Bitcoin, the largest cryptocurrency, is facing an NFT launch. So, how will this affect BTC? Here are the comments of Dominic Basulto, analyst of the famous consulting company The Motley Fool, and the Bitcoin forecast…
The largest cryptocurrency in the field of NFT
Throughout its 14-year history, Bitcoin (BTC) has existed primarily as a new form of money made possible by Blockchain technology. The goal set by the Bitcoin founders under the name Satoshi Nakamoto in 2009 was to become a truly decentralized, peer-to-peer cryptocurrency for financial transactions. But all that could be about to change in 2023. At the end of January, a new protocol called Ordinals was launched that will make it possible to create and store NFTs on the Bitcoin Blockchain. The launch has already sparked a protest in the token community.
These new Bitcoin NFTs will be very different from the NFTs we see in Ethereum (ETH) or Solana (SOL), which are currently some of the biggest when it comes to NFTs. Current NFTs are cryptographic tokens powered by smart contracts. They reside on a Blockchain and are separate from that Blockchain. In turn, these Bitcoin NFTs are works of art that are literally “written” into the Blockchain itself. Using clever programming and a deep knowledge of how Blockchain works, the developers were able to find a way to add NFT data to blocks that could previously only hold financial transaction data.
New use cases for bitcoin emerge
The introduction of NFTs means that Bitcoin can be used for more than just financial transactions. So, from an investment perspective, the introduction of NFTs can actually increase the value of the cryptocurrency, according to analyst Dominic Basulto. Anything that benefits a coin increases its value. Moreover cryptocoin.comConsidering the size of the NFT market, which, as we reported, sold approximately $25 billion in 2022, it could have a major impact on future valuation if Bitcoin, Ethereum and Solana start to reduce the NFT market share.
Also, these new NFTs could potentially attract an entirely new demographic to Bitcoin. When it comes to crypto, a lot of people want to have some fun. This is why meme coins are so popular and this is why NFTs rose in the first place. So NFTs could be a way to open up Bitcoin to new investors and make the cryptocurrency even more attractive to a mainstream audience.
But Bitcoin has some limitations
On the downside, these NFTs have the potential to clog the Bitcoin Blockchain and make the network slower than it is. Even now, the network can only process seven transactions per second, so anything that slows down the transaction will devalue BTC as a payment method. Furthermore, these NFTs may actually highlight the limitations of Bitcoin, far from creating new use cases and new market opportunities.
For example, Bitcoin is known to consume an incredible amount of energy, and miners consume a tremendous amount of power to mine a single block. So why would anyone want to make the process even more inefficient? Some miners have already said that they will refuse to mine any Bitcoin block containing NFT data. For many, NFTs go against Satoshi Nakamoto’s original vision and famous Bitcoin whitepaper. For them, adding NFT to Bitcoin is as controversial as adding the giant glass pyramid to the Louvre in Paris.
Will this increase the value of the cryptocurrency?
At the end of the day, the analyst said, “I don’t think Bitcoin needs NFTs. Not every blockchain needs to be everything,” he says. Also, according to the analyst, these new NFTs are not trying to “fix” anything wrong with existing NFTs. On the contrary, it is even considered a “step back” for NFTs. Because they are not tokens, they cannot be moved off-chain or easily traded.
As even the creator of the Ordinals protocol admits, these NFTs are more like “digital artifacts” that will stay on the Bitcoin Blockchain forever. The analyst does not think these new NFTs will move interest for investors. But he thinks it will create much more public discussion about Bitcoin. Still, the analyst said that he is closely following the developments that will increase the efficiency and speed of the network; because he says this is the best way to add long-term value to BTC.
