May 29, 2024
Bitcoin Ordinals Coexist With Traditional Money Transactions
Bitcoin News

Bitcoin Ordinals Coexist With Traditional Money Transactions

Despite apprehensions about Bitcoin Ordinals causing network congestion, there is scant proof to indicate that these inscriptions are encroaching on blockspace used for more substantial Bitcoin (BTC) monetary transfers. Glassnode, an on-chain analytics company, addressed this in its report titled “The Week On-chain” on September 25.

The report clarified that this is likely due to inscription users typically selecting low fee rates, indicating their readiness to endure extended confirmation times.

“Inscriptions appear to be buying and consuming the cheapest available blockspace, and are readily displaced by more urgent monetary transfers.”

Introduced in February 2023, Bitcoin Ordinals have dominated daily transaction counts on the network. Surprisingly, this substantial activity has not translated into a proportionate share of mining fees. According to Glassnode, inscriptions make up only around 20% of Bitcoin transaction fees.

Despite inscriptions bolstering the consistent demand for blockspace and leading to heightened fees for miners, Glassnode has observed a 50% rise in Bitcoin’s hash rate since February. Consequently, this has intensified the competition among miners vying for revenue through transaction fees, as per Glassnode’s findings.

“With extreme miner competition in play, and the halving event looming, it is likely that miners are on the edge of income stress, with their profitability to be tested unless BTC prices increase in the near term.”

At present, Bitcoin is valued at $26,216, and numerous experts within the industry anticipate a certain level of price growth leading up to the scheduled Bitcoin halving event in April 2024.

Currently, the majority of inscriptions are generated by BRC-20 tokens, which were introduced approximately one month after Casey Rodarmor initiated the Ordinals protocol on Bitcoin in February.

On September 25th, Rodarmor proposed “Runes” as a potential substitute for BRC-20 tokens, proposing that an unspent transaction output-based fungible token protocol could potentially reduce the accumulation of “junk” unspent transaction outputs on the Bitcoin network.

Image by partystock on Freepik

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