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Bitcoin is the king of crypto, known among investors for its ability to retail value, a feature that earned it the moniker “digital gold”. Ever since its earliest days, it has made a reputation for itself as a rather conservative digital coin, focused solely on transactions and the financial aspect of the blockchain. Altcoins, on the other hand, have been more multifaceted, expanding into several different directions, such as decentralized applications and gaming. However, in spite of its more restrained nature, Bitcoin has stayed a market favorite, attracting investors from all over the world. The main reason for this is that BTC has succeeded in remaining relatively reliable and trustworthy, something that can’t often be said about other cryptocurrencies.
In January 2024, the Bitcoin environment made a shift from its usual modus operandi to launch the Ordinals, an asset class that caused quite an uproar among community members that have started to search for new ways on how to take advantage of them, with some condemning their launch while others were quick to check the Bitcoin price usd to figure out if they afford to add Ordinals to their wallet. But what exactly are they, and what has been their impact on the platform?
Image source: https://unsplash.com/photos/gold-and-black-round-coin-5ixVD22x22o
The Bitcoin Ordinals are the rough equivalent of the Ethereum-based NFTs. They use satoshis, the smallest denomination on the Bitcoin blockchain, that is inscribed with text or image. This creates a truly unique digital asset that is also very scarce, hence its high value. Ordinals are essentially a new method of coming up with meme tokens and non-fungible tokens. When they were launched, the community split between those who saw them as a positive improvement and those who believed that they would disrupt the market and affect it negatively. There were even some who saw the Ordinals as akin to spam emails. However, unlike the previous NFTs, the content associated with an Ordinal, be it video, audio, or a simple image, gets inscribed directly onto the blockchain itself.
All Ordinals are mined in the same way as the standard Bitcoin. The transactions are also essentially the same, with the only difference being in the protocol. However, the mining process is somewhat different compared to that of the classic NFTs, as the data is inscribed directly on the blockchain, something that cannot be done in the case of other systems, and the fact that Bitcoin uses proof-of-work for the mining, while the other blockchains have implemented the proof-of-stake.
The impact of the arrival of the Ordinals on the platform has been debated among users since before the Ordinals were even launched. One of the positive prospects of Ordinal integration is that it can serve as one of the innovative measures that covers the needs of miners where subsidies are concerned. It isn’t the only development capable of doing so, with the Runes and BTC-20s showing potential in this regard as well. If all of them join their forces, it could mean that miner retention levels stay consistent and could even receive a boost. When you buy NFT tokens, you incentivize the market and keep it going.
In the aftermath of the halving that occurred in April 2024, market analysts predicted that miners would have only a few choices if they wanted to remain profitable:
Invest in brand-new equipment.
Relocate to a country where energy prices are much lower.
Quit.
Many were forced to choose the last one due to a lack of sufficient resources. There’s also the fact that Bitcoin’s growing popularity has led to a growing use base, something that significantly impacted the miners’ income fees. This means that there’s little incentive for many to stay operational. Before the Ordinals arrived, miners were fully reliant on peer-to-peer transactions that accompanied block subsidies. Satoshi Nakamoto even predicted back in Bitcoin’s early days that transaction fees would eventually become the main compensation source for miners.
Ordinals, BRC-20s and Runes have recorded their own fluctuations as well, going through several rises and falls in popularity since the launch of the protocol, something that has disrupted steady miner revenue flows even further.
The Runes focus on the creation of fungible tokens that can boost user experience and efficient transactions, while the ordinals facilitate the creation of unique, fungible, or non-fungible digital assets. In spite of their fundamental differences, both the Runes and the Ordinals are often discussed together due to their core similarity of being products located on the Bitcoin blockchain but serving different functions than the standard coins. As of the end of April, well over 2.38 million Runes transactions had been processed, making up more than 68% of all the actions taking place on the blockchain.
The runes protocol was actually launched by the same creator responsible for the development of the Ordinals. Casey Rodarmor also created separate inscriptions and is widely recognized among community members as a highly knowledgeable bitcoiner. Most analysts have also discussed the fact that the Runes are marketed as being a more efficient way of creating new tokens on the Bitcoin network compared to the BRC-20 standard, an Ordinals-based method. Yet, there is no indication that the Ordinals will be replaced anytime soon.
The Ordinals have also been associated with higher price performance, something investors will always see as a positive aspect. The most obvious example was right before the halving. Data showed that volumes were considerably higher at that point, even though the buying and selling of other non-fungible tokens dropped by a staggering 95%. This trend indicates that there was an isolated rise in the Ordinals. This movement also shows that even during times when it might seem that the Bitcoin environment is not doing as well as it could, its performance remains very strong nonetheless.
The Ordinals are a means to inscribe satoshis with digital media in the form of images, videos, and music. Their novelty received mixed reactions from the trading community, and while some were eager to welcome this new asset class, others saw them as a potential threat to the network’s stability and well-being. However, there’s no denying the fact that the market has changed as a result of their introduction and will continue to do so.
Investors who want to make sure their portfolios are protected need to remain aware of the price fluctuations as well, so that their strategies will be customized to handle the variations. It is the only way to remain profitable.
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