As on-chain activity increases, Bitcoin is becoming more than just digital gold: Grayscale Research

Recent developments suggest that Bitcoin (BTC) could be more than just “digital gold,” according to a researcher at crypto asset management giant Grayscale.

In a new analysis, Grayscale's Michael Zhao highlights Bitcoin's increasing on-chain activity.

“The emergence of ordinal inscriptions has revitalized on-chain activity, with over 59 million non-fungible token-like (NFT) collectibles being inscribed, generating over $200 million in transaction fees for miners as of February 2024. This trend is expected to continue, reinforced by renewed developer interest and ongoing innovation on the Bitcoin blockchain.”

Bitcoin ordinals allow users to inscribe digital data such as images and videos into a single satoshi, a single unit of BTC, to create the equivalent of NFTs on the top crypto asset's network. According to Zhao, atomic numbers have sparked a “cultural shift” in the Bitcoin community and attracted new developers to the ecosystem.

In addition to atomic numbers, the Grayscale analyst emphasizes that BTC's use case is evolving with the emergence of smart contract protocols running on the Bitcoin network.

“Among the existing Layer 2 solutions, some have been quietly laying the foundation for this development for years. Stacks stands out as a platform that has introduced fully expressive smart contracts for Bitcoin. It has promoted the development of various decentralized applications (DApps) that leverage Bitcoin's security and enable functionalities ranging from DeFi (decentralized finance) to NFTs. These DApps represent the forefront of Bitcoin’s transition to a multifaceted ecosystem capable of supporting a wide range of blockchain-based applications.”

At the time of writing, Bitcoin is trading at $49,801.

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