All new Bitcoin protocol may shake up the NFT market: Report

February 8, 2023

By Anjali Kochhar

A new protocol released on Bitcoin is bringing wider NFT capabilities to the world’s largest blockchain and it has the potential to reshape the NFT market and the dynamic between some of the largest blockchains, according to a report by Forkast.

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

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

“There are purists who say [Bitcoin] should always just be peer-to-peer cash, but I think that’s possibly not the story when it comes to the reality, which is that people experiment with Bitcoin all the time,” he said in an interview with Forkast. “It really is exciting to see people build things on top of Bitcoin.”

NFTs are regarded as a crucial component of the reimagined internet of Web3 — in which gaming, social media and financial services are run through decentralized blockchain applications controlled by users’ wallets.

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

“[It’s] been around longer than any others — ten years now, plus — they have a huge, huge base of users. So, I almost think there’s potential it could compete with Ethereum more quickly than the others could, simply because of adoption.”

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

“Perhaps [Ordinal’s] not going to be something that competes directly with those networks,” he said. And it may well act as a reminder that Ethereum is a really strong and well-tooled network for creating NFTs.

Some of Ordinal’s critics argue that it will increase the demand on the network, driving up fees for regular transactions. Petscher agrees this is a risk, but said the added utility of being able to purchase the NFTs with Bitcoin could also serve to increase the price, helping many miners and long-term holders within the community.

Others argue that these are frivolous ways to use the network, however, and detract from the intention Satoshi Nakamoto, Bitcoin’s pseudonymous creator, had in mind when releasing the original Bitcoin white paper in 2009.

About the author

Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.

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