Crypto Global

Bitcoin transactions at all-time high thanks to BRC20 Ordinals!

May 10, 2023

The demand for Bitcoin transactions is currently exceptionally high. The block reward for miners has doubled in some cases.

One of the main reasons for the queue of half a million transactions is the BRC-20 token standard, which is based on the Ordinals protocol and allows for the creation and sending of any alternative tokens directly on the Bitcoin blockchain. The BRC-20 standard, developed and introduced by a pseudonymous Twitter user named "Domo" just over a month ago, utilizes the Bitcoin-based Ordinals protocol and inscriptions to manage token contracts, token minting, and token transfers.

The Ordinals protocol, introduced at the end of last year, is an innovative numbering system for each existing Satoshi (the smallest unit of Bitcoin, similar to cents for the Euro), with an "inscription" added when a data layer is placed on a Satoshi.

Although only a month old, the BRC-20 token standard already dominates the Bitcoin blockchain. According to a dashboard created by Dune to monitor the new standard and its growth, BRC-20 tokens accounted for over 60% of all transaction activity on the Bitcoin blockchain on Tuesday and paid 42.8% of all fees.

However, the increase in fees is a blessing for Bitcoin miners. Miners typically finance their operations through the issuance of new bitcoins (currently at a rate of 6.25 BTC per block, approximately every 10 minutes), with user transaction fees added on top.

In bear markets, transaction fees usually make up only a very small portion of miners' income. However, the BRC20 trend has gained so much momentum that miners have received transaction fees several times higher than the 6.25 BTC mining reward for newly added blocks.

The duration of the Ordinals hype remains uncertain. However, at least miners can profit from the current surge in the Bitcoin network.