Breaking down the opportunity for Bitcoin NFTs...
In today’s edition of the Ground Floor we will be breaking down the opportunity for Bitcoin ordinal NFTs in the coming months...
The Future Of Bitcoin NFTs
Earlier this week, Yuga Labs, the creators of BAYC sent the winners of its TwelveFold auction their bitcoin ordinals (NFTs) ~ an NFT that cost collectors between 2.25 to 7.11 BTC, an auction that allowed Yuga Labs to generate $16.5 million in revenue.
What Are Bitcoin Ordinals?
In January 2023, software engineer Casey Rodarmor launched the Bitcoin ordinals protocol ~ a protocol that allows images & text to be inscribed directly on the Bitcoin blockchain.
Said differently, the Bitcoin Ordinals protocol allows people to create NFTs on Bitcoin.
How It Works?
Each of the 19 million Bitcoins that have so far been minted are broken into 100,000,000 units called satoshis, commonly referred to as sats.
The Ordinals protocol allows people who operate Bitcoin nodes (a computer in Bitcoin's network that hosts a copy of the entire Bitcoin blockchain) to inscribe a satoshi with data such as an image or text, thus creating a Bitcoin Ordinal.
Unlike ethereum NFT collections such as Checks whereby creators such as Jack Butcher regularly update the collections metadata to attach a new image to the token, once a creator mints a Bitcoin Ordinal ~ the image or text cannot be changed.
This immutability has been one of the primary points the creator of the Bitcoin Ordinals protocol has conveyed to entice people to adopt the protocol.
🎨 The Opportunity
Before jumping into the future, it's important to examine the present day;
Today, the primary value proposition of Bitcoin Ordinals centers around owning an early Bitcoin Ordinal inscription, or taking a model that has proven success on ethereum such as a 10,000 profile picture collection, and being the first to do so on Bitcoin Ordinals.
With a number of projects such as OnChainBirds, On Chain Monkeys & Bitcoin Punks experiencing great success (ie. high floor prices) from implementing this strategy, it would be inaccurate to suggest this strategy isn't working in the short term.
Nonetheless, in the long run, Bitcoin ordinals will need a much more compelling value proportion to retain the attention, and to continuously attract the capital of collectors as cloning existing collections, and promoting the point that collections should command value as a result of being minted on Bitcoin is a claim as hollow as an Easter egg.
🔑 Unlocking Value
Bitcoin has a market cap of $471 billion.
Today, the people who purchase Bitcoin are told to HODL their Bitcoin (not spend it), whereas the people who purchase ETH are very accustomed to spending it on NFTs.
This is the opportunity.
The ethereum NFT community continues to thrive as collectors continue to support a wide array of artists that continue to create artwork collectors are interested in purchasing ~ there's nothing to suggest such an eco-system cannot be built on Bitcoin.
Incentives rule the world, and if a small percentage of the people who hold Bitcoin were willing to spend their Bitcoin to acquire their favorite Bitcoin ordinals ~ this incentive would likely prove sufficient to entice certain creators to pour their creative energy into creating original artwork on Bitcoin.
📡 Looking Forward
The biggest challenge Bitcoin ordinals will face is not obtaining attention in the short term, it's retaining relevancy in the long term.
It's my interpretation that the eco-system built on Bitcoin Ordinals today is upheld by existing Ethereum NFT collectors purchasing Bitcoin NFTs ~ to succeed in the long term, it's imperative that Bitcoin Ordinals receive the support of the Bitcoin community.
This is a tall task, and without the support of the people who command the capital required to successfully seed such an ecosystem I would be willing to wager Bitcoin ordinals will be looked back upon as nothing more than a "flash in the pan".
💡 Web3 Roundup
1) 👀 The New NFT Record
P.S. What did you think of today's newsletter?
See you next time! — OB1👋
This newsletter is for informational purposes only and does not constitute financial or business advice to any person or entity.