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Analyzing the impact of Ordinals on Bitcoin [BTC] network’s traffic

 

According to Bitcoin explorer Mempool, the difficulty on the Bitcoin [BTC] network has achieved a new all-time high of 43.55 T, marking a 23% rise year-to-date (YTD).

BTC miners had to employ more computing power to mine blocks due to the increase in difficulty levels, as the hash rate soared to 351 EH/s.

After the debut of Ordinal NFTs on the Bitcoin Mainnet in January 2023, overall network traffic has increased dramatically. Bitcoin Ordinals have taken the crypto world by storm since their inception. According to Dune Analytics, the total number of Ordinals inscriptions reached 521,843 at the time of writing, with 58% of them coined in March alone.

The figure peaked on March 9, when more over 30,000 inscriptions were coined in a single day. Nevertheless, over the last two months, the total transaction fees paid on the Bitcoin network have more than doubled.

Ordinals trade accounted for 22% of total fees paid by miners, according to Dune data.

Ordinals, in particular, concentrate on BTC’s smallest units, satoshis. The protocol allows users to encode data into each satoshi. This data may contain smart contracts, which can then be used to enable NFTs.

With BTC under heightened regulatory scrutiny, Bitcoin-native NFTs could provide it with much-needed push in the long run. Despite its meteoric rise, the Ordinals project has divided the crypto world, with BTC purists concerned about increased network congestion, which would result in higher fees and slower transactions.

These concerns are not entirely unwarranted. At the time of writing, memory use per block has reached 366 MB, causing the blockchain to reject any transaction valued less than 3.07 sats/vB, or Bitcoin per byte. Nonetheless, over 30,000 transactions had still to be validated, indicating that the network had slowed significantly.

 

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