Crypto News

Grayscale sees a bright future for Bitcoin with Ordinals

Published by
Nonhlanhla P Dube
  • Bitcoin Ordinals or NFTs could have a positive impact on the future of Bitcoin by increasing mining fees, which could incentivize miners and ensure continued network security throughout the lifetime of the Bitcoin network.
  • Ordinals could renew developer enthusiasm for Bitcoin, especially given the Bitcoin network’s reputation as a rigid blockchain ecosystem.
  • Ordinals could contribute to a cultural transformation within the Bitcoin community by offering a straightforward manifestation of non-fungible digital assets due to their immutable nature, lack of programmability, and mandatory on-chain inscription requirements.

Grayscale, the world’s largest digital asset manager, has published a report stating that Bitcoin Ordinals or NFTs are a positive indicator for the future of Bitcoin. Grayscale believes that ordinals could increase mining fees, renew developer enthusiasm for Bitcoin, and contribute to a cultural transformation within the Bitcoin community.

In a blog post titled “Market Byte,” Grayscale explained that ordinals offer two significant benefits to the expansion and development of the Bitcoin ecosystem. The first benefit is a significant increase in fees paid to miners since the introduction of the protocol in January. This increase could potentially establish a sustainable baseline level of transaction fees to incentivize miners and ensure continued network security throughout the lifetime of the Bitcoin network. Grayscale also believes that ordinals could renew developer enthusiasm for Bitcoin, especially given the Bitcoin network’s reputation as a rigid blockchain ecosystem.

Bitcoin Ordinals refer to the position of a particular transaction in the order of transactions on the Bitcoin network. Grayscale’s report suggests that transactions with high ordinal values are often associated with increased demand for Bitcoin and could indicate future price increases. Ordinals employ previous Bitcoin network enhancements, such as SegWit and Taproot, and allow data to be embedded directly within the witness segment of a Bitcoin transaction, including images, videos, and applications.

Grayscale acknowledges the concerns regarding Bitcoin Ordinals, as the original Bitcoin whitepaper does not account for unique digital assets, additional data that contributes to blockchain congestion, or inscriptions that could reduce fungibility. However, Grayscale contends that ordinals are a byproduct of utilizing the Bitcoin blockchain as it currently exists and subsequent crypto innovations, even if Bitcoin’s creator did not initially envision them.

Grayscale compares ordinals and the ERC721 standard, with ordinals having the advantage of being a straightforward manifestation of non-fungible digital assets due to their immutable nature, lack of programmability, and mandatory on-chain inscription requirements. Ordinals may be an appealing alternative for those looking for a simple, scarce digital asset on the most established blockchain available.

This report from Grayscale is relevant to South Africa as the country is seeing increased interest in cryptocurrencies and NFTs. It provides insights into how Bitcoin Ordinals could potentially increase the mining fees and promote a development-oriented community and culture in support of the Bitcoin network. The report also sheds light on the benefits of using the Bitcoin blockchain as it currently exists and how it can adapt to support new innovations.

Nonhlanhla P Dube

Nonhlanhla P Dube is a senior news reporter at Rateweb. Nonhlanhla is a student of International Relations at the University of South Africa. She reports primarily on personal finance and economics. You can contact her directly by email at nonhlanhla@rateweb.co.za

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Published by
Nonhlanhla P Dube

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