Amidst the turmoil the crypto industry has been involved in over the past month, the global market capitalization has dropped from the psychological level of $1 trillion; Bitcoin has followed the trend. The largest cryptocurrency in the market cap dropped from $445 billion to $420 billion.
Over time, the utility of BTC has been narrowed as a store of value and transfer of value. However, the emergence of BTC Decentralized Finance (DeFi) protocols is trying to convert the utility of this network even further, expanding its use cases with the arrival of the Ordinals protocol.
Bitcoin Ordinals or Bitcoin-based NFTs can be crucial in sustaining and developing the economy of the largest cryptocurrency in the ecosystem. Although, in an essential step towards activating Bitcoin’s economy, some projects focus on expanding and growing BTC’s market capitalization.
What Are Ordinals And How Can They Change The BTC Economy
According to crypto research firm Delphi Digital, over 365,000 Bitcoin ordinals have been minted “in a minting frenzy,” bringing activity to the BTC network to new levels.
For many, Bitcoin ordinals can be considered NFTs, but the two differ. NFTs are created and tracked through smart contracts, often hosted using decentralized storage systems, such as a modular suite of protocols for organizing and transferring data – the Interplanetary File System (IPFS).
On the other hand, ordinals are inscribed in the Satoshi on-chain storage, validated in blocks, and stored in the network’s distributed ledger.
However, according to Delphi Digital, the ordinal theory assigns a unique number to each satoshi, BTC’s smallest denomination, 1 BTC equals 100,000,000 satoshis. It allows for the inscription of metadata on each sat, functionally turning them into NFTs, increasing the interest of “big players” following Yuga Labs’ recent twelvefold auction.
Projects That Will Unfold BTC Potential
Rollkit will introduce a module for Bitcoin where “Sovereign Rollups” can manage their execution. At the same time, these rollups will be able to deposit consensus and data availability to BTC.
Rollkit is a modular framework for rollups created by the Celestia team, the first modular blockchain network for secure web3 applications, which allows developers to plug in custom execution and data availability layers.
In addition, Stacks, a BTC layer for smart contracts whose goal is to “unlock the Bitcoin economy,” features a consensus mechanism called Proof of Transfer (PoX), an extension of the Proof of Bur mechanism.
Users of this layer can pay fees to miners in STX, the stack-native token of the decentralized computing platform Blockstack, to send transactions or deploy smart contracts on stacks.
According to Delphi Digital, the project aims to “bridge” BTC via sBTC, a version of BTC that lives on the stack and is pegged 1:1 to BTC used to mint it. sBTC is intended to be as close to native BTC as possible to enhance its on-chain functionality. Delphi Digital concluded:
Ordinals, Stacks and Rollkit are potentially the beginning of a vibrant ,on-chain Bitcoin ecosystem. These projects represent a new path forward for Bitcoin: One that is more than just digital gold.
For Ben Lilly, co-founder of Jarvis Labs and an economist, BTC ordinals represent a shift in the network’s demand curve, allowing users to be more productive using the network. For Lilly, this is what a healthy and growing economy “looks like,” he asserted:
The Bitcoin economy is trending bullish
Feature image from Unsplash, chart from TradingView.com.
