A new technology upgrade has allowed memecoins, such as Pepe Coin (PEPECOIN-USD), to be deployed on the Bitcoin blockchain for the first time, causing congestion issues and driving BTC transaction fees to a two-year high.
The upgrade enabled the creation of Ordinals, which are non-fungible tokens (NFTs) on the Bitcoin blockchain, while the BRC-20 standard facilitates the trading of memecoins.
Some 14,300 BRC-20 tokens have been launched, amassing a total market capitalisation exceeding $1bn (£800m). Ordi (ORDI-USD), a memecoin honoring the Ordinals protocol, is currently the most valuable, worth $400m.
The Taproot upgrade, which happened in November 2021 has since caused an increase in activity on the network, which processes transactions every 10 minutes, and significantly slowed transaction settlement.
Read more: Crypto live prices
The development has been met with criticism from some bitcoin pioneers, such as Max Keiser and Samson Mow.
“Ordinals are like barnacles on the hull of a ship, the market will scrape them away,” broadcaster and bitcoin advocate Keiser told Yahoo Finance UK.
“They are like digital plastic-pollution floating in the ocean, humans are great at polluting the environment, both analog and digital."
Since the beginning of May, bitcoin (BTC-USD) transaction fees have skyrocketed, now averaging over $20.
Ordinal inscriptions have soared, with users adding images, videos, and other content, totalling over 5 million inscriptions, according to Dune Analytics data.
According to Samson Mow, founder of JAN3, the hype surrounding Bitcoin Ordinals and BRC-20 tokens is unsustainable and will dissipate within months.
“These guys are basically paying massive amounts of fees that go directly to Bitcoin miners, and there is no way this can be sustained,“ Mow said in an interview with Cointelegraph.
“They will fade away after even months, let’s not talk about years here.
Twitter account 'Bitcoin is Saving' posted: "Marginalised peoples in developing countries will have to pay more to run their Bitcoin nodes and send transactions because privileged wealthy whites want to put JPEG drawings on the blockchain as status symbols."
Marginalized peoples in developing countries will have to pay more to run their Bitcoin nodes and send transactions because privileged wealthy whites want to put JPEG drawings on the blockchain as status symbols. Just because you can doesn’t mean you should.
— Bitcoin is Saving (@BitcoinIsSaving) January 29, 2023
Bitcoin Ordinals and BRC-20 tokens using the UniSat wallet
Investors purchase BRC-20 tokens and NFTs using the UniSat wallet, which is facing high demand.
To set up a UniSat wallet, users must download the extension from the UniSat website, create a new wallet with a secure password, and note down a 12-word recovery phrase.
However, users should be prepared for potential front-running and high transaction fees, given the Bitcoin network's high gas fee consumption.