One of the first blockchains to make it possible to mint Bitcoin Ordinals was Stacks, which puts it in a prime position to capitalize on the buzz. According to Ordinals, the Bitcoin maximalist beliefs will be tested if the NFTs cause network congestion.
Additionally, Stacks is up against competition from projects in other blockchain ecosystems because it hasn’t yet provided all the functionalities needed to enable an NFT trading ecosystem. According to the project’s fundamental and technical analysis, the rise in the price may have reached overbought circumstances and may soon be correct.
Ordinals Development At A Standstill
Since Casey Rodarmor inscribed an Ordinal on January 29, there has been a boom in interest in inscribing NFTs on the Bitcoin network. Despite the overwhelming start of the trend, only technical users with a Bitcoin node and most trading happen through OTC methods.
The infrastructure for Bitcoin NFT markets is still significantly lacking compared to Ethereum NFT marketplaces in complex operations like decentralized trading. According to several investors, there needs to be a mechanism to launch markets and NFT minting platforms for Ordinals.
The usage of the network for purposes other than payments has previously been opposed by the Bitcoin developer community because it clogs the network and raises transaction costs. Several Ethereum users paid hundreds of dollars in transaction fees during the bull run of 2020 and 2021 as user activity on the platform skyrocketed. Yet, while maintaining optimal fees throughout the bull run, the usage and revenue of the Bitcoin protocol lagged behind Ethereum.
A CoinShare report claims that the adoption of Ordinals will once more depend on whether the technique for adding new data to the Bitcoin blockchain is socially accepted, which will create problems like network congestion and higher fees.
The article discusses earlier unsuccessful attempts to conduct smart contract activities on the Bitcoin blockchain, concluding that similar ventures of Bitcoin’s past have had little influence on investors and users alike.
Around the beginning of February, when the instrument exploded, there was a considerable increase in the number of Ordinals inscribed on Bitcoin. Due to a shortage of trading infrastructure, the trend slowed down, with less than 10,000 NFTs recorded on most days.
The price of Stack blockchain’s native STX token increased by 256% in February due to excitement surrounding Bitcoin NFTs and an imminent project upgrade.
If the Ordinals buzz spreads, it remains to be seen how the Bitcoin community will react to increased network congestion and fees.
Stacks Price Surges On Speculation, But Blockchain Activity Lags
By easing minting operations and hosting marketplaces, Stacks intends to make Bitcoin Ordinals more accessible to users.
The team administering the blockchain, Stacks Foundation, released on February 22 a new protocol upgrade, Stacks 2.1, which aims to enhance the blockchain by adding EVM compatibility and synthetic Bitcoin (sBTC) via a secure bridge to Bitcoin.
Moreover, the .BTC naming service is on the Stacks network, which might produce significant trading activity if the demand for .BTC addresses rise. A .BTC Stacks address is currently substantially disconnected from the Bitcoin network. Users cannot send and receive Bitcoins at these addresses unlike .ETH addresses.
Following the 2.0 upgrade, Stacks will make it possible to send Stacks assets directly to Bitcoin addresses. The Bitcoin blockchain will be accessible via proxy without a distinct Stacks address. It is unknown whether Bitcoin users will find the feature appealing.
Although the changes sound encouraging, blockchain activity is still inadequate to support the STX price increase. In February, just 1,000 unique active wallets engaged with DApps on Stacks. The most remarkable aspect of Stack’s usage data was that the NFT marketplace Gamma failed to attract many users to its platform, with less than 100 wallets trading every day.
Gamma facilitates the minting and transmission of Bitcoin ordinal NFTs using Stacks. Unfortunately, many users have encountered UX issues while using this feature, as it requires a distinct Ordinal-compatible Stacks wallet address. Numerous users have sent their NFTs to incorrect addresses. Also, the wallet issue has limited the trading of Bitcoin NFTs.
Developers in the Stacks ecosystem, such as the Xverse team, are constructing a user-friendly wallet with Ordinals compatibility. In addition, an experiment involving atomic swaps between Bitcoin NFTs and STX is now in development. The objective is to expand this capability into a comprehensive marketplace.
Yet, other ecosystems are attempting to capitalize on this trend. Ordinex, for example, is developing a trading platform for Ordinals that will be accessible to Ethereum users via Metamask. Other Ethereum-native projects, like OnChainBirds and SappySeals, have inscribed NFTs on Bitcoin and enabled trading on OpenSea. So far, the trading volume of these collections remains average, with little fanfare.
In addition to Stacks, several ecosystems are attempting to capitalize on the opportunity by supporting Bitcoin NFTs. While Stacks has a technical advantage over other cryptocurrencies, Ethereum has a devoted user base and sufficient liquidity to exceed the Stacks ecosystem if a workable solution is developed. Furthermore, it will ultimately depend on the response and demand for these NFTs from the Bitcoin community, which may not support excitement.
Stacks (STX) Token Substantial Price Gain
Annually, the STX token is diluted at a rate of 2.5%. Inflation will decrease following the anticipated Bitcoin halving in April 2024. Compared to other layer-1 blockchains, such as Solana and Cardano, the supply growth rate of STX is modest, which is positive. Unfortunately, the network’s total fees or token economics are not compensating for inflation, and this must alter quickly.
Bitcoin NFTs have a great deal of promise, but it remains to be seen if the Bitcoin community, often opposed to speculation and activities that clog the network, will allow the trend to flourish.
The Ordinals ecosystem lacks the most critical aspect of NFT trading, namely an easily accessible marketplace, and wallet. Being a Bitcoin sidechain, Stacks enjoys technological advantages with Bitcoin integration and has a modest advantage over other blockchains in supporting Ordinals mania.
The apps to support Ordinals, however, are still under development. While this is happening, Stacks is up against competition from other, more liquid ecosystems, which might develop more workable strategies to incorporate Bitcoin NFTs on their chain.
The token of the project has been experiencing substantial price gains this year, building on the momentum from last week’s rally and skyrocketing by 16.18% within a 24-hour timeframe, reaching a value of $0.9954.