- The initial hype around Ordinals, a service first launched on the Bitcoin blockchain, is waning as transaction costs and network congestion rise.
- The integration of a similar service on the Litecoin and Dogecoin networks has resulted in a spike in their transaction counts, hinting at shifting user preferences.
Moderating Activity on Bitcoin with Ordinals Service
The Ordinals service, launched several months ago on the Bitcoin blockchain, has experienced a slow down in the initial excitement similar to the non-fungible tokens (NFTs) trajectory. This cooling off period is allowing the crypto ecosystem to assess the actual value of custom inscriptions on individual satoshis brought about by Ordinals.
However, the heightened Ordinals and BRC-20 activity on the Bitcoin network has highlighted one of the blockchain’s major limitations – its low scalability. A surge in these transactions led to increased costs and network congestion.
According to on-chain analytics firm Glassnode, at the peak of the Ordinals activity, the fee dominance for inscriptions (data directly inscribed on the Bitcoin blockchain) reached 62%. This spike resulted in the total fees paid per day soaring to $17.8 million, causing uproar within the Bitcoin community as basic transaction costs skyrocketed.
Interest Shifts to Litecoin and Dogecoin
It seems that Bitcoin users are now getting some respite as the fee share for such transactions has dropped to 26%. While still high for some, it is a more manageable situation for others.
The diminished interest in Ordinals and BRC-20s on Bitcoin may be due to the integration of a similar service on the Litecoin and Dogecoin networks. Since the end of April, these networks have seen a surge in their transaction counts, a marked increase from their stable figures over the past year.
This new functionality led to Litecoin reaching its highest-ever daily transaction count of 584,000 transactions on May 10, while Dogecoin set a new record on May 18 with 1.2 million transactions in a 24-hour period.
Impact on Crypto Landscape and Future Expectations
The launch of LRC-20 and DRC-20 token standards on Litecoin and Dogecoin has enabled users to generate entirely new meme coins on these networks. However, this has also led to a diversified field of offerings, often resulting in a loss of value for a significant percentage of newly introduced protocols and products.
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Despite the current scenario, the upcoming Bitcoin halving and the anticipation of the next cryptocurrency bull market cycle might lead to a resurgence of interest in Ordinals across Bitcoin, Litecoin, and Dogecoin. Rumors of a possible airdrop for Ordinals users hint at a potential spike in Bitcoin network activity and transaction costs, as users maneuver to secure maximum allocation.
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