Ordinals Inscriptions Responsible for Price Spikes
Ordinal inscriptions account for over 50% of daily transactions and are a big reason for the fee rise. Since their launch in January, many developers and users have minted over 200.000 Ordinal NFTs, and the community is growing. Relevant to the emerging transaction fee increase, it's worth mentioning that there is a backlog of 350,000 Bitcoin transactions awaiting verification.
From a technical aspect, Ordinal NFTs are an unintentional product of Bitcoin protocol updates SegWit and Taproot performed in 2017 and 2021. Ordinals make it possible to create Bitcoin NFTs by attaching text, video, or images onto a single satoshi on the base Bitcoin blockchain. Being Bitcoin-native, Ordinals are compatible with the network and do not require alteration to the Bitcoin protocol.
The full impact of Ordinal NFTs on the rise of transaction fees is still debated. However, industry experts look at the current situation as a reminder that innovation is necessary to stabilize the market in the future. The best solution proposed is expanding layer-2 capabilities, designed to facilitate mass crypto adoption and prevent transaction bottlenecks, in turn making the entire process scalable and cheaper.
The Lightning Network is receiving support as a viable option for off-chain transactions settled faster for reduced fees. It's the most appropriate method to grow and sustain Bitcoin's user base.
Miners Reached a Revenu Milestone
At a time when high transaction prices are burdening Bitcoin users, miners are reaping the rewards for their efforts and profit from the surge in costs. Data for November shows that miners have generated $1.16 billion in revenue, with transaction fees contributing $142 million to the total, making November this year’s most profitable month for miners.
Concerns over high fees are not slowing down Bitcoin. The network is functioning as intended, and the price of Bitcoin is resurgent, reaching around $42,000 on Monday, December 18.