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New highs for the Bitcoin network

17 May, 2023
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Introduced in 2023, the Ordinals protocol gave users the ability to mint NFTs and meme tokens on the Bitcoin network (read more on the mechanics on the creator's blog). This led to excitement and some new record highs.

Daily transactions

Last week, the number of daily transactions surpassed the 2007-high by 39%, reaching 682,000.

Image source: glassnode.com

The network has faced an overload because of the low processing speed, and the mempool queue has exceeded 500,000 transactions. Users have experienced halted transfers, and the average fee has risen to $30.

Number of transactions per block

The number of transactions has jumped from an average of 2,000 to 4,400 per block.

Image source: glassnode.com

It's mostly due to BRC-20 coins having displaced other types of ordinals. Simply put, BRC-20 consists of text that helps pack transactions more densely.

Transaction volume

An interesting pattern can be observed when analysing the average volume per transaction. NFTs appeared on the network first, pushing the indicator to a record-high 1.5 KB, as it takes a significant block size to transfer "files". But by the end of April, BRC-20 have replaced NFTs, causing the average transaction volume to drop to the 12-year low of 405 bytes.

Image source: glassnode.com

Fees

The new protocol was highly appreciated by miners as the hype around ordinals has resulted in fee growth (users have to offer higher fees for their transactions to be processed faster). This is the fifth time in history that the fees have exceeded the block reward (6.66 BTC against 6.25 BTC, respectively). It's also the third time that daily fees have reached $17.8 million. It previously occurred during the cryptocurrency market rally.

Image source: glassnode.com

Users are divided into two camps in their opinions. On the one hand, ordinals increase demand and empower the network. On the other, they go against Satoshi Nakamoto's idea of a purely payment functionality and cause fees to rise.

Image source: StormGain cryptocurrency exchange

One can only claim that the network records caused by ordinals haven't led to similar price shocks for Bitcoin. The number of minted BRC-20 has dropped by 36%, and the mempool load decreased by 45% from last week's highs.


StormGain Analytical Group 
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