The launch of Bitcoin Non-Fungible Tokens (NFTs) which are known as Ordinals has hit the number of non–zero Bitcoin addresses to an all-time high, 44 Million, as stated by Glassnode. The report further explained that it is the first time in the 14-year history of Bitcoin that its network activity has been used for purposes other than peer–to–peer monetary transactions.
Alongside, the report explained that the surge in Ordinals has led to the short-term upward movement in Bitcoin Network usage. It has also added several “new active users” with non–zero BTC balances to the network.
The growth in the network user base is primarily the result of Ordinals which instead of carrying a large payload of coin volume carried a huge payload of data and new active users. This can be seen as the adoption of Bitcoin beyond the typical investment and monetary transfers. However, the Ordinals now seem to compete for block space which is creating upward pressure on the fee market but did not result in a significant surge in Bitcoin transaction fees.
Ordinals were launched on January, 21 with the upper range of mean Bitcoin block size increasing from 1.2 -2.0 MB to 3.0 – 3.5 MB in just a span of one week. The Taproot Soft Fork enabled the technological applications behind the Ordinal protocol in November 2021.
Using the Ordinals Numbering Scheme, Bitcoin users can assign arbitrary content to Satoshis which is the smallest denomination of BTC, and enable users to inscribe Bitcoin–native, NFT–like images. So far there are 78,400 NFT–like images and videos inscribed. However, the impact of the NFT–like images on Bitcoin has led to several controversies too. Moreover, some Bitcoiners have also shown dislike towards the Ordinals protocol indicating a deviation from Bitcoin‘s core purpose of a P2P electronic cash system.