Data shows that the Bitcoin transaction fee share of inscriptions has fallen to just 26% recently, a sign that the hype around it may be fading.
The share of Bitcoin engraving fees is still high, but much lower compared to its peak
According to data from the on-chain analytics company glassDuring its peak, the dominance of graphics over engravings was 62%. “Pattern” here refers to any form of data included directly in the Bitcoin blockchain.
Engravings only became possible when The Ordinals Protocol came out earlier in the year, and since then, they’ve seen a number of applications and gained some quick popularity.
Because Inscription transactions are like any other transfer on the network, they naturally affect the economics of the blockchain related to transactions. An easy way to measure the impact of patterns is through bitcoin transaction fees.
In general, transaction fees vary based on the amount of demand on the network. In times of low traffic on the blockchain, investors do not need to pay any large amount of fees to get their transfers done quickly, thus the fees remain low.
However, when there is a lot of congestion on the network, carriers may have to attach a large amount of fees since there is a lot of competition for the limited transaction capacity that miners have.
Now, here’s a chart showing what percentage of transaction fees Bitcoin has earned since its inception:
Looks like the value of the metric has come down a bit recently | Source: Glassnode on Twitter
As shown in the chart above, Bitcoin Inscriptions’ fee share exploded shortly after the technology debuted. Most of the contributions were coming from image-based sprites (colored orange in the graph), which were playing the role of non-fungible tokens (NFTs) on the network.
However, in April, the vignette fad died down and the share of transaction fees for this type of transfer fell to low values.
Not long after interest in the tokens declined, a new application for the technology emerged: BRC-20 tokens.
BRC-20 tokens are fungible tokens that are similar to ERC-20 tokens on the Ethereum blockchain and are generated in the same form as text stencils.
From the graph, it is clear that the share of fee transactions for tokens has risen to a new all-time high (ATH) after the introduction of BRC-20 tokens, with most conversions unsurprisingly coming from the text-based type (highlighted in blue).
At ATH, the value of the scale reached around 62%, which means that bitcoin miners were receiving 62% of all transaction fees from registration-based transfers.
However, in the past few days, interest in engravings seems to have waned again, as the share of fees from these transfers has dropped to 26%.
Obviously, this is still a very high level, but nonetheless a very significant drop from the peak.
BTC price
At the time of writing, Bitcoin was trading at around $26,800, down 2% in the past week.
BTC has gone stale in the past few days | Source: BTCUSD on TradingView
Featured image by Dmitry Demidko on Unsplash.com, charts from TradingView.com, Glassnode.com
