Make Kitco Your Homepage

Ordinals activity on Bitcoin moderates after Litecoin and Dogecoin integrate the service

Kitco News

Editor note Get all the essential market news and expert opinions in one place with our daily newsletter. Receive a comprehensive recap of the day's top stories directly to your inbox. Sign up here!

(Kitco News) - It has now been several months since Ordinals first launched on the Bitcoin (BTC) blockchain, and similar to the path of non-fungible tokens (NFTs), the initial hype around custom inscriptions on individual satoshi's has begun to die down as the crypto ecosystem takes stock of the value that Ordinals offer.

Over the past couple of months, Bitcoin users have been reminded of one of the major drawbacks of the top blockchain network – low scalability – as a spike in transactions related to Ordinals and BRC-20 activity led to a surge in transaction costs and clogged the Bitcoin network.

Data provided by on-chain analytics firm Glassnode shows that at the height of the Ordinals frenzy, the fee dominance for inscriptions, which refers to any form of data directly inscribed on the Bitcoin blockchain, was 62%.

Ordinal inscription fee share. Source: Glassnode

During the height of inscriptions activity, the total amount of fees paid per day in USD terms was $17.8 million, Glassnode said. This led to a considerable amount of pushback from some in the Bitcoin community as the cost for a simple BTC transaction spiked to levels not seen in several years.

"A challenging side effect of this was that the cost of sending a regular Bitcoin transaction also reached extreme heights, with the median and mean fee required to get a transaction included in a block hitting $20.17 and $30.80, respectively," Glassnode wrote.

Now, it appears as though Bitcoin users are getting a slight reprieve as the fee share for such transactions has dropped to 26%, which is still considered high for some, but a much more manageable situation for others.

One possible source of the dwindling interest in Ordinals and BRC-20s on Bitcoin has been the integration of a similar service on the Litecoin (LTC) and Dogecoin (DOGE) networks, which have seen their transaction counts spike higher since the end of April after holding steady for the past year.

Transaction count on Litecoin and Dogecoin. Source: Bitinfocharts

As a result of the new functionality, Litecoin hit its highest-ever daily transaction count on May 10, with 584,000 transactions. Dogecoin reached a similar achievement on May 18 when it set a new transaction volume record of 1.2 million transactions in a 24-hour period.

Crypto exchange struggles deepen for Huobi and Hotbit

While the launch of the LRC-20 and DRC-20 token standards on Litecoin and Dogecoin has allowed users to create and issue entirely new meme coins on the two networks, it has also resulted in a diluted field of offerings, which typically results in the loss of value for a large percentage of newly launched protocols and products.

But with the Bitcoin halving now less than a year away and cryptocurrency traders starting to look towards the next cryptocurrency bull market cycle, there's a good chance that Ordinals will see at least one more strong surge in interest across Bitcoin, Litecoin and Dogecoin.

And with rumors now circulating that a possible airdrop is in store for Ordinals users, it's increasingly likely that the Bitcoin network will once again see a spike in activity and transaction costs in the near future as airdrop hunters make moves to ensure they receive a maximum allocation.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.