Daily transactions have ascended to an all-time high of 682,000 this month, according to Glassnode data, nearly 40% higher than the previous peak in 2017. Bitcoin’s dominance, or its share of the $1.16 trillion full cryptocurrency market, has increased to 44% from 38% at the beginning of the year.
What’s Happening?
BRC-20 is the first class of crypto tokens to be built on the Bitcoin blockchain, in addition to Bitcoin itself. Nearly 25,000 of the experimental coins have already been minted this year, which has boosted transactions.
Gordon Grant co-head of trading at Genesis Buying and Selling said that BRC-20 tokens are a phenomenon we haven’t seen before.
Primarily due to the creation of these tokens, the average number of daily transactions over seven days is more than 531,000, nearly double what it was a month ago, according to data from Blockchain.com.
This new class of cryptocurrency has no specific use beyond speculation, very similar to memecoins. However, its nascent popularity points to interest in Bitcoin not only as a store of value or method of payment but as the foundation for developing new currencies and applications, previously considered the domain of more modern blockchains such as Ethereum and Solana.
Some investors and developers see the Bitcoin blockchain as a more secure long-term basis for creating tokens and applications in the wake of the crypto carnage that followed the collapse of high-profile firms such as FTX and a standard flight from riskier assets, according to market players.
Alex Miller, chief executive of bitcoin developer purple Hiro commented that People have seen what’s possible with other blockchains and they want it in Bitcoin, as the oldest purple, bitcoin has a track record that people can trust. Still, the BRC-20 frenzy has been volatile.
The total value of these tokens, which are generally traded on secondary markets, particularly decentralized exchanges, topped $1 billion in early May but has since fallen back to $446 million, according to tracker BRC-20.io.
Enrolled in Satoshi
Since 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 inscribed into each satoshi, the smallest bitcoin denomination, or hundred millionth.
CJ Reim, a contributor at blockchain firm CoreDAO said that there’s not a lot of utility when it comes to BRC-20 tokens and ordinals, 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 has not had a significant impact on the price of Bitcoin, which has been trading below $30,000 since mid-April.
The rapid creation of BRC-20 tokens has not been without controversy, with detractors saying that the issuance of these tokens has made things more difficult for users who want to use Bitcoin for the purposes originally intended.
“Gasoline” fees, or transaction costs on the Bitcoin blockchain, have risen steeply over the past month, with total dollar-denominated fees paid per day approaching a new all-time high of $17.8 million per day, according to Glassnode data.
Pink also slowed considerably. Congestion was so acute that the world’s largest cryptocurrency exchange, Binance, had to briefly pause bitcoin withdrawals on May 7th.
Nauman Sheikh, head of treasury management at digital asset investment manager Wave Electronic Assets indicated that while congestion has eased somewhat, it is still high and, at its peak, users were waiting more than 30 hours for transactions to be confirmed.
By Marina Meza
