CryptoQuant.com
As NFTs are stored on-chain, Bitcoin network activity surges to two-year highs.
Bitcoin's network activity has recently increased and is now at its highest level since May 2021. The number of daily transactions in the bitcoin network has grown to 345K, the highest level since April 2021, driving up network activity. The Network Activity Index of CryptoQuant indicates that activity on the bitcoin network has reached its highest level since May 2021. Looking at transactions in greater detail, we can see that P2TR transactions have fueled the growth. Taproot scripts, implemented on bitcoin in November 2021, are used in these transactions. As more inscriptions are added to the blockchain, the average daily size of bitcoin blocks has reached new all-time highs. According to our Network Activity Index, larger block sizes positively impact network activity. Evidently, due to inscriptions, some recent bitcoin blocks in the last few days have reached the 4 MB block size limit. These blocks were the largest in bitcoin history. Transaction fees have also recently risen slightly but remain well below current levels. NFTs on the Bitcoin blockchain may bring more financial use cases to the network and drive more demand for block space. As a result, this will increase miners' fees and bolster their long-term sustainable growth. On the other hand, inscribing non-fungible characteristics to satoshis can negatively affect privacy and fungibility.