Bitcoin Transactions Reach New All-Time High Amid Surging Interest in Ordinals

The recent surge in the daily number of Bitcoin transactions has set a new all-time high and broken the previous record set over five years ago. According to Pedro M. Negron, a research analyst at blockchain analytics platform IntoTheBlock, on May 1, Bitcoin hit a new record of 682,280 daily transactions, which is an increase of 255% compared to its previous ATH of 192,000 reached on December 14, 2017.

This recent surge in the number of Bitcoin transactions can be attributed to the rise in popularity of the decentralized finance (DeFi) asset and the introduction of Ordinals. Ordinals, which debuted in January, allow data such as audio, art, or video games to be inscribed to individual satoshis, the smallest unit of Bitcoin, creating a unique digital asset similar to an Ethereum-based NFT. To date, more than 2.39 million Ordinals have been inscribed, and they contributed around 54% of Bitcoin's daily transactions at its all-time high.

According to Glassnode, most other Bitcoin transactions are monetary in nature and are often triggered by crypto exchanges. Ordinals are considered to be a protocol that expands the blockchain's use case as it allows users to embed data into Bitcoin's blockchain, similar to minting non-fungible tokens. This expands the network's user base by allowing participants to do more than just borderless transfers or invest in the cryptocurrency.

Tom Rodgers, Head of Research at crypto ETP provider ETC Group, noted that transactions in Bitcoin have become much smaller compared to the past, with most being around $1. This suggests that most Bitcoin users are using the blockchain for trading, leading to an increase in Bitcoin velocity, or the amount of Bitcoin being transacted by users instead of being locked up in cold wallets.

In April alone, the daily record for inscriptions made was broken four times, including roughly 72,000 inscriptions on April 2 and 193,000 inscriptions on April 23, according to the Dune dashboard. The trend of using Ordinals for creating fungible tokens on Bitcoin, similar to what can be done on Ethereum, was kickstarted by a pseudonymous on-chain data enthusiast named Domo, who created the "BRC-20" token standard as an experiment.

The recent shift in Ordinals' use has resulted in a change from primarily image-based inscriptions to text-based inscriptions. On Saturday, close to 99.8% of the total inscriptions made were text-based, compared to just 0.1% of image-based inscriptions. This change in usage reflects the growing interest in using Ordinals for creating fungible tokens on the Bitcoin network.

In conclusion, the recent surge in the daily number of Bitcoin transactions and the increasing popularity of Ordinals have expanded the use case of the Bitcoin blockchain, allowing for more than just borderless transfers or investment in the cryptocurrency. The trend of using Ordinals for creating fungible tokens on the Bitcoin network is expected to continue, leading to further growth in the number of Bitcoin transactions.