- Interest in Ordinals, in particular BRC-20 tokens, is rising.
- Ordinals and BRC-20 tokens are continuing to break records.
- However, Ordinals and BRC-20 tokens’ success comes with Bitcoin’s demise.
Ordinals have revolutionized how people navigate and use Bitcoin. However, given Bitcoin’s recent struggles with network congestion and high network fees, Bitcoin maxis, who aren’t in favor of Ordinals, are running victory laps seeing its demise and possible decline.
After registering over five million inscriptions and accruing $27 million in total fees, it’s unlikely that Ordinals will slow down. Especially now that Ordinals-powered BRC-20 tokens are soaring toward a new market cap record.
$1B worth of Memes and Listings
Bitcoin Request for Comment (BRC-20), a new token standard introduced by Pseudonymous on-chain analyst Domo, is taking over Bitcoin. BRC-20.io reports the new protocol, which uses Ordinals at its core, powers over 14,000 unique tokens with a combined market cap of $912 million at press time.
However, on Monday, May 8, the combined market cap of all BRC-20 tokens just nicked the billion-dollar mark for a short while. The reason? Memecoin fever and ORDI.
Crypto.com and Gate.io, two of crypto’s leading exchanges, recently listed the first BRC-20 token, ORDI. This led to the asset peaking at $32.47 and its market cap soaring to $700 million on May 9, according to CoinMarketCap.
Only a week ago, on May 1, the token exchanged hands for $3.78.
But that’s not all. With BRC-20 enabling asset creation on Bitcoin, new memecoins have also found their way to swarming the network, with tokens like PEPE and MEME topping the charts.
The two memecoins hold a collective market cap of over $60 million at press time. This is considering the BRC-20 PEPE token is distinct from Ethereum’s trendy memecoin, which currently sits at a $775 billion market cap, according to CoinMarketCap.
The rise in BRC-20 listings indicates the emergent nature of the space and a significant shift in Bitcoin. However, while BRC-20 continues to break records and dominate the Ordinals space, its growth comes at a cost – Bitcoin’s stability.
BRC-20 and Network Congestion
On Sunday, May 7, BRC-20 tokens accounted for over 65% of Bitcoin transactions. The sudden spike in activity led to Bitcoin facing a massive backlog of transactions, leading to a domino effect of unprecedented problems.
Over 400,000 unconfirmed transactions flooded Bitcoin’s mempool. This led to leading exchanges like Binance stopping Bitcoin withdrawals, miners raking in obscene transaction fees, $20 network fees becoming a norm, transactions waiting longer, and people flocking to the Lightning network.
The surge in network fees sent ripples across the Bitcoin ecosystem, sparking rumors that the BRC-20 could be a coordinated “attack” on the network. While the basis of the rumors is still uncertain, the recent string of events has put many of Bitcoin’s underlying problems in the spotlight, which developers could improve.
On the Flipside
- At press time, Binance has resumed Bitcoin withdrawals.
- Bitcoin’s recent network congestion issues are similar to Ethereum’s in 2018.
- Ethereum gas fees hit record highs during the ongoing PEPE mania.
Why You Should Care
Bitcoin is the world’s first and most prominent blockchain network. While it has remained largely immune to network congestion in the past, it’s currently struggling against BRC-20 and Ordinals. The situation is similar to what Ethereum faced in 2018 and 2021, when its network was plagued by DeFi and NFT projects, resulting in high gas fees and low throughput.
While Ethereum was able to steer clear of its scalability problems thanks to new solutions like sharding, zero-knowledge proofs, optimistic roll-ups, and more, it remains to be seen how Bitcoin will tackle the challenges posed by BRC-20.
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