Bitcoin block builders have been busy stuffing JPEGs and other random data types into the oldest blockchain since early 2023. And they’ve been paid handsomely for their efforts. Small corners of the Bitcoin community, however, are not amused by the latest “Bitcoin NFT” craze. Controversial opponents of this activity include Saifedean Ammous, Pierre Rochard, and Jimmy Song. Some of their Twitter disciples even calling the entire craze outright fraud.
But the purpose of this article isn’t to judge the value or harm of inscriptions, the basic form of Bitcoin NFTs. Instead, this article simply highlights the ongoing excitement over this somewhat novel use of block space by analyzing four different charts. Each of these data visualizations helps contextualize what is going on with Bitcoin inscriptions today.
A Brief History of Bitcoin JPEGs
By way of introduction, it’s important to understand that various types of “digital collectibles” on the Bitcoin blockchain are a common theme throughout the largest cryptocurrency’s history. They are not in fact anathema to its purpose or development. Here’s a quick rundown of the history of Bitcoin NFTs.
- Trading Cards: In January 1993–long before Bitcoin existed–Hal Finney theorized about the possibility of “buying and selling . . . cryptographic trading cards” as part of what cryptocurrency could become. Reading an excerpt from Hal’s message on this topic is almost a perfect match to the NFT landscape today.
- Colored Coins: In December 2012, Meni Rosenfeld published “Overview Of Colored Coins,” which explained that “it is possible to color a set of coins to distinguish it from the rest.” Bitcoin historians universally accept this paper as the birth of on-chain collectibles and the idea of NFTs.
- Rare Pepes: In the late 2010s, Rare Pepe assets became a tradable non-fungible token on the Counterparty protocol built atop Bitcoin based on the enduring internet meme of Pepe the Frog. To this day, even though Counterpary use is virtually non-existent, OG NFT collectors across the crypto industry still hold and treasure their historical Rare Pepe collectibles.
- Block Header Art: Bitcoin blocks as a landscape for on-chain art was pioneered long before Ordinals entered the scene as many individuals and companies would occasionally inscribe messages and designs into block headers. One of the more iconic examples of this activity happened in 2018 when TD Ameritrade etched an OP_RETURN message with a literal flag designed with text characters that included the company’s logo.
- Ordinals Inscriptions: Casey Rodarmor kickstarted the modern era of Bitcoin NFTs with his Ordinals inscriptions project. Rodarmor explained that, “Inscriptions are digital artifacts native to the Bitcoin blockchain… They do not require a separate token, a side chain, or changing Bitcoin.” Images, audio, video, HTML, SVG, JS, CSS—anything can be an inscription transaction.
Bitcoin Inscriptions Data Deep Dive
So, what’s actually happening on the Bitcoin blockchain because of these inscriptions? Here are a few charts that visualize the on-chain craze.
For starters, the mempool has been filling up. As the visual below shows, February was a very busy month for Bitcoin mempools with lots of fairly large transactions. In fact, this was the most activity Bitcoin mempools had seen in months. Toward the end of February, mempool levels have started to taper off, but the effect of inscriptions is clear.
Fee revenue from “the inscribeoooors” is also not trivial. In a matter of weeks, as the chart below shows, well over $1 million in on-chain transaction fees has been paid to miners for processing inscription transactions. Anecdotally, several out-of-bound payments for inscriptions have been publicly documented on Twitter and elsewhere, pushing this number even higher.
One of the most shocking charts of on-chain data from inscriptions is block sizes. For years, block sizes hovered around 1.5MB. But as the line chart below illustrates, that number nearly doubled when inscriptions became popular. Big blocks mean more demand for block space and higher fee revenue for miners–all around, a good thing!
Lastly, a bit of “off-chain” data confirms the excitement around this use case for the Bitcoin protocol is starting to make waves. A timeseries chart taken from Google Trends shows vertical growth in search interest for “Bitcoin Ordinals.” Of course, this data is relative to previous search interest. But the fact that Google Trends even records this data is notable, because only terms with a material amount of minimum search interest are indexed by Trends at all.
It’s impossible to know if inscriptions will be a short-lived trend that dies before the current bear market ends or if this subset of Bitcoin users will continue to grow and add more demand for block space. Either way, the effects of inscriptions cannot be ignored even by their harshest critics. And Bitcoin has caught the attention of artists and collectors who previously only gravitated to blockchains like Ethereum for this on-chain activity. Long live Bitcoin!