth behind it all. 🕵️♀️
Need more context on Ordinals?
Find out what Ordinals are and how Bitcoin NFTs work by reading our latest PRO Report:
If you’re somewhat familiar, then fasten your seatbelts, DOers. This one’s going to be a wild ride! 🎢
P.S- Make sure you stay until the end. We have a special ‘Advice For Builders & Investors‘ section that you don’t wanna miss 👀
Let’s go 👇
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Breakdown of Bitcoin On-Chain Analytics 📊
Alright, let's kickstart this deep dive with some raw data!
Bitcoin's been busy. Just how busy? Let's unpack this, chart by chart. 📈
Total Ordinal Inscriptions
First off, we're looking at a whopping 5 million total Ordinal inscriptions. That's right, 5 million pieces of unique NFTs have found a home on the Bitcoin blockchain. 🏠
Why does this matter? It's a testament to the rapid adoption of Ordinals and the increased demand from the community.
$BTC Paid in Fees
Next up, we have a total of over 1000 $BTC paid in fees, which translates to a hefty ~$30M. 💰
What does this mean? Well, it's simple. This level of fees indicates a high demand for Ordinal inscriptions. It also represents a significant source of revenue for Bitcoin miners.
Ordinal Fees as a Percentage of Total Bitcoin Fees
Now, this is where it gets really interesting. Over the last 4 days, Ordinal fees have accounted for 36%, 61%, 41%, and 46% of all Bitcoin fees. 🚀
The implication here is clear: Ordinals are becoming a major player in the Bitcoin economy.
This could herald a shift in the Bitcoin landscape, as Ordinals carve out a significant chunk of transaction activity.
Bitcoin Miners' Earnings
Lastly, we see that Bitcoin miners are finally making some decent money. 💸
This matters because miner incentivization is key to the security and longevity of the Bitcoin network.
With Ordinals, miners are seeing a new stream of income, which could lead to more mining activity and thus, a more secure network.
In summary, the onchain data shows that Ordinals are in demand (but this could very well be a fad).
They're a new powerhouse in the Bitcoin economy, driving increased activity and miner revenue. But as with any major innovation, Ordinals have not been without their critics…
Worries Of The Bitcoin Community
Let’s talk about the fears, concerns, and criticisms that have been voiced within the Bitcoin community. 🕵️♂️
Non-Financial Use 🏦: Some purists believe Bitcoin should be reserved strictly for financial transactions and not for storing NFTs or other non-financial data.
They argue that Bitcoin's limited block space should not be used for what they perceive as frivolous purposes.
Overcrowding the Blockchain 🚗: There's a worry that the inclusion of NFTs could overcrowd the Bitcoin blockchain, causing congestion.
This could potentially slow down transaction times and disrupt the smooth functioning of the network.
Increasing Transaction Fees 💸: As NFTs compete for space with traditional financial transactions, there are concerns that transaction fees could increase significantly.
Higher fees could price out smaller, everyday transactions, altering Bitcoin's accessibility.
Straying from Original Intent 🚶♂️: Some members believe that using Bitcoin for storing NFTs deviates from Bitcoin's original mission as envisaged by its creator, Satoshi Nakamoto.
The argument here is about preserving the original vision of Bitcoin as a decentralized peer-to-peer electronic cash system.
Potential for Censorship 🚫: The introduction of NFTs on Bitcoin's blockchain could open the door for miners to selectively censor certain types of data, which contradicts the decentralized ethos of the system.
This concern stems from the idea that controversial or undesirable NFTs could be targeted for exclusion.
Security Concerns 🛡️: As new protocols and uses like Ordinals are introduced, they potentially open up new vectors for attacks or vulnerabilities in the system.
Ensuring the security of Bitcoin remains paramount, and some worry that innovations like Ordinals could compromise this.
But before we rush to judgment, let’s take a moment to separate fact from fear.
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The Truth
So what is the reality of the situation?
Community Reaction 📢: The Bitcoin community has always been vocal, and this situation is no different.
Bitcoin has weathered many storms, and it's likely to weather this one too.
Sustainability through Fees 💰: Bitcoin needs fees to be a sustainable blockchain.
Fees are an integral part of the incentive system that keeps the network running smoothly and securely.
Transaction fees serve as an additional reward for miners, especially as the block rewards continue to halve every four years.
Profitable Mining 🛠️: Just a few months back, Bitcoin mining was becoming almost unprofitable for small miners.
Cointelegraph wrote on October 4th, 2022: “Glassnode analysis suggests that miners are somewhat on the cusp of acute income distress.”
When mining isn't profitable, it could lead to centralization and ineffective mining, as only the big players can afford to keep going, something that’s detrimental to the security of the network.
A surge in fees due to Ordinals could, paradoxically, help keep the mining ecosystem healthy and diverse.
Besides… Aren’t high fees indicative of a bull market? 🐂 👀
Bitcoin as a Settlement Layer ⚖️: Bitcoin is the settlement layer of its network, and there are layer 2 solutions like Lightning Network and Stacks, which can support cheap and fast transactions with Bitcoin settling them.
This is similar to how Ethereum uses its layer 2 solutions.
Last Thursday’s PRO Report was precisely on this matter: Bitcoin NFTs and Bitcoin L2s. Wanna dive deep into that?
This layered approach allows Bitcoin to retain its security and decentralization while still facilitating speedy, low-cost transactions.
Lastly, keep in mind that there’ll always be people expressing their opinions and spreading FUD.
Remember, Bitcoin is open source. If you don’t like the rules, you can always fork it and make your own rules!
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Wrapping Up: What’s Next?
It’s important to remember that nothing lasts forever. Ordinals are going through a phase now and the hype will die out sooner or later. 📉
Right now, however, big players like Binance and smaller communities like DeGods will look to capitalize on the opportunity.
🟡 Binance: Offering support for Ordinals so people use their platform to trade these NFTs. That’s more money for Binance.
💀 DeGods: Forking 535 NFTs to Bitcoin to be early on the ‘next big thing’.
But what does this mean for you, as an investor or builder?
As we wrap up, we want to shift focus to our PRO members by giving you some advice on how all of what we talked about above impacts YOU!
I just wrote a 400 words section on how you can capitalize on the opportunity (or avoid the hype cycle) 🚨
If the demand is there, I plan to include this section regularly in all of our free newsletters!
Moving forward, I plan to share insights about the news we just covered, why it matters to YOU and give you advice for building and investing in web3. 🚀
This will be exclusive for our PRO members. 💜
So keep reading and let me know your thoughts about whether or not you want to keep seeing this! 👀
Not a PRO? Fix that now and start thriving in web3 😉