When a digital artwork by crypto artist Beeple was sold at Christie's for a whopping $69.34 million, NFT became popular around the world overnight. This new medium of digital art has emerged from Web3 and entered the mainstream art collection market.

However, as the crypto market entered a bear market, the NFT market also became sluggish, and famous auction houses including Christie's and Sotheby's saw a sharp drop in the turnover of digital artworks. Until the emergence of Bitcoin NFT, digital art had a new "scroll" of inscriptions, and another NFT market showed vitality.

As of January 23, 19 Bitcoin NFTs were sold at the Sotheby's auction for a total of approximately US$1.1 million. Among them, Genesis Cat, a digital art image cast by visual artist FAR (Francisco Alarcon) on the Bitcoin blockchain network, was sold for US$254,000, but this was not the highest.

Last December, Bitcoin NFT artworks were listed at Sotheby's auction for the first time. Three Super Mario-themed pixel-style digital artworks were sold for approximately US$450,000, about five times the highest estimated price.

Compared with the earlier Ethereum NFT, Bitcoin NFT uses protocol tools to store it completely on the Bitcoin network. In terms of crypto asset market value, Bitcoin is the blockchain network with the highest market value in the world, currently at $784.66 trillion.

The blockchain network, which was previously considered to be only used for Bitcoin transaction records, has a new function, and Taproot Wizards is a tool developer that adds this new function, which is why the Bitcoin NFT it produces can be sold at a high price. With this tool, more NFT works are emerging in the Bitcoin ecosystem, and everyone can mint them.

The transaction price of $254,000 was 12 times higher than the estimated price.

Following Nyan Cat and CryptoKitties, another cat-themed NFT has become popular. On January 22, an NFT called Genesis Cat was sold at an auction by Sotheby’s, the world’s leading auction house for fine art and luxury goods, for $254,000, more than 12 times the estimated price of $15,000 to $20,000.

Genesis Cat is now available at Sotheby’s

This high-priced NFT artwork was created by visual arts and technical artist/engineer FAR (Francisco Alarcon) on the Bitcoin blockchain network, and Genesis Cat is a single digital artwork in the Quantum Cat NFT series. Quantum Cat will be the first NFT series released by Taproot Wizards, the development team of the Bitcoin Ordinals protocol, and will consist of 3,333 cat-shaped Bitcoin NFTs.

Genesis Cat is not the most valuable Bitcoin NFT ever sold at Sotheby’s.

Previously, in December 2023, the historic auction house auctioned its first Bitcoin NFT work, a pixelated Super Mario-style picture set, which sold for about $450,000, about five times the highest estimate. As of January 23, Sotheby's auction had sold 19 Bitcoin NFTs for a total of about $1.1 million.

Mario-themed Bitcoin NFT collection sells for $450,000

If you trace back Sotheby's NFT auction history, it is not difficult to find that a series of Bitcoin NFTs are not sky-high prices.

The auction house first got involved in NFT digital art in 2021, and once created many record-breaking transaction amounts, such as the single item CryptoPunk No. 7623, which sold for US$11.75 million, and the Cube series (Bored Ape Yacht Club) with the largest number of transactions - 23,598 NFTs with a total transaction amount of US$14 million.

Some statistics of NFTs auctioned by Sotheby’s

But as time goes by, the transaction price of single NFT artworks listed on Sotheby's is getting lower and lower. According to Sotheby's 2021 annual report, its total auction turnover in 2021 reached US$7.3 billion, setting a historical record in more than 200 years, and the auction turnover of NFT collectibles reached US$100 million. By 2023, digital art auctions only generated a turnover of about US$35 million.

This is related to the downturn in the entire NFT market, and 2023 is undoubtedly the worst year. According to CryptoSlam data, the overall sales of NFT markets on various blockchains in 2023 were only US$8.7 billion, far lower than the US$23.734 billion in 2022. However, the number of transactions reached 90.6 million, which is 1.65 times the 54.85 million in 2022.

Under such market conditions, the emergence of Bitcoin NFT is adding vitality to the market.

1.14 million Bitcoin NFTs produced in 200 days

What’s special about the Genesis Cat NFT is that it is a digital art image recorded on the Bitcoin blockchain network using the Ordinals protocol. This process is called “engraving” and the result is also called “inscription”.

As digital artworks created by Ordinals protocol developer Taproot Wizards land at Sotheby’s, Bitcoin inscriptions are being sold on the market at an unprecedented rate.

According to Cryptoslam data, as of January 25, the sales of Bitcoin NFTs have reached 2.141 billion US dollars, with a total of 1.874 million transactions; while the sales of Ethereum NFTs, which have the best sales, have reached 42.188 billion US dollars, with a total of 45.497 million transactions. Although the total sales of Bitcoin NFTs are only 5% of Ethereum NFTs, this data was created by the Bitcoin NFT market in just over 200 days.

Bitcoin NFTs had more buyers than sellers in the past year

Since the launch of the Ordinals protocol in March 2023 and the Bitcoin blockchain network has the ability to create NFTs, 1.14 million image inscriptions have been created in 200 days. In the same period of time, this speed far exceeds the "old bases" of NFTs - 1.14 million is the total number of NFTs produced in the first 200 days on the Ethereum, Solana and Polygon blockchain networks.

Why is Bitcoin NFT developing so rapidly? This has to do with the market's view of its value.

Unlike NFTs on other blockchain networks such as Ethereum, Bitcoin NFTs are created and stored on the Bitcoin blockchain. On other blockchain networks with smart contract functions, the creation and transaction data of NFTs are recorded, but the pictures, texts and even videos are actually stored off-chain.

The Ordinals protocol provides the Bitcoin network with the function of minting NFTs. In simple terms, this protocol can number the smallest unit of Bitcoin, Sat, in chronological order and record text, pictures, and even video information within the storage space allowed by the network. The result of this engraving is the Bitcoin inscription.

The "numbering" and "engraving" characteristics of the inscription have derived many new crypto assets. If different annotations and different contents are entered into Sat, it meets the characteristics of "non-fungible tokens" NFT; if the same annotations and the same content are entered, it is equivalent to producing homogeneous tokens such as BTC and ETH.

It should be noted that since its inception, the function of the Bitcoin network has always been to produce and record Bitcoin transactions, which are publicly traceable and cannot be modified. Since the capacity of a Bitcoin block is only 1MB, it can only record a maximum of 4096 transactions, which is not conducive to carrying more information.

The Ordinals protocol proves that Bitcoin can actually add information. The uniquely meaningful numbered content is even given commemorative significance due to the unchangeable nature of Bitcoin records. Some market audiences regard it as a "digital artifact." Of course, "engraving" on the Bitcoin network will also increase the burden on the network, resulting in a disadvantageous situation of reduced network transaction speed and increased transaction fees.

Not long ago, some core developers of Bitcoin Core, the Bitcoin software system, denounced the inscriptions as "worthless" because of the poor network performance caused by inscription casting. However, judging from the subsequent production of Bitcoin NFTs and related tokens, market participants do not seem to care about the attitude of developers.

The successful auction of Bitcoin NFTs such as Genesis Cat at Sotheby's also proves the interest of the digital art investment market in Bitcoin NFTs. A report by Galaxy Research and Mining predicts that by 2025, the market value of the inscription market created by Ordinals will reach $5 billion.