One of the main effects of the emergence of Ordinals, non fungible tokens (NFT) native to the Bitcoin network, has to do with the use of Taproot transactions. Their adoption reached 13.7% yesterday, a new all-time high for this indicator.
Since the launch of the Ord wallet by Casey Rodarmor on January 23, 2023, the kickoff for the mass use of Ordinals, Taproot usage grew by 800%. According to data from Dune Analytics, it went from 1.72% on the aforementioned date to the record reached this Thursday, March 2.
That growth was explosive from the very first days.
The explanation for this phenomenon lies in the use that NFT Ordinals make of Taproot. To register files on the Bitcoin network, Ordinals uses a part of the transaction called Witness, which was created with the SegWit software update in 2017 and has the function of hosting signature data testifying that a transaction is valid.
Prior to Taproot, space in the witness field was limited, mainly due to security concerns. However, the update activated in November 2021 (the last major one on Bitcoin) extended the cap to 4 MB.
That gave the possibility for Ordinals to take advantage of the witness space (which also has a 75% discount on commission payments) to store all kinds of files in hexadecimal format.
Other effects of NFT Ordinals on Bitcoin
The adoption of Taproot was not the only consequence of the emergence of Ordinals in Bitcoin. These NFTs also caused the blocks on the network to increase in average size. At the time of writing, this indicator stands at 2.1 MB.
Likewise, commission payments to miners increased, thanks to the weight of Ordinals transactions. As can be seen in the graph above, although fees on average decreased from their peak, the cumulative amount already exceeds USD 1.4 million.
Despite all this, these days the Bitcoin Ordinals rush seems to have subsided, as reported in this newspaper. After weeks of congestion, the Bitcoin mempool does not have as many transactions on hold and the commissions for trading are also down because of it.
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