After a one-day surge in activity that was primarily made up of text-based assets, the number of non-fungible tokens (NFT) connected to the Bitcoin blockchain surpassed 3 million earlier this week, according to data from Dune Analytics.
By incorporating references to digital art into modest Bitcoin-based transactions, the tokens, also known as inscriptions, operate on the Ordinals Protocol, which enables users to embed data into the Bitcoin network.
The increase comes after the release of the Bitcoin Request for Comment (BRC-20) token standard, which enables users to directly create transferable tokens across the network. That prompted the creation of a collection of digital artwork and meme tokens based on Bitcoin. The latter category’s market value increased to $137 million on Tuesday.
However, data indicates that the majority of inscriptions are text-based. As network fees are based on the amount of data engraved, they are significantly less expensive than digital art or meme coins.
On the Bitcoin blockchain on Monday, there were more than 372,000 unique inscriptions, of which 371,000 were text-based. The remaining were applications or tokens, just 316 image-based inscriptions were produced.
For producing the inscriptions, creators paid a total of 28 bitcoin (BTC), which was added to the almost 284 bitcoin in lifetime fees generated by Ordinals activities. In today’s dollars, that is more than $8 million.
The “Bitcoin NFT” market, according to digital asset investment firm Galaxy Digital, may reach $4.5 billion by 2025, even though the market valuation of BRC-20 tokens is now less than $10 million.
The Bitcoin community is still divided on whether Ordinals is a good fit for the Bitcoin ecosystem. One of its proponents, Dan Held, asserts that it broadens the uses for Bitcoin in the financial world, while critics believe that it diverges from Satoshi Nakamoto’s initial vision for the cryptocurrency, which was to serve as a peer-to-peer payment system.