Thirteen years after the world’s first Bitcoin (BTC) pizza purchase, the pioneer cryptocurrency network faces a new wave of disruption thanks to the advent of Ordinals, the recently launched protocol that allows adding digital content such as art — i.e. nonfungible tokens — in the Bitcoin blockchain.
Since the launch of Ordinal NFTs on the Bitcoin mainnet in January 2023, the network’s traffic has increased significantly, spiking transaction costs and spotlighting issues surrounding Bitcoin.
Bitcoin mempool, the “waiting area” for incoming transactions on the network, has over 286,000 pending transactions at the time of writing. While the number is lower than the peak of 400,000 clogged transactions at the beginning of the month, it is still historically high.
In an interview with Cointelegraph’s Joe Hall during last week’s Bitcoin Builders, Muneeb Ali, the CEO of Trust Machines, explained how Ordinals NFT’s hype could support Bitcoin in attracting more developers and capital to layer-2 solutions.
“Bitcoin is the largest asset. We should have the best devs, the best scientists trying to work on Bitcoin layer-2s,” said Ali. He believes the fee spike provided clear evidence to developers and investors that layer-2 protocols for Bitcoin are in demand.
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The purpose of layer-2 solutions is to improve the scalability, privacy, and other characteristics of layer-1 blockchains, such as the Bitcoin network. Ali’s Trust Machines is a layer-agnostic ecosystem for Bitcoin applications, building on various layers in the Bitcoin network.Total number of transactions on the Bitcoin blockchain in the past 12 months. Source: Blockchain.com
There is a $500 billion market potential untapped on the BTC network, claims Ali, referring to BTC’s current market capitalization of $521 billion. Products, users and the amount of Bitcoin sent on the Lightning Network (LN), the layer-2 payment solution built on top of its blockchain, has skyrocketed in 2023. Despite the figures, the Bitcoin space continues to struggle for developers, and there are no entities “playing the game,” explained Ali.
Bitcoin, the CEO says, is “so decent,” a benefit that can still hinder the development of a solid developer ecosystem. “There is no marketing department, there is no foundation, there’s no incentive. That’s why it is grassroots decentralized and most decentralized driven.”
Increasing Bitcoin fees may attract more developers, but won’t unlock its global potential if layer-2 solutions don’t gain traction as a category for venture capitalists, defends Ali. “If collectively, Bitcoin layer-2s emerge as a very attractive category, and there’s better education around why it is interesting, it is a narrative as well. I think the community can have a very grassroots narrative, and there’s a ton of support for Bitcoin out there.”
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