Bitcoin Becoming More Than Just Digital Gold As On-Chain Activity Soars: Grayscale Research

Recent developments suggest Bitcoin (BTC) could serve as more than just “digital gold,” according to a researcher at the crypto asset management giant Grayscale.

In a new analysis, Grayscale’s Michael Zhao highlights Bitcoin’s surging on-chain activity.

“The advent of ordinal inscriptions has revitalized on-chain activity, with over 59 million non-fungible-token-like (NFT) collectibles inscribed, generating upwards of $200 million in transaction fees for miners as of February 2024. This trend is expected to persist, bolstered by renewed developer interest and ongoing innovations on the Bitcoin blockchain.”

Bitcoin ordinals enable users to inscribe digital data such as images and videos to a single satoshi, an individual unit of BTC, to create the equivalent of NFTs on the top crypto asset’s network. Zhao says ordinals have instigated a “cultural shift” in the Bitcoin community, attracting new developers to the ecosystem.

In addition to ordinals, the Grayscale analyst highlights that BTC’s use case is evolving with the emergence of smart contract protocols running on the Bitcoin network.

“Among the existing layer-2 solutions, some have been quietly laying the groundwork for this evolution for years. Stacks stands out as a platform that has introduced fully expressive smart contracts to Bitcoin. It has fostered the development of various decentralized applications (DApps) that leverage Bitcoin’s security, enabling functionalities ranging from DeFi (decentralized finance) to NFTs. These DApps represent the forefront of Bitcoin’s transition into a multi-faceted ecosystem, capable of supporting a wide array of blockchain-based applications.”

At time of writing, Bitcoin is trading at $49,801.

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