Ordinals Protocol Generates Over 6,000 BTC in Fees

The innovative Ordinals protocol has recently garnered significant attention with its non-fungible token (NFT) inscriptions on the Bitcoin blockchain, accumulating fees that have surpassed the 6,000 BTC mark. According to analytics platform Dune, these fees equate to a staggering sum exceeding $257 million, given the current exchange rates.

Making Sense of the Numbers

With the Ordinals project’s rising popularity, there have now been over 59 million serial inscriptions. On average, each of these inscriptions has a fee of 0.0001 BTC, or approximately $4.37, showcasing the protocol’s growing financial impact within the cryptocurrency ecosystem.

Understanding Bitcoin Ordinals

Bitcoin’s ordinal system has revolutionized the concept of NFTs on its network by allowing for the unique identification of each Satoshi, the smallest Bitcoin unit. This is achieved by ordering each Satoshi and assigning it an identifier based on its mining time and transaction order, thus granting it the non-fungible characteristics required for NFT creation.

Security Warnings and Developer Skepticism

Despite the protocol’s success, concerns have been raised about its potential security implications. The U.S. National Vulnerability Database (NVD) issued a warning in December 2023, identifying the Ordinals protocol as a possible cybersecurity threat to Bitcoin. They highlighted vulnerabilities in Bitcoin Core and Bitcoin Knots that could be exploited by BRC-20 tokens to bypass data transfer limits in transactions by disguising them as code.

Renowned Bitcoin developer Luke Dashjr has also expressed criticism towards BRC-20 tokens for exploiting these vulnerabilities, leading to network congestion. As a response, the Bitcoin community is considering updates to resolve these issues and potentially put an end to BRC-20 and Bitcoin-based NFTs.