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The fees associated with transactions on the Bitcoin blockchain have reached their highest levels in two years. This increase can be attributed to the growing demand for block space driven by the rising popularity of the Ordinals protocol and the emergence of the 'Bitcoin Request for Comment' (BRC-20) tokens.
During European hours on Monday, the average transaction fee on the Bitcoin network was around $20, which is a significant increase from the previous week's average of $1.20. These levels were last observed in May 2021, when the price of bitcoin reached an all-time high of $60,000.
Dune Analytics data reveals that there was a sudden surge in the number of non-fungible tokens (NFTs) associated with the Bitcoin blockchain, which exceeded 3 million last week. This spike in activity was primarily driven by the creation of text-based assets that occurred over the course of a single day.
These tokens, known as inscriptions, operate on the Ordinals Protocol. This protocol enables users to incorporate data into the Bitcoin blockchain by including references to digital art within small transactions based on bitcoin (BTC).
With the BRC-20 token standard, users can create transferable tokens directly on the Bitcoin network. This has given rise to a multitude of digital artwork and meme tokens built on top of Bitcoin.
The latest data from OrdSpace, a platform dedicated to tracking BRC-20 data, has revealed that over 11,000 tokens issued on the Bitcoin network are currently available for purchase on the open market as of Monday. The combined market capitalization of these tokens is an impressive $1.6 billion, a testament to the popularity and widespread adoption of Bitcoin.
Currently, the most highly valued BRC-20 tokens on the Ordinals marketplace are the tokens of Ordi (ORDI), with a market capitalization of $220 million and 7,300 unique ORDI token holders. Ordi is notable for being the first BRC-20 token to be deployed on the Bitcoin blockchain, which is likely contributing to its strong value proposition among investors.
The Pepe tokens issued on the Bitcoin blockchain, which differ from those issued on Ethereum, represent the second-largest BRC-20 issuance, albeit with a comparatively smaller market capitalization of $17 million.
BRC-20 tokens on Bitcoin are seeing millions in trading volumes even as their prices slide steeply. (Ordspace)
In the meantime, certain analysts view the swift transactional activity as evidence of increasing network adoption, which further reinforces Bitcoin's fundamental narrative.
“During the last peak in 2019, most Bitcoin transactions skewed towards larger transactions, in the range of $1,000 to $10,000,” said Tom Rodgers, Head of Research at ETC Group, in an email to CoinDesk.
“This suggests most Bitcoin users were using the blockchain for trading. Compare this to today. The largest cohort of Bitcoin transactions - 359,560 - came from transactions under $1. This suggests a huge increase in Bitcoin velocity -- or the amount of Bitcoin being transacted by users, instead of being locked up in cold wallets and held over the long term,” Rodgers added.
Despite the rapid pace of adoption, the recent network congestion has caused some temporary challenges for crypto exchanges, including Binance, which had to suspend bitcoin withdrawals twice over the weekend.
On-chain data indicates that as of Monday, there were almost 415,000 unconfirmed Bitcoin transactions, a figure surpassing the levels witnessed during the 2018 and 2021 bull markets.