Converse to the portrayal of ballooning interest from enthusiasts and tremendous sector growth in 2021, the non-fungible tokens (NFT) niche tracked a massive slump in market activity last year. Digital collectible markets, in general, recorded a massive decline in interest – no exception to the wrath that befell crypto and DeFi markets.
In contrast to a plunging stake, the NFT niche showed signs of recovery in January and February, reflected by a swell in sales volume figures, transaction count and market participants (buyer & sellers) relative to Q4 2022 data. This revived involvement has partly been chalked up to the splash from the Bitcoin-based NFT-like discovery Ordinals. In the latest update involving these groovy inscriptions, Solana-native NFT marketplace Magic Eden launched a fully-audited NFT trading avenue for the Bitcoin ecosystem on Tuesday.
Magic Eden onboards Ordinals as part of its multichain vision
Launched initially with a sole focus on Solana NFTs, Magic Eden incorporated Ethereum NFTs trading in August 2022 and its sidechain Polygon later in November. The cross-chain NFT marketplace said in a March 21 announcement that its newly-launched offering will support Bitcoin digital artifacts, including Ordinals, which have increasingly become popular in recent months. Magic Eden’s move is purely strategic, taking advantage of the burgeoning Bitcoin NFT ecosystem to encourage the crowd to trade NFTs on the network.
Volume by Ordinals NFT marketplace. Source: Dune Analytics
To facilitate transactions, the marketplace integrated two noncustodial BTC wallets, Xverse and Hiro, through which creators can list and sell the Ordinal NFTs. Collectors will also be able to access additional information like age, rarity and other inscription details of the artifacts.
“Adding a Bitcoin marketplace is really exciting for our team, considering it is the grandfather of all blockchains and we are all passionate about blockchain,” CEO Jack Lu said.
The expansion to the Bitcoin blockchain will entail an initial beta launch involving 13 Ordinal collections chosen based on their popularity and merit of being among the earliest to be inscribed on the network. The shared press release highlighted Bitcoin Bandits, Inscribed Pepes and Taproot Wizard among those coming at launch with plans to avail more collections available. Magic Eden’s efforts follow a similar initiative from Gamma.io which launched a trustless marketplace for minting and trading Bitcoin NFTs.
To learn more about Solana, visit our Investing in Solana guide.
First coming to light in December after the first inscription on the Bitcoin network, the total number of inscriptions has exponentially skyrocketed to nearly 575,000 at the time of writing.
Ordinals daily inscriptions.
Ordinals gained even more popularity after their extension to Litecoin by an Australian blockchain engineer Anthony Guerrera who successfully forked the Ordinals protocol onto the former network. Guerrera shared his work, the forked project, on Github, in February, bringing the NFT-like assets inscribed on a satoshi to Litecoin through inscription on a Litoshi. The blockchain developer said he was motivated to explore porting Ordinals to the Litecoin blockchain on February 10, after pseudonymous Twitter user Indigo Nakamoto listed a modest 5 LTC reward (that later rose to 22 LTC) to the first person to fruitfully create the fork.
Beyond the incentives, Guerrera added he was well aware that Litecoin could support Bitcoin inscriptions as the blockchain already has soft forks of the duo of Bitcoin technologies Taproot and SegWit, which were critical to bringing Ordinals to life. Guerrera initially faced issues when working on the project due to Rust-dependency, which led him to fork Rust-Bitcoin to make one that could work with the Mimblewimble Extension Blocks (MWEB) upgrade on Litecoin. MWEB was introduced to the network in May last year to bring optional confidential transactions and enhanced transaction size.
Bitcoin Ordinals inscriptions by media type
The project took him about a week to implement the changes, which he noted were quite simple – modifying the code to accept inputs from the Litecoin network rather than Bitcoin and accounting for mismatched parameters such as block time creation. To celebrate the successful fork, the software engineer wrote in a Feb 19 tweet that he minted the MimbleWimble whitepaper as the first ever ordinal inscription (Inscription 0) on Litecoin.
To learn more about Bitcoin and Litecoin, check out our Bitcoin vs. Litecoin guide.
Though not providing assurances of smooth sailing, Guerrera explained that inscribing on Litecoin (where the cost is just a few cents) would be protected from such issues by its use of larger block sizes. Moreover, Litecoin’s MWEB assures privacy, and users could leverage its confidential transactions option to transfer funds privately by paying for anonymous inscriptions such as statement pieces, something not possible on Bitcoin – a fully public ledger.
Magic Eden and Gamma.io aren’t the only brands that have explored Ordinals. Yuga Labs, the creators of the popular BAYC collection, also joined the bandwagon earlier this month, announcing the first Bitcoin collection, dubbed Twelvefold. The controversial auction of the 300-piece Ordinals-inspired NFT collection was a huge success.
NFT activity slows down in March
Though more native and non-native brands have continued joining the NFT space in recent months, the proportion relative to the rest of the industry is still minute, suggesting stymied adoption. Reports surfacing last month indicated that e-commerce giant Amazon was preparing to debut its NFT initiative as soon as next month. However, coming as a blow to the NFT space, Meta announced earlier this month the discontinuation of NFT integration and support on its Instagram and Facebook platforms.
Expectedly, NFT market activity in March has declined compared to January and February, even with slightly over a week to go. The total number of unique buyers has also contracted, as has the average NFT sales figure. Thus far, NFT sales this month have totaled just over $530 million, according to data from CryptoSlam. For comparison, January and February figures marginally surpassed $1 billion – the first instances since May 2022.
NFT activity since February. Source: CryptoSlam
In part, the deceleration in NFT activity has been influenced by events in the broader financial market. NFT data acquisition and analysis platform DappRadar observed in a March 16 report that the collapse of Silicon Valley Bank diluted demand hence the trimmed NFT sales count. The data captured an instance of the scaled-down participation – less than 11,500 NFT traders were active on Mar 11, the lowest tracked figure since November 2021. Though interest appears to have resumed, it is unlikely that March will catch up to February due to the disruption.