A real hype. On 7 November, the Binance platform announced the listing of ORDI, a memecoin derived from the Bitcoin blockchain. At the time of listing, its unit price was just over $7. At the time of writing, it is over $20.
This memecoin was launched thanks to the Ordinals protocol, officially presented last January by its creator Casey Rodarmor, which has been enjoying significant success for several months now. And an entire industry is getting organised.
"Each Bitcoin is made up of 100 million satoshis. What the Ordinals protocol allows is to number them one by one so that data such as images, a video or a message can then be attached to them," explains Fanis Michalakis, a developer at LN Market.
"Initially, Casey Rodarmor simply wanted to bring NFTs to Bitcoin, but quickly the use cases went far beyond that," notes Simon Glâtre, Bitcoin engineer at SATO Technology, a company specialising in Bitcoin mining.
What you need to understand is that the rules for Ordinals inscriptions are scalable in the sense that anyone can add their own rules to them, as it were. "The main consequence is the appearance of the BRC-20 standard used to mine a multitude of memecoins in addition to NFTs on Bitcoin," adds Simon Glâtre.
Since April, and buoyed by these new possibilities, collections of NFTs such as Bitcoin Frogs have been flourishing all over Bitcoin. The total market capitalisation of all memecoins has reached almost $1.5 billion. If the phenomenon is growing so fast, it's also because some players are making it easy to issue them, with just a few clicks.
👉 Hunting for rare satoshis
Magisat, Magic Eden, Gama and the OKX exchange platform have specialised in selling or buying ordinal inscriptions. In concrete terms, they will be offering for sale numbered satoshis to which users can attach an NFT or create a memecoin in just a few clicks. The rarer the satoshi, the higher the price for inscribing one's data on it.
When he proposed the Ordinals protocol, Casey Rodarmor tried to define a scale of rarity, essentially determined by the periodic events specific to Bitcoin's operation.
For example, the first satoshi of each mined block will have a higher value than the others. The most expensive? The first satoshi of the Genesis Block, the very first block mined on Bitcoin. The satoshis belonging to the famous sale of pizzas for 10,000 bitcoins initiated by developer Laszlo Hanyecz on 22 May 2010 also have their own rarity 😅.
Depending on the rarity, registration costs can range from a few cents to several thousand euros, from which platforms will earn a commission.
"If the phenomenon is taking off to such an extent, it's because the Bitcoin community now has the opportunity to launch its own NFTs, which are no longer the exclusive preserve of the Ethereum community", enthuses German Robin Obermaier, who has launched his lending and borrowing platform based around NFTs derived from Ordinals.
With Ordinals, it is possible to have one's image directly on-chain, unlike Ethereum, which only gives access to a URL. This is a decisive factor for collectors," continues Fanis Michalakis.
👉 A boon for Bitcoin miners
While 2022 has been complicated to say the least, the arrival of Ordinals on Bitcoin is a breath of fresh air for Bitcoin miners with the increase in transaction fees.
In a recent report, Glassnode noted an exceptional increase in the number of weekly transactions in May. These were 39% higher than the previous record, which dates back to 2017. On 6 May alone, more than 400,000 Ordinals registrations were made on the network.
After experiencing a significant slowdown in October, a new peak was observed on 12 November with more than 500,000 registrations. "The total reward linked to the mining of a block has sometimes been multiplied by two", explains Romain Nouzareth, CEO of SATO Technology.
To date, the total fees collected linked to Ordinals have reached $88 million according to data aggregated by asset manager 21Shares.
Besides transaction fees, miners also sell their network expertise to artists wanting to mine an NFT collection on Bitcoin with slightly more advanced parameters than those offered by exchange platforms. SATO Technology, for example, supported artist Takeru Amano for his "Magic Eden" collection.
