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Bitcoin Ordinals Volume Tops $210 Million in Q2 — Is This the Next NFT Wave?

Published July 7, 2023 5:58 PM
Teuta Franjkovic
Published July 7, 2023 5:58 PM
Key Takeaways
  • The trading volume of Bitcoin Ordinals reached $210.7 million in Q2 2023, up 2834% from Q1 of that year
  • Exploitation losses in the dapp sector decreased significantly, by 45%, from $373 million in Q1 2023 to $206 million in Q2 2023
  • Despite a 38% decline in NFT trading volume this quarter, a paltry 9.2% decline in sales indicates persistent market interest and activity

According to the most recent quarterly report from DappRadar , the establishment of Bitcoin Ordinals inscriptions on the Bitcoin blockchain has generated more than $210 million in trade volume but the NFT market kept decreasing.

The information demonstrates how the rapidly rising demand for Bitcoin Ordinals resulted in a dramatic rise in trade volume through the second quarter of 2023.

Bitcoin Ordinal Trading Volume Rose From $7.18M to $210.7M

By the end of June, the annual average trading volume for Bitcoin had grown to $210.7 million from $7.18 million in the first quarter. According to DappRadar, the quarterly rise was 2834%.

The research further claims that, by the second quarter of 2023, there were approximately 550,000 all-time Ordinals trades, with almost 150,000 different traders adding to the exaggerated trading volume.

BTC Ordinals
Credit: Dune Analytics

The number of unique users surged significantly starting in May 2023, according to a Dune blockchain analytics dashboard  showing multiple Bitcoin Ordinals marketplace indicators from the user domo.

The majority of unique users by marketplace are represented by UniSat, an open-source Chrome browser extension for Bitcoin Ordinals and BRC-20 tokens, Magic Eden, and Ordinals Wallet.

The non-fungible token (NFT) environment has been interestingly impacted by the growth of Bitcoin Ordinals. Bitcoin overtook Solana to become the second-most popular NFT blockchain around the end of May 2023, leaving Ethereum as the leading cryptocurrency blockchain in terms of NFT trade volumes.

Through the first half of 2023, BTC miners have made almost $184 million, with Coin Metrics praising Ordinals and BRC-20 tokens for their contribution to the increase in fees that has already eclipsed 2022’s total for BTC miners.

In a tweet  on July 6, Ethereum co-founder Vitalik Buterin thanked Bitcoin Ordinals for reviving a “builder culture” within the Bitcoin community.

Quick Ordinals 101

Each individual Bitcoin satoshi (the currency’s smallest unit) has a value according to the Bitcoin Ordinal theory, a numbering system. Inscriptions can then be made on a particular sat with numbered sats. These inscriptions are collections of arbitrary data and information that may be directly inscribed on the Bitcoin blockchain in nearly any format.

Although they are more commonly thought of as digital artifacts, Ordinals are comparable to NFTs in that they become unique with inscribed data. Ordinal inscriptions were made possible by the Bitcoin updates SegWit and Taproot, which among other things, increased block size.

Modernizations of Ordinals

Ordinals saw a significant increase in attention and buzz, similar to other new cryptocurrency ventures. However, interest began to wane, albeit only slightly. However, BRC-20 and BRC-721 tokens later appeared and maintained the level of interest.

Ideas began to bloom as people became aware of the potential of these recent advances on the Bitcoin network. BRC-721 followed BRC-20.

BRC-20 Token Standard

The appearance of Ordinals in the community stirred up old debates about network congestion and the optimal applications for Bitcoin. However, it didn’t end with Ordinals. The BRC-20 token standard followed. In March 2023, a new “token standard” was established and given the name “ERC-20” in honor of Ethereum’s ERC-20 token.

The fact that BRC-20 tokens are not fully fledged standards or specifications sets them apart from other token standards. In reality, BRC-20 tokens are just a small piece of JSON code embedded in an Ordinal. Their goal is to produce tokens that are semi-fungible on the Bitcoin blockchain. They are comparable to ERC-20 tokens in this regard.

What does BRC-721E bring to Bitcoin, and what is it called?

Similar to Ethereum’s ERC-721, the BRC-721E token standard was developed for NFTs. ERC-721, on the other hand, enables users to bridge conventional NFTs from Ethereum to Bitcoin, as opposed to merely encoding Ordinals as NFTs.

Users can bridge NFTs from Ethereum by sending them to a burn address, which results in the creation of BRC-721E tokens. A low resolution version of the NFT is used to inscribe metadata onto the ERC-20 token after it has been teleburned. Additionally, the burned ERC-20 token with the full-quality NFT is mentioned in the inscription.

What Comes Next for Bitcoin NFTs and Ordinals?

Some of the best ideas in the realm of cryptocurrencies, like many new innovations, begin as memes. On Bitcoin, BRC-20 tokens started the memecoin season, and some of the NFTs that are being bridged from Ethereum are exactly as absurd as one could imagine. But these new concepts are introducing the globe to all these new advances on Bitcoin, beyond the excitement, fun, and copying in.

For many years, Bitcoin has been seen as a digital currency with limited applications. The novel use cases that the Bitcoin Ordinals protocol has generated are encouraging advancements. Additionally, they are increasing demand for layer 2 Bitcoin solutions.2.

NFT Market Declines, but Interest Remains

The popularity of Bitcoin Ordinals sharply increased last quarter, but the overall NFT market continued to decline. The second quarter of this year saw NFT trading volume hit $2.9 billion, a 38% decrease from the first quarter, according to the DappRadar study.

But the analysis warned against comparing trade volume with the intensity of market fervor. “A decrease in trade volume doesn’t always signify a decline in market activity or interest. This is demonstrated by the fact that there were 18.6 million sales in Q2, a 9.2% decline.

The survey also revealed a fall in trading volume of 34% at Blur, the current largest NFT marketplace, during the quarter. OpenSea, the long-time market leader, suffered much more, with a more than 56% decline in trade volume.

Immutable X Marketplace and JPG Store, on the other hand, defied the general trend and showed substantial increases in their trading volumes of 37% and 64%, respectively. This shows “a positive outlook for these platforms amid a challenging market environment,” according to the report.

Nevertheless, Bitcoin is currently down 3% from yesterday’s price of $30,170. The leading cryptocurrency, however, has increased by more than 13% over the past month and by 81% YTD.

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