According to a report published by Galaxy Digital, a research team focused on digital assets, the market size of non-fungible tokens (NFTs) built on Bitcoin could reach $4.5 billion over the next two years. With the number of Bitcoin-based Ordinal inscriptions nearing 300,000, the researchers at Galaxy Digital think that new use cases stemming from this trend will “drive growing interest and adoption” for bitcoin.
Galaxy’s report explores the potential use cases of Bitcoin-based Ordinal inscriptions and NFTs, stating that “inscriptions significantly expand the design space for Bitcoin” and “have the potential to dramatically widen the scope of Bitcoin’s cultural impact.” The researchers note that the ecosystem is still young, but infrastructure is emerging quickly, and wallets will be a key building block for the technology.
The report delves into various collections minted in recent times, such as Taproot Wizards, Bitcoin Punks, and Ord Rocks. The paper mentions Openordex, a marketplace that leverages partially-signed bitcoin transactions (PSBTs) to enable the trustless listing and purchasing of inscriptions.
Additionally, the report discusses the controversy tied to the Ordinal inscriptions, stating that technical arguments are mostly avoided, and a social movement to stop them probably won’t happen.
Unlike Ethereum, because of the lack of smart contract technology within Bitcoin, NFT royalties are also unlikely. However, the researchers think the criteria for blue-chip Ordinal inscriptions will be “dynamic,” and the market “could see significant secondary volume.” While the study mentioned a number of tools, Galaxy believes Ordinal inscription market infrastructure will be developed by the second quarter of this year.
As a result of these trends, layer two (L2) or other types of Bitcoin scaling solutions will be pushed to the forefront of development.