NFTs on the Bitcoin blockchain go under the hammer for millions

Mar 14 (Reuters) – Imagine first digitally saving 3D images of objects like colored spheres onto a tiny bit of bitcoin. And then you sell those photos for $16.5 million.

Just when we thought that cryptocurrency had nothing to surprise us anymore, Bitcoin gives us a new guise in the form of its own NFTs.

The innovation materialized in 2023 with an update to the Bitcoin network, whereby each Satoshi – the smallest bitcoin unit with a face value of one hundred millionth – can now store several megabytes of data: from text and images to audio and video.

The storage of information was an accidental consequence of a series of updates. According to data from Glassnode Market Intelligence, since January, cryptocurrency enthusiasts have injected 385,000 such “records,” known as “ordins,” into Bitcoin, including more than 200,000 image files and more than 150,000 text messages.

“I think this is really the beginning of a fundamental shift in what can be done with bitcoin,” said Hiro’s Alex Miller.

The multi-colored orbs are part of the TwelveFold collection, which consists of 300 images of 3D objects displayed in a square grid from NFT developers Yuga Labs, best known for the Bored Ape Yacht Club collection. They call the current set of images a “visual allegory” of blockchain data.

Despite its allegory, the collection still made quite a tangible profit this month, when the company sold 288 such paintings for $16.5 million, according to research firm Delphi Digital.

Other best-selling ordinals, named after a software protocol that facilitates the signing process, include JPEG images of rocks and dark-crowned figures, which according to Galaxy Digital Research have sold for $213,845 and $273,010, respectively.

Although the Bitcoin-based NFT market only started in January, Galaxy believes it could reach $4.5 billion by 2025. Galaxy’s optimistic outlook is based on factors such as the growth of a more established Ethereum-based NFT market and Bitcoin’s status as the most popular cryptocurrency.

However, don’t get carried away: the highly unpredictable Unique Tokens (NFT) market is notoriously unpredictable.

Total NFT sales – excluding ordinals – were around $1 billion last month, according to CryptoSlam data. That’s more than November’s $324 million, but still less than about $5 billion in January and $2.7 billion in May.

However, Bitcoin-based NFTs were able to gain a lot of popularity in a very short time. According to Glassnode data, Satoshi with NFT signatures accounts for about 7% of the total number of transactions on the bitcoin blockchain.

“A Little Bit”

According to market participants, one of the biggest challenges for the new class of NFTs is the lack of user-friendly trading platforms. Initially, transactions were conducted over-the-counter on online tables available on the Internet.

However, not everyone is happy with this increase in activity, especially some bitcoin fanatics who believe that the cryptocurrency should only be used for payments.

According to data from Blockchain.com, the average Bitcoin transaction fee over a 7-day period rose to $1,981, the highest since November. This is due to the surge in ordinal trading, as the commission was less than $1 in early February.

“We want to make transactions as cheap as possible so people around the world can do business and transfer money,” said Corey Clippsten of Swan Bitcoin. He also sees the fact that non-monetary use of bitcoin replaces its primary function as a problem and calls the approach somewhat frivolous.

Some critics argue that ordinal numbers also clutter the web. According to data from Blockchain.com, the average time to confirm a bitcoin transaction over a 7-day period in late February exceeded 186 minutes, the most since the bitcoin crash in November.

Over time, this value has dropped to almost 124 minutes, although it still far exceeds the range of 12.8 to 35 minutes recorded in January and February.

“Ordinals have drawn even more attention to the web,” said Brandon Sedo of Core DAO. “At the same time, NFTs on bitcoin distract from the main purpose of the network, which is to be available globally, 24/7, and uncensored.”

The original message in English is available under the code:

(Lisa Pauline Mattakal and Medha Singh in Bangalore)