Bitcoin fees have surged to their highest levels since the meme coin frenzy in May, driven by the revival of Bitcoin-linked non-fungible tokens (NFTs) known as Ordinals.
According to BitInfoCharts data, average transaction fees on the Bitcoin blockchain reached $6.84 on Wednesday, marking a staggering 970% increase from the August low of $0.64.
This surge in fees is attributed to the growing popularity of Ordinals, with approximately 1.9 million inscriptions uploaded to the blockchain in the past two weeks, as highlighted in a report by digital asset management firm 21Shares on Wednesday. Ordinals, a protocol enabling users to store NFTs on Bitcoin, experienced a surge in demand during a brief meme token craze this spring, leading to fees reaching nearly two-year highs.
The recent listing of Ordinals’ token ORDI on Binance, the world’s largest crypto exchange, further fueled the price, nearly doubling before experiencing a partial retreat on Wednesday.
While Ordinals have primarily been associated with memecoin implementations, 21Shares analysts emphasized that they serve as a proxy for the increasing demand for Bitcoin blockspace.
The resurgence of Ordinals is also proving advantageous for bitcoin miners, contributing approximately 8.5% of their revenue from blockchain transaction fees, as noted in the report. This holds particular significance for miners as Bitcoin’s quadrennial halving event, expected in April 2024, approaches, leading to a 50% reduction in block rewards for the industry.
Ordinals-based Meme Coin Rallies 40% After Binance Listing
Ordinals, a decentralized finance (DeFi) protocol based on Bitcoin, has garnered attention in recent months, becoming a familiar name among traders and investors. This recognition inadvertently played a role in a meme coin surge on Tuesday, following the listing of a token with a similar name on Binance.
On November 7, Binance announced the addition of a new token to its exchange. While token listings are typically routine, this particular listing attracted attention due to confusion surrounding the cryptocurrency’s name. A meme coin named Ordinals, trading with the ORDI ticker, experienced a nearly 40% increase.
It’s important to note that the meme coin, while utilizing the Ordinals protocol as a BRC-20 token on the Bitcoin network, does not represent the protocol itself. However, the coin’s description lacked clarity about its origin, stating,
“The total amount of bitcoins is 21 million, and one bitcoin can be subdivided into 100 million satoshi (i.e., satoshi is sat, the smallest unit of bitcoin). There are 2,100 trillion satoshi in total. Inscriptions are created by writing content to a satoshi using the Ordinals protocol. The inscription does not need to use a separate token, side-chain, or Bitcoin, as what the Ordinals protocol does is to write information to each satoshi, such as text, pictures, audio, and video, etc. Due to the size limit of the Bitcoin block, the main information used for inscription is text and pictures.”
As a result of this confusion, investors and traders mistakenly perceived the meme coin to be more valuable than it truly is, leading to increased demand. The subsequent rally not only saw a 40% surge in 24 hours but also contributed to a cumulative rise of nearly 100% over the past four days.
As of the current writing, the meme coin is trading at $10.35, reaching a six-month high.
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