Bitcoin NFTs Built on Inscriptions & Ordinals: A $4.5bn Market by 2025, According to Galaxy Research
A new report from Galaxy Research highlights the emergence of a new frontier in Bitcoin: inscriptions. Since December 2022, over 200,000 inscriptions have been minted on Bitcoin, creating a new ecosystem for non-fungible tokens (NFTs) that could be worth $4.5 billion by 2025. These inscriptions are files that can range from images to text, audio, and applications, tied to a single unique Satoshi (sat), the smallest unit of BTC.
While inscriptions and NFTs have notable differences, the addition of sizeable data storage with strong availability assurances creates a variety of use-cases, many of which are only beginning to be explored. These include new types of decentralized software or Bitcoin scaling techniques. Even the NFT use-case alone has the potential to dramatically widen the scope of Bitcoin’s cultural impact.
The growth of inscriptions, whether as an NFT market or something more, will enhance the likelihood of additional Bitcoin adoption, which long-term can be supportive of BTCUSD. Even without relying on the second layer methodology for individually labeling units of BTC, significant “blob space” data availability on Bitcoin can find significant uses, putting a floor on blockspace demand and benefiting Bitcoin’s security and fee market.
The emergence of this new Bitcoin-native use case suggests major opportunities for growth but also raises serious questions about the future of Bitcoin. While many are embracing this new design space, other Bitcoiners have concerns about its impact on Bitcoin’s decentralization.
Galaxy Research predicts that significant market infrastructure to support Bitcoin NFTs will be developed by Q2 2023. Wallets have already begun to offer the necessary support to improve user experience, and marketplaces are already emerging.
In conclusion, inscriptions and ordinals create significant growth potential for the Bitcoin ecosystem and can improve the fidelity and security of the overall Bitcoin network. The report argues that concerns about negative effects on Bitcoin’s fungibility are overblown, and that even the 500 million inscriptions tied to ordinals would see only 0.2% of Bitcoin’s terminal supply become “non-fungible.” As the market infrastructure continues to develop, it will be interesting to see how Bitcoin inscriptions and NFTs evolve and impact the overall cryptocurrency market.
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