May 23 (Reuters) – Things are heating up on the Bitcoin blockchain.
Daily transactions jumped to an all-time high of 682,000 this month, according to data from Glassnode, nearly 40% higher than the previous peak in 2017. Bitcoin’s dominance, or its share of the $1.16 trillion total cryptocurrency market, has swelled to 44%. Up from 38% at the beginning of the year.
What’s going on?
Enter the BRC-20, the first class of tokens to be built on the bitcoin blockchain, along with bitcoin itself. Nearly 25,000 cryptocurrencies have already been minted this year, sending transactions through the roof.
“The BRC-20 token is a phenomenon we have not seen before,” said Gordon Grant, co-head of trading at Genesis Trading.
Primarily due to the creation of these tokens, the average daily transactions over seven days are over 531,000, which is nearly double what it was a month ago, according to Blockchain.com data.
This new class of cryptocurrency has no specific use beyond guesswork, like memecoins. However, its emerging popularity indicates interest in bitcoin not just as a store of value or a means of payment, but as a basis for the development of new currencies and applications—previously considered the domain of more recent blockchains such as Ethereum and Solana.
Some investors and developers see bitcoin’s blockchain as a safer long-term basis for creating tokens and applications in the wake of the cryptocurrency carnage that followed the collapse of high-profile companies like FTX and a general flight of riskier assets, according to market players.
“People have seen what is possible with other blockchains and they want it on Bitcoin, as the oldest network, Bitcoin has a proven track record that people can trust,” said Alex Miller, CEO at Bitcoin developer network Hiro.
However, the BRC-20 craze has been fickle.
The total value of these tokens — which are typically traded on secondary markets, mainly decentralized exchanges — topped $1 billion in early May, but has since fallen to $446 million, according to BRC-20.io tracker.
Subscribed to Satoshi
Because the Bitcoin blockchain was not originally developed to support a crypto ecosystem, unlike Ethereum and Solana, BRC-20 tokens are created using ordinal theory, which allows data to be recorded on every satoshi – the smallest denomination of a bitcoin, or one hundred million.
“There is not much benefit when it comes to BRC-20 tokens and Ordinals,” said CoreDAO blockchain contributor CJ Reim, though he sees the trend as “promising” in terms of interest in building products on the bitcoin blockchain.
The race to create these new coins hasn’t had much impact on the price of bitcoin, which has been trading at less than $30,000 since mid-April.
The rapid creation of BRC-20 tokens has not been without controversy, with critics saying that the issuance of these tokens has made it more difficult for users who want to use bitcoin for the purposes originally intended.
“Gas” fees, or transaction costs on the bitcoin blockchain, have skyrocketed over the past month, with total dollar-denominated fees paid per day near an all-time high of $17.8 million per day, according to Glassnode data.
Blockchain.com data showed that average transaction fees rose to $30.91 for the 90-cent range and $4.23 between January and May 1.
The network also slowed down significantly. The congestion was so severe, that the world’s largest cryptocurrency exchange Binance had to briefly halt bitcoin withdrawals on May 7.
“Although congestion has eased somewhat, it is still high and at its peak users were waiting over 30 hours to confirm transactions,” said Noman Sheikh, Head of Treasury at Wave Digital Assets investment manager.
“This has pushed the limits of Bitcoin technology.”
Additional reporting by Lisa Matakal and Medha Singh in Bengaluru; Editing by Praveen Char
Our Standards: The Thomson Reuters Trust Principles.
The opinions expressed are those of the author. They do not reflect the opinions of Reuters News, which is bound by the trust principles of integrity, independence, and freedom from bias.
#Cryptoverse #Bitcoin #Cryptocurrency #giving #birth #breed #cryptocurrency