The year 2023 has started off with much excitement for Bitcoin supporters thanks to a surging price and the ascent of a new type of collectible named Bitcoin Ordinals, of which over 200,000 have already been created. The 2 trends could very well be related, with many experts connecting the dots and calling the arrival of Bitcoin NFTs the reason for the world’s original cryptocurrency’s jump from $16k to over $25,000 this year, as it unlocks huge new growth potential and increase in network transactions.
And sorry Bitcoin maxis and purists… it’s likely not going away any time soon. According to a new report by Galaxy Research, Bitcoin NFTs are expected to become a $4.5 billion market by 2025. This is a huge development and reminiscent of Ethereum’s Crypto Kitties craze in 2017 which divided the smart contract network’s community at first due to the network congestions and high gas fees it brought.
Of course, a few years later the recent bull market was partly spurred on by the mania around Ethereum NFTs, which allow creators to certify digital assets as unique, creating scarcity in a world where digital goods can be infinitely replicated. NFTs have become increasingly popular in the digital art world, commanding record sales in 2021 thanks to highlights such as Beeple’s Everydays ($69m), CryptoPunks, Bored Ape Yacht Club and now Bitcoin NFTs are the latest addition to the ecosystem.
In this article, we will explore what Bitcoin NFTs are, why they are gaining popularity, and what the future holds for this emerging market according to a new Galaxy report.
What are Bitcoin NFTs?
Bitcoin NFTs are unique digital assets that are stored on the Bitcoin blockchain, and its creation was made possible by the 2021 Taproot upgrade. These non-fungible assets can be anything from digital art, music, or videos to collectible items like trading cards or virtual real estate.
In December 2022, a Bitcoin developer named Casey Rodarmor introduced “inscriptions” to the blockchain, after working on it for months. Inscriptions are pieces of data that can be posted to the Bitcoin blockchain as part of a transaction. In January 2023, Rodarmor launched his “Ordinal Theory”, allowing users to inscribe satoshis with unique data such as images and video. This opened up new possibilities for NFTs on the blockchain, allowing for even more unique digital assets to be created.
By tying inscriptions to individual satoshis, which are the smallest denomination of Bitcoin, they become non-fungible tokens. This makes them unique and valuable, and they can be traded and transferred as NFTs. Also, the fact that they are secured on the Bitcoin blockchain makes them tamper-proof, immutable, and easily transferable.
Source: Ordinals.com and Galaxy Research
Why are Bitcoin NFTs becoming popular?
The rise of Bitcoin NFTs can be attributed to the growing interest in digital art and the increasing adoption of crypto assets thanks to the success of and collectibility of the most popular Ethereum NFTs. The blockchain technology used to create NFTs also provides a level of transparency and security, making it an attractive option for artists and collectors alike. Additionally, the potential for high returns on investments has drawn investors to this market.
BAYC’s Yuga Labs Enter Bitcoin NFT race
Recently, Yuga Labs, the mega-successful studio that created Bored Ape Yacht Club and is busy currently building its OtherSide metaverse Otherside, announced its first-ever Bitcoin-based NFT project called TwelveFold. Yuga’s involvement in Bitcoin NFTs is predicted to encourage other artists to create and sell their own NFTs. This will likely attract major NFT marketplaces like OpenSea to the Bitcoin ecosystem, providing even more opportunities for artists and collectors alike.
Yuga Labs’ entry into the Bitcoin NFT market could also bring new ideas and creativity to the market, potentially leading to more innovation and growth. Furthermore, Yuga Labs’ reputation and success in the Ethereum NFT market could bring greater credibility and legitimacy to the Bitcoin NFT market, helping to attract more investors and collectors to the space.
Developing Infrastructure for Bitcoin NFTs
According to the Galaxy report, a complete ecosystem of Bitcoin NFT-focused products and services that will cater for the budding new market will be fully developed by the third quarter of 2023. This is incredible, considering that BTC NFTs have only been around since the start of the year. Crypto wallets like the Ordinals Wallet have already begun to offer the necessary support to improve user experience, and marketplaces are already emerging. With more infrastructure being built, the future of Bitcoin NFTs looks bright.
Galaxy’s Outlook on the Future of Bitcoin NFTs
The Bitcoin NFT market is expected to look distinct from competitors due to the cost of inscribing on the network. Creators will likely wish to avoid such high costs, making Bitcoin the home of much rarer, high-quality art projects, and valuable one-of-ones. This is very different from other chains such as Ethereum and Solana which are known for their huge 10,000-strong collections of mainly PFP collections, which are much cheaper to create.
Galaxy’s report is bullish on the future of Bitcoin NFTs, but it’s contingent on the continued success of the broader NFT market. If the NFT ecosystem does not continue to grow, then demand for Bitcoin-native NFTs will be limited. However, given the growing interest in digital art and surging crypto adoption, it seems likely that the NFT market will continue to expand.
Bitcoin NFTs are a welcome innovation of new unique digital assets that are stored on the Bitcoin blockchain, making them tamper-proof and easily transferable. The rise of Bitcoin NFTs and clever use of inscriptions and ordinals are expanding Bitcoin’s design space and opening up new possibilities for NFTs on the blockchain.
The emergence of Yuga Labs and other new entrants into the Bitcoin NFT market should be welcomed due to the exposure, experience and deep pockets they bring to Bitcoin’s market. With an entire infrastructure of products and services designed to cater to this growing market expected to be fully developed by the summer of this year, the future of Bitcoin NFTs looks unstoppable, with a slew of new Taproot-unlocked use cases for the Nakamoto coin probably coming soon.
At present CoolWallet does not yet support Bitcoin NFTs, but as the world’s first mobile Bitcoin hardware wallet in 2016, we love all BTC innovations and will be sure to stay on top of developments to serve our community best.