Despite worries about Bitcoin Ordinals congesting the network, there’s scant evidence to indicate that inscriptions are usurping blockspace from more significant Bitcoin BTC monetary transactions.
“There’s scant proof that inscriptions are ousting monetary transfers,” stated the on-chain analytics company Glassnode in its report on September 25 titled “The Week On-chain.”
The company elucidated that this is probable as users of inscription tend to opt for lower fee rates, signifying their readiness to endure longer wait times for confirmation. Bitcoin Ordinals, launched in February 2023, have dominated the network activity concerning daily transaction count.
Nonetheless, this dominance is not mirrored in its proportion of mining fees, with inscriptions contributing to merely about 20% of Bitcoin transaction fees, as noted by Glassnode. While inscriptions have augmented the baseline demand for blockspace and enhanced fees for miners, Glassnode states that Bitcoin’s hash rate has surged by 50% since February.
This surge has escalated the competition among miners seeking to garner revenue fees. Glassnode remarked, “With heightened miner competition underway, and the impending halving event, miners are likely nearing a threshold of income stress. Their profitability is set to be challenged unless there’s an uptick in BTC prices shortly.”
Currently, Bitcoin stands at $26,216, but numerous industry experts are anticipating a potential price increase as the scheduled Bitcoin’s halving event in April 2024 approaches. Presently, a significant portion of inscriptions is resultant from BRC-20 tokens, launched a month after Casey Rodarmor unveiled the Ordinals protocol on Bitcoin in February.
On September 25, Rodarmor proposed “Runes” as a possible substitute for BRC-20s, implying that a protocol based on unspent transaction output wouldn’t abandon as much “junk” unspent transaction outputs on the Bitcoin network.
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