Busy bitcoin spawns a new breed of crypto
Daily transactions hit 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 share of the overall cryptocurrency market currencies of $1.16 trillion, rose to 44% from 38% at the start of the year.
What is going on?
Enter BRC-20, the first class of crypto token 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, sending transactions skyrocketing.
“BRC-20 tokens are a phenomenon we’ve never seen before,” said Gordon Grant, co-head of trading at Genesis trading.
Mainly due to the creation of these tokens, the seven-day average daily transactions stand at more than 531,000, almost twice as much as a month ago, according to data from Blockchain.com.
This new class of crypto has no specific use beyond speculation, similar to memecoins. Yet its burgeoning popularity underscores interest in bitcoin not just as a store of value or a method of payment, but as the basis for the development of new coins and applications – previously thought to be the domain of more modern blockchains. such as Ethereum and Solana. Some investors and developers see Bitcoin’s blockchain as a more secure long-term foundation for building tokens and applications in the wake of the crypto carnage that followed the collapse of top companies like FTX and a general flight of assets riskier, according to market participants.
“People have seen what is possible with other blockchains and they want it on bitcoin, as the oldest network bitcoin has a track record that people can trust,” said Alex Miller, CEO of the network. bitcoin developers Hiro.
Still, the BRC-20 frenzy has been volatile.
The total value of these tokens – which are usually traded on secondary markets, especially decentralized exchanges – topped $1 billion in early May, but has since fallen back to $446 million, according to tracker BRC-20.io.
REGISTERED ON SATOSHI
As 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 record data on each satoshi – the smallest denomination of bitcoin, or one hundred millionth.
“There’s not a lot of utility when it comes to BRC-20 tokens and ordinals,” said CJ Reim, a contributor at blockchain firm CoreDAO, though he sees the trend as “promising.” terms of interest in building products on the bitcoin blockchain.
The rush 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 critics claiming that issuing these tokens has made it more difficult for users to use bitcoin for their originally intended purposes.
“Gas” fees, or transaction costs on the bitcoin blockchain, have skyrocketed over the past month, with total dollar-denominated fees paid per day reaching nearly a new all-time high of 17.8 million. dollars a day, according to data from Glassnode.
Median transaction fees hit $30.91 from a range of 90 cents and $4.23 between January and May 1, according to data from Blockchain.com.
The network has also slowed considerably. The congestion was so acute that the world’s largest crypto exchange, Binance, had to briefly suspend bitcoin withdrawals on May 7.
“Although congestion has eased somewhat, it is still high and at its peak users were waiting over 30 hours for transactions to be confirmed,” said Nauman Sheikh, head of cash management at the digital asset investment manager Wave Digital Assets.
“It pushed the boundaries of bitcoin technology.”
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