The new Bitcoin protocol could shake up the NFT market

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A new protocol released on Bitcoin brings broader NFT capabilities to the world’s largest blockchain and it has the potential to reshape the NFT market and the dynamics between some of the largest blockchains, industry officials told Forkast.

The protocol, named Ordinals, which was released after a post by developer Casey Rodarmor on January 21, allows users to insert relatively large amounts of data into transactions, which can be used to create collectible images on the network. , similar to many popular NFT projects. .

While this capability was previously available on Bitcoin but at a scale too small for exploitable NFTs, system upgrades like Taproot 2021 and SegWit 2017 allow the Ordinals protocol to extend this functionality.

Jonathon Miller, Australian managing director of U.S.-based cryptocurrency exchange Kraken, said Ordinals is a positive development for the network, but has also caused controversy.

There are purists who say [Bitcoin] should always be peer-to-peer money, but I think that might not be the story when it comes to the reality that people are experimenting with bitcoin all the time, he said in an interview. It’s really exciting to see people building things on Bitcoin.

Without this experimentation, the network would not have Layer 2 solutions such as the Lightning Network, which dramatically increases Bitcoin transaction speeds, he added.

New killer?

NFTs are seen as a crucial part of the reinvented Internet of Web3 in which games, social media and financial services are run through decentralized blockchain applications controlled by users’ wallets. And NFTs have long been the domain of the Ethereum blockchain which hosts around 70% of the total value of NFT sales.

Many blockchain networks from Cardano to Solana have been labeled Ethereum Killers in recent years, or networks hoping to eat away at Ethereum’s dominance in Web3 or NFT, but so far none have made much headway.

The story continues

Yehudah Petscher, NFT relationship strategist for blockchain data aggregator CryptoSlam, said one reason for this is that Ethereum has a multi-year head start. But that’s not a factor holding Bitcoin back as the world’s premier cryptocurrency.

[Its] has been around for more than a decade than any of the others, plus they have a huge, huge user base. So I almost think there is a potential for it to compete with Ethereum faster than others, just because of its adoption.

Miller had a different view, saying that Ethereum has great tools for creating NFTs, whereas Ordinals is just the protocol for creating tools on the Bitcoin network.

May be [Ordinals] isn’t going to be something that directly competes with those networks, he said. And it could well be a reminder that Ethereum is a very solid and well-equipped network for creating NFTs.

And after?

Petscher said the real change from ordinals may not be in creating new types of collectibles, but in proving that developers can build on an old blockchain and change market dynamics in the world. process. This could turn out to be the real innovation of the project, he added.

[Ordinals] certainly gives bitcoin as a currency itself more utility, he said, it was strictly almost a financial asset and people were very happy with it. It now has another one and one I expect like on Ethereum and these other blockchains will grow exponentially now you can transact collectibles.

Some Ordinals critics claim that this will increase demand on the network, leading to higher fees for regular transactions. Petscher agrees it’s a risk, but said the added utility of being able to buy NFTs with Bitcoin could also serve to boost the price, helping many miners and long-term holders in the community. .

Others argue that these are frivolous ways to use the network, however, and undermine the intent Satoshi Nakamoto, pseudonymous creator of Bitcoins, had in mind when publishing the original Bitcoin whitepaper in 2009. .

It can be all of those things at once, Petscher said. It can certainly be frivolous and it can be silly and it can be unnecessary and it can still be great at the same time and important to building a movement.

And especially in a decentralized world, not only does it not matter, but there is nothing you can do about it.

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