According to a report by the Grayscale Bitcoin Trust (GBTC), which is the largest institutional crypto fund, a new type of non-fungible token (NFT) called Ordinals is gaining popularity in the Bitcoin network. The GBTC described ordinals as unique digital assets created by assigning data to individual satoshis, which are the smallest denominations of Bitcoin. This numerical assignment provides uniqueness, and ordinals have gained significant attention in the crypto community, with over one million inscriptions as of April 8, 2023.
Ordinals were created in December 2022 by Bitcoin developer Casey Rodarmor, and have since become a popular way to create and trade unique digital assets on the Bitcoin network. While some have criticized their use for straying from Bitcoin’s original purpose and potentially causing blockchain bloats and compromising fungibility, Grayscale argued that ordinals are a natural evolution of utilizing the Bitcoin blockchain and subsequent crypto innovations.
Despite these criticisms, the GBTC believes that ordinals benefit the Bitcoin network in two ways. First, they increase the total fees paid to miners, which could establish a sustainable baseline level for transaction fees to incentivize miners. Second, ordinals have the potential to attract renewed developer excitement toward the relatively stagnant Bitcoin community and blockchain.
