December 21, 2023
By Sharan Kaur Phillora
The crypto world is witnessing a new frenzy with the rise of hybrid NFTs, or Ordinal Inscriptions, causing significant congestion on blockchains. These NFTs, initially popular on Bitcoin, are now spreading across various smaller blockchains, pushing up transaction fees and in some instances, slowing down the networks.
Here’s what we know:
Zaheer Ebtikar, founder of crypto fund Split Capital, compares this trend to the popularity of dog coins, saying, “It’s kind of like dog coins — people make a dog coin on each chain [because] other dog coins are popular.”
Unlike renowned NFT collections created on Ethereum, inscriptions are minted directly on the blockchain through a protocol named Ordinals. Julio Moreno, head of research at CryptoQuant, noted a surge in transactions related to Ordinals and inscriptions on Bitcoin since November.
Leo Mizuhara, founder of Hashnote, sees technical benefits in this method, as “the NFT-type of inscriptions data are actually fully written to the blockchain, unlike in Ethereum.”
However, the rapid adoption of these inscriptions has led to increased transaction expenses on various blockchains, including Polygon PoS and Binance BNB Chain, as per Dune Analytics data. Michael Rinko, an analyst at Delphi Digital, views this trend as lacking rationality, saying, “I kinda just see it as the new hot thing…zero rationality behind it.”
The impact on blockchains like Avalanche is notable, with users spending millions daily on creating and moving inscriptions. This trend has also caused temporary outages on projects like Arbitrum. Ben Yorke, VP at WOO, sees few benefits over traditional tokens, remarking, “There aren’t many benefits over traditional tokens, just projects minting and speculating to chase the Bitcoin Ordinals narrative.”
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.
