• Bitcoin network activity is at its highest level since May 2021 due to the popularity of Ordinals NFTs.
• CryptoQuant’s Network Activity Index evaluates the activity of the Bitcoin network on four metrics: number of active addresses, number of transactions, Unspent Transaction Output (UTXO) count and block size.
• The surge in network activity is due to the growing popularity of Non-Fungible Tokens (NFTs) which occur through Taproot transactions, leading to an increased average block size.
Bitcoin Network Activity at All-Time High
On-chain data shows that Bitcoin network activity is now at its highest level since May 2021 as Ordinals NFTs have been rapidly gaining popularity.
CryptoQuant’s Network Activity Index
CryptoQuant’s “network activity index” evaluates the activity of the Bitcoin network using four metrics: total number of active addresses on the network, number of transactions, Unspent Transaction Output (UTXO) count and block size. The graph below displays how this value has changed over time:
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Growth Due to Non-Fungible Tokens (NFTs)
The reason behind this boost in activity is that BTC non-fungible tokens (NFTs) have been quickly becoming popular. These NFTs have become possible on the BTC blockchain thanks to a system called the “Ordinals.” This protocol directly stores images on the chain using Taproot transactions. As these NFTs are directly “inscribed” on the blockchain itself,the average block size gets inflated when these are added to transactions; thus resulting in a rise in CryptoQuant’s Network Activity Index.
In conclusion, as more and more people adopt Non Fungible Tokens as a form of investment or display item with unique characteristics such as rarity and scarcity, it is evident that there will be increasing demand for blockchain space; causing Bitcoin’s network activity index to reach all-time highs not seen since May 2021!
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