Inscriptions: A Bitcoin Renaissance

Key Insights

• The SegWit and Taproot upgrades inadvertently opened up the ability for individuals to store significant amounts of arbitrary data on the Bitcoin blockchain. These upgrades resulted in new use cases such as fully on-chain NFTs (ordinals) and using the network as a data availability layer.
• Over 342,000 inscriptions (embedded arbitrary data) have been posted on the Bitcoin blockchain in the last three months, with images accounting for approximately 63% and text at 36%.
• Inscriptions could revitalize Bitcoin's blockspace fee market, with inscriptions-related transaction fees accounting for 6% of the total transaction fees in the past week.

In the past year, Bitcoin has grappled with the erosion of its core narratives, including its perceived role as an inflation hedge, a store of value, and a maturing institutional asset. Combined with limited development activity, Bitcoin struggled to find compelling new narratives to drive it forward.

But there is a glimmer of hope. New use cases for Bitcoin have emerged as a result of a design quirk in the SegWit and Taproot upgrades, allowing for fully on-chain NFTs and the use of the network as a data availability layer. These developments may have given Bitcoin a new narrative that could draw untapped interest to the network.

Unintended Features Enabled by Taproot & Segwit