Binance recently announced the suspension of Bitcoin Ordinals trades and deposits starting April 18, 2024. The exchange advised holders of Bitcoin-based non-fungible tokens (NFTs) to withdraw their assets from the platform’s NFT marketplace before May 18, 2024. The reason behind the suspension was not disclosed, but Binance mentioned that it sought to streamline product offerings on its marketplace. Additionally, the Binance NFT marketplace will no longer offer airdrops, utilities, and benefits related to Bitcoin NFTs after April 10, 2024. This move by Binance comes at a time when interests and trading activities in the overall NFT markets, including Bitcoin-based NFTs, are at multi-year lows.
Despite Binance’s decision, OKX intends to support four new inscription standards as it believes that Bitcoin Ordinals will play a crucial role in 2024. Bitcoin Ordinals, also known as Bitcoin NFTs, enable users to embed digital content such as music, audio, text, video, images, or art onto the Bitcoin blockchain. Binance had introduced support for these collectibles in 2023, promising more opportunities for collectors. However, the inclusion appears to have been short-lived, surprising community members with the sudden turn of events. Data from non-fungible.com shows a decrease in NFT sales, which peaked at 117,000 in August 2021 but has since dropped to 2,400 across various blockchains, including Ethereum.
The decision to end support for Bitcoin Ordinals raises concerns about the impact on the security of the Bitcoin network and the congestion it creates. Luke Dashjr, a popular Bitcoin Core developer, revealed on December 6, 2023, that Bitcoin NFTs were causing network clogs, increased fees, and exposing vulnerabilities in the network. There has been a significant volume of inscriptions on the Bitcoin network, leading to congestion and high transaction fees for users. Dune Analytics data shows that the Bitcoin network has had over 64.17 million inscriptions, generating more than $430.7 million in transaction fees. The rise of Bitcoin Ordinals has sparked a debate on whether inscriptions representing NFTs and BRC-20 tokens on the Bitcoin network should exist, as some believe these elements could lead to similar problems faced by the Ethereum chain.
Experts are divided on the impact of Bitcoin Ordinals on the network, with some arguing that the network and its token, BTC, were designed for pure peer-to-peer financial transactions and may suffer from the issues that have plagued the Ethereum chain, such as high transaction fees and scammy meme coins. On the other hand, some see Bitcoin Ordinals as driving innovation and positive momentum within the network, serving as a pathway toward decentralization. The suspension of Bitcoin Ordinals on Binance and the ongoing debate surrounding inscriptions on the Bitcoin network highlight the challenges and opportunities presented by NFTs and token standards within the cryptocurrency ecosystem. As the space continues to evolve, stakeholders will need to navigate these complexities to ensure the sustainable growth and security of blockchain networks.
