Recently, Bitcoin's NFT market has been booming, with both Ordinals and Atomicals gaining momentum. However, I don't intend to discuss the rise of ORDIs or ATOMs, or whether NFTs have technological value. Instead, I want to analyze the underlying reasons for the explosion of the Bitcoin NFT market and speculate on its future development based on some data.
The data used in this article is from OKLink Chain Master.
First, let's take a look at the BTC miner revenue in the past three months. On August 17th, the contribution of on-chain transaction fees accounted for only about 1.7%. However, since November, it has been gradually increasing and reached a recent peak of 19.57% on November 10th. The biggest driving force during this period was the introduction of ORDIs trading pairs on bn.
From this perspective, the explosion of the Bitcoin NFT market has significantly increased the proportion of miner's transaction fee revenue. If we look ahead to half a year later, in April 2024, Bitcoin's halving event will occur, and block rewards will be halved again. Without considering other factors, if we extrapolate the current popularity of NFTs to the post-halving period, the proportion of transaction fee revenue stimulated by the Bitcoin NFT market will reach 50%.
Miners are driven by profit. After the foreseeable halving event, they would traditionally choose to purchase new mining machines to increase their computing power and ensure more block rewards. However, in an analysis article by Ni Da (@Phyrex_Ni) on November 9th, it was pointed out that currently, Bitcoin mining farms in the United States are operating at a loss for nine months of the year. Coupled with the semiconductor industry's process bottleneck, the arms race for mining machine computing power is gradually slowing down.
Therefore, profit-driven miners will inevitably seek another source of income, which is Bitcoin NFTs.
By looking at the BRC20 token information from OKLink Chain Master, we can see that within less than a year of Ordinals' launch, there have been over 50,000 tokens issued in the market. Combined with the number of mints and transactions for each token, this is a rapidly expanding trading market. Such a market greatly stimulates the increase in transaction fee revenue for Bitcoin miners.
Whether it's Ordinals, Atomicals, or other unknown colored coin protocols in the future, they all fundamentally drive the growth of miner's revenue, and miners urgently need a new source of income. Therefore, the Bitcoin NFT market will proudly assume this responsibility, and miners will become a major force in the Bitcoin NFT market.
However, it is worth noting that what miners need in the Bitcoin NFT market is more and larger transaction volumes, and the price fluctuations of NFTs are just a means to achieve this. The increase in the proportion of transaction fee revenue is the goal.
Based on the positive attitude towards the expansion of the Bitcoin NFT market mentioned above, I speculate that the next thing to explode in the Bitcoin NFT market will be tool-like products for NFT minting and forging. For the majority of ordinary people, setting up and configuring a full node to mint NFTs, although lower in cost, has a higher barrier to entry and requires significant storage hardware capacity.
Therefore, in order to quickly expand the breadth of the NFT market, simpler and more convenient service-oriented tools are essential. For example, leading exchanges have gradually integrated Bitcoin NFTs and started supporting NFT minting and trading markets. With product iterations, the complexity of Bitcoin NFT operations will decrease.
Finally, I want to say that even though the market will continue to expand, it does not mean that every NFT has investment value. Personally, I would compare the current Bitcoin NFT market to the era of excessive issuance of ERC20 tokens around 2017. Before ERC20 tokens gained absolute advantages, it was common for each project to create its own blockchain or fork an existing one and issue native tokens. Due to the different technical stacks of each public chain, the difficulty and speed of exchanges listing these tokens varied. It was not until ERC20 tokens achieved widespread standardization that exchanges were able to list them quickly and push them into the market.
Currently, Bitcoin NFTs are also in the early stage of this market, but eventually, there will be a dominant protocol among various Bitcoin NFT protocols that captures the entire Bitcoin NFT market. The current NFT market only solves the problem of issuing assets in the Bitcoin ecosystem. When there is a protocol or project that can solve the application scenarios of Bitcoin ecosystem assets, that is when the foundation for valuable investments will be established.
Author: Liu Ye Jinghong
Official WeChat account: Wesman Notes
Personal WeChat account: liuyejinghong_
Xlog homepage: liuyejinghong.xlog.app
Mirror: mirror.xyz/liuyejinghong.eth
The cover image of this article is from Unsplash
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