The launch of Bitcoin’s non-fungible tokens (NFTs), known as ordinals, has pushed the number of non-zero Bitcoin addresses to a new all-time high of 44 million, according to crypto-analytics platform Glassnode.
In a February 13 report from Glassnode, the firm explained that for the first time in Bitcoin’s 14-year history, a portion of the network’s activity is being used for purposes other than peer-to-peer Bitcoin (BTC) money transfers:
“This is a new and unique moment in the history of Bitcoin, where an innovation is generating activity on the network without a classic transfer of coin volume for monetary purposes.”
Glassnode explained that the rise of Ordinals has contributed to a “short-term increase in Bitcoin network usage of late” that has brought many “new active users” with a non-zero BTC balance to the network:
“The main source of this activity is due to Ordinals, which instead of carrying a large payload of coin volume, carries a larger payload of data and new active users,” Glassnode said.
“This describes a growth in the user base (…) of use beyond the typical investment and money transfer use cases,” he added.
A new player competing for block space
Glassnode noted that Ordinals is now competing for demand for block space, which is “creating upward pressure on the fee market,” but noted that this has not led to a significant increase in Bitcoin transaction fees.
According to Glassnode, since the launch of Ordinals on January 21, the upper range of Bitcoin’s average block size has increased from 1.5-2.0 MB to 3.0-3.5 MB in a matter of weeks.
However, this has not led to an increase in fees. While there have been some short-lived spikes, Glassnode stated that a “new lower limit transaction fee required for block listings” has been hit since Ordinals made its mark on Jan. 21.
The technological applications behind the Ordinal protocol were enabled by the Taproot soft fork, which went into effect in November 2021. Bitcoin Ordinals launched on January 21.
Using the Ordinals numbering scheme, Bitcoin users can assign arbitrary content to satoshis, the smallest denomination of BTC, allowing them to enroll images similar to Bitcoin’s native non-fungible tokens (NFTs).
There have been more than 78,400 NFT-like images and videos registered so far.
However, the impact of NFT-like imagery on Bitcoin has not come without controversy.
Related: Bitcoin is already in its ‘next bull market cycle’ — Pantera Capital
Some notable “Bitcoiners,” such as Blockstream CEO Adam Back, have recently expressed their distaste for the Ordinals protocol, suggesting that it deviates from Bitcoin’s purpose as a peer-to-peer electronic cash system.
However, others have been more open to the idea. Bitcoin bull Dan Held has stated on several occasions that ordinals bring more “financial use cases to Bitcoin”.
