DEV Community

Cover image for Bitcoin Halving 2024: How It Impacts the NFT Ecosystem?
NFT Research
NFT Research

Posted on

Bitcoin Halving 2024: How It Impacts the NFT Ecosystem?

With less than 1 day left until the BTC halving countdown, it is expected to occur on April 20th. The current block reward is 6.25 BTC, which will be halved to 3.125 BTC after the halving, with 253 blocks remaining. The Bitcoin halving is undoubtedly one of the most important events in the history of Bitcoin development, and as this event approaches, the entire crypto community is filled with anticipation and excitement.

The impact of this event is not limited to Bitcoin itself but will have far-reaching effects on the entire cryptocurrency ecosystem, including the NFT ecosystem. In this moment of change and challenge, we can’t help but think: how will the Bitcoin halving shape the future of the crypto world?

About Bitcoin Halving: The purpose of Bitcoin halving is to gradually slow down the speed of Bitcoin’s supply, creating a deflationary economic environment by slowing down the rate at which new Bitcoins are produced. This deflationary characteristic is designed to maintain the scarcity and value of Bitcoin, while also encouraging long-term holding and investment to promote Bitcoin as a sustainable digital currency in the long term. So far, Bitcoin has gone through 3 halvings:

  • November 2012: Reduced from 50 BTC per block to 25 BTC.
  • July 2016: Reduced from 25 BTC per block to 12.5 BTC.
  • May 2020: Reduced from 12.5 BTC per block to 6.25 BTC.

Potential impacts of Bitcoin halving

Price and market performance: Investor sentiment and the overall performance of the crypto market are influenced, and the halving event itself will trigger market optimism about the future supply and value of Bitcoin. Most people believe that Bitcoin halving will bring about a bull market, and Bitcoin halving still possesses strong narratives and anticipated value.

Miners and network security: Halving will reduce miners’ mining profits, undoubtedly bringing them a double challenge. On one hand, as the hash power of the Bitcoin network continues to increase, the cost of upgrading and replacing mining machines is also rising, which means that miners need to bear higher costs to maintain the same mining revenue. On the other hand, each halving will halve the block reward income of miners, directly impacting their profit levels, and some marginal miners may exit.

Of course, Bitcoin halving also highlights scalability challenges. With the decrease in miners’ income, the trend in interaction may maintain network security by increasing transaction fees, and users may have to bear higher transaction fees. In addition, Bitcoin’s architecture limits programmability, further restricting the ability of developers to use complex applications. This situation requires scaling solutions to adapt to increased throughput of effective transactions and expanded use cases, such as trading NFTs.

However, with efficiency improvements and market enthusiasm, the challenges miners face in terms of income will be alleviated, and the network still has enough hash power to support the security and decentralization of Bitcoin.

Supply: Halving will reduce the rate at which Bitcoin is added, and each halving of block rewards will further increase the scarcity of Bitcoin. However, the scarcity of Bitcoin needs to be considered from multiple perspectives. From the perspective of new supply, it undoubtedly enhances its relative scarcity, maintaining its position as digital gold. But from the perspective of total circulation, even if the new supply is declining, as long as block rewards continue to flow in, the total circulation of Bitcoin is increasing.

Halving is often seen as a significant milestone in the development history of Bitcoin. For the entire crypto market, as the leader in the crypto field, the performance of Bitcoin usually has spillover effects on the entire crypto ecosystem.

What is the trend and development of the NFT market?

With the rise of the Bitcoin Ordinals inscription ecosystem in 2023, the on-chain activities of Bitcoin have greatly increased. On November 20th last year, the transaction fees on the Bitcoin chain exceeded Ethereum for the first time. Since the emergence of the Ordinals inscription ecosystem, over 20% of miner revenue comes from inscription-related activities. Starting in December last year, Bitcoin has surpassed Ethereum in the NFT trading field, becoming a leader in NFT trading.

In the current Bitcoin NFT market, activities on the Ordinals platform have significantly increased. The concept of tokenized art, such as Bitcoin Wizard and Rune Pups, has seen a surge, as well as the recent popularity of Runestone. Pups/Rune Pups is a project combining tokenized art and NFTs deployed on the Ordinal protocol, with a total supply of 2.3 billion tokens and a combined total of 10 billion tokens. Due to the image of PUPS being a puppet monkey with a Bitcoin logo, it is also known as the “WIF” version of Bitcoin in the European and American communities. Currently, its floor price is around 0.12btc.

The most attractive event for people to pay attention to and participate in is the launch of the Runes protocol during the Bitcoin halving. Runes is a new protocol launched by Casey, the founder of Ordinals, and was first introduced in Casey’s blog. It is expected to launch at the start of the Bitcoin halving, which is at a Bitcoin block height of 840,000. With the continuous rise of Runestone and the upcoming launch of the Runes protocol, the Bitcoin NFT ecosystem is showing a trend of continued growth and becoming increasingly diversified.

As of now, the trading volume of the Bitcoin NFT market has significantly surpassed Ethereum, and the Bitcoin network is emerging as a new centre for NFT development. It is worth noting that the daily minting volume of Ethereum NFTs is showing a clear decline, dropping from a peak of 300,000 to less than 20,000, with some NFT assets with large-scale data attributes transferring from the Ethereum mainnet to other L2 solutions.

More importantly, there is a noticeable trend of issuing NFT assets with strong financial attributes shifting from Ethereum to the Bitcoin network. Industry experts believe that issuing such NFT assets on the Bitcoin network is becoming the consensus direction for a new round of asset issuance.

As the bull market reaches its peak, there is strong potential for significant growth in the NFT ecosystem, particularly in the trading volume of Bitcoin-NFTs within the Bitcoin inscription ecosystem. This surge could lead to a bubble in the prices of certain Bitcoin NFT projects, especially top projects that garner increased attention.

NFTScan is the world’s largest NFT data infrastructure, including a professional NFT explorer and NFT developer platform, supporting the complete amount of NFT data for 24 blockchains including Ethereum, Solana, BNBChain, Arbitrum, Optimism, and other major networks, providing NFT API for developers on various blockchains.

Official Links:





Top comments (0)