Bitcoin Nfts Drove Blockchain Transaction Fees Up Over A Year

Bitcoin blockchain is experiencing a surge in fees due to the minting of hundreds of nonfungible tokens for the first time.

Using the Ordinals protocol, created recently by Bitcoin developer Casey Rodarmor, people have been able to mint NFTs on the Bitcoin network since last month, and people have been able to mint them using this protocol for the past month. Among the most important blockchains for commercial purposes, Ethereum has been primarily used for issuing NFTs, such as the popular collections Bored Ape and CryptoPunks, among others. It has become one of the most important blockchains for this reason.  

It has been reported that transaction fees for bitcoins have risen to 2.5% on January 31 according to data from cryptocurrency mining data provider Hashrate Index, and have been even higher on Wednesday as well. Besides the transaction fees, which are paid to miners for verifying on-chain data and processing transactions with specialized computers, a fixed amount of cryptocurrency is also paid to miners as a compensation for their work. 

“As a result of ordinary NFTs, we are seeing an increase in transaction fees this week,” commented Colin Harper, an employee of Luxor Technologies, a company that provides cryptocurrency mining services. 

Since the size of the data required for the tokens is very large, compared to the data required for a regular transaction, there is a protocol in place that guarantees the creators of the NFT tokens can enjoy a discount on transaction fees; however, the fees can be much higher since the size of the data required can be much larger than that required for a regular transaction. Generally, Harper believes that the cost of a regular financial transaction can cost less than one dollar, while the cost of a non-regular financial transaction can cost tens of dollars.

Rodarmor said in an interview with TradeAlgo that hundreds of NFTs have been created since the developer team enabled people to mint them directly on Bitcoin in late January.

“It is important to note that Ordinal NFTs (also called inscriptions) can be any type of digital image, video, or even a video game file.” Harper explained.