Users inscribing as many as 5k ‘NFTs’ on every bitcoin block
At peaks, there can be as many as 5,000 unique inscriptions on every bitcoin block, fresh data from Dune Analytics on May 1 shows.
The rise and rise of Bitcoin Ordinals
Bitcoin inscriptions have been exploding in recent months.
By offering a special way for users to store inscriptions, which can be files, similar to non-fungible tokens (NFTs), at the satoshis level, Bitcoin, the transactional network, has turned out to be a cheaper, more convenient alternative of minting “NFTs”.
The result has been an uptick in on-chain transactions in recent months, coinciding with the launch of Bitcoin Ordinals in January 2023. Bitcoin Ordinals is a portal through which users can “mint” inscriptions in bitcoin blocks.
Anyone can attach files on satoshis, storing them permanently on the Bitcoin network.
As such, Dune data now shows that there can be as many as 5,000 inscriptions on every bitcoin block during peaks.
The upsurge in the number of bitcoin inscriptions has subsequently forced more traffic to the Bitcoin blockchain.
Because of this new way of file storage made possible following the Tap Root upgrade, parallel findings reveal that Bitcoin has been processing more transactions in 2023 than in any other period in the network’s history.
Will Bitcoin inscriptions force transaction fees higher?
The result has been over 9.3 GB of “new data” added to the network resulting in 240 bitcoin (BTC) processing fees sent to miners.
As an illustration, the Bitcoin blockchain processed over 568,000 unique transactions on April 30, 78,000 more than at the peak of the 2017 bull run. Out of this bunch, over 50%, or 307,000 transactions, were inscriptions from Bitcoin Ordinals.
On April 30, there were 16% more inscriptions than those registered on April 29. Most of these inscriptions have been texts, with fewer choosing to store images on the Bitcoin network.
In total, more than 2.93 million inscriptions have been added to the Bitcoin network since January 2023, with a notable trend of daily inscriptions gradually rising over the past four months.
All the same, bitcoin remains to be a transactional layer meant to enable the trustless transfer of funds.
Although a sizeable chunk of blocks is filled with monetary transactions, there are worrying concerns that the increasing popularity of Bitcoin Ordinals and inscriptions could bloat blocks, increasing block space demand and unnecessarily forcing transaction fees up.
From January, bitcoin transaction fees have been rising, more than tripling from around $0.629 on Jan. 1 to $2.4 recorded on April 30.