The popularity of the so-called “Bitcoin NFTs” has exploded over the last two months with the release of Ordinals. Ordinals is a novel technology that enables users to digitally inscribe media and text on the original blockchain. To date, over 500,000 of these inscriptions have already been created, and the figures keep growing every day.
To remind, Ordinals is a recent development for Bitcoin that, unlike its rivals, enables on-chain storage of media without requiring smart contracts. However, the difficulty of minting, administering, and trading Ordinals is higher compared to those of NFTs on other blockchains like Ethereum and Solana. The main reason behind this is the absence of adequate infrastructure.
What does Magic Eden mean for Bitcoin Ordinals?
Magic Eden is a marketplace that enables NFT trading on Ethereum and Solana blockchains and offers consolidated listings for NFTs based on Ethereum. According to the information from its official website, the platform boasts over 22 million unique visitors per month. Also, it has more than 100k wallets connecting every day. Furthermore, eminent companies such as Solana Ventures, Paradigm, Coinbase Ventures and Sequoia support the platform.
Such support coming from Magic Eden, one of the largest NFT marketplaces could prove to be a major step for Ordinal NFTs.
Firstly, it will undoubtedly expand its reach to a wider audience. Being only a few months old, Bitcoin Ordinals comes with limited tools and products for the market. Due to those limitations, Bitcoin NFTs space has been unattainable and insecure for average and non-professional users. Needless to say, the new Bitcoin NFT marketplace that is to be launched will be fully audited.
Secondly, the launch will incorporate two non-custodial cryptocurrency wallets, Hiro and Xverse, to enable users to conduct transactions. Logically, the two wallets will be compatible with Ordinal NFTs. This is of immense importance, as the choice of Bitcoin Ordinal wallets is rather limited to only a few of them.
With these two wallets, traders on the Magic Eden platform will be able to trade inscriptions, i.e., NFTs minted on the Bitcoin blockchain.
Another prominent company that took interest in Ordinal NFTs is Yuga Labs, famous for its Bored Ape NFT collections and ApeCoin (APE). On March 5, the company launched a Bitcoin NFT collection dubbed TwelveFold which included 300 limited-edition NFTs. Out of the overall number, 288 collectibles were made available for trading.
The collection was launched in the form of an auction and lasted for only 24 hours.
According to the press release from March 5, those who wanted to come into the possession of an NFT had to bid for it. Participants in the bidding process had to transfer their entire offer sum in Bitcoin (BTC) to a specific BTC address owned by Yuga Labs. The company claimed that it would restore BTC to those who failed to place the highest offer, while winners would pay the amount they bid.
It could be said that the auction was more than fruitful. In 24 hours only, Yuga Labs reaped $16.5 million or 735 BTC.
Yet, judging by the reaction of the public, the initial bidding plan didn’t go out as planned, arousing fury within the crypto community.
What went wrong?
To put it simply, contrary to its promise, Yuga Labs failed to return BTC to participants who failed to place a top bid but claimed to have done so. Instead, owners had to conduct refunds manually. Such a failure caused the crypto community to suspect something fishy was going on. Some members even accused Yuga Labs of attempting to keep BTC from unsuccessful bids, referring to an auction as a “scammer’s dream.”
The backlash was so heated that even Casey Rodarmor, the creator of Bitcoin Ordinals, joined in. He was very harsh to criticize Yuga Labs, without even mincing his words. He also added that he would invite the community to boycott similar auction projects, should there be any.
Response to criticism
In response to the continuous criticism of the most recent Bitcoin NFTs auction, Greg Solano, a co-founder of the company, stated that Yuga Labs is a “trusted party.” In line with this, he claimed there was no chance of fraud in the most recent auction the company held on the Bitcoin blockchain.
He clarified that the decision to use the bitcoin blockchain was made on purpose by Yuga Labs in an effort to improve transparency. By being explicit, the company was “set the best precedent … given the constraints of running a trustless auction on Bitcoin that simply isn’t possible at this stage.”
No stranger to controversy
Yuga Labs has been dogged by controversy before, hitting the news frequently in the past few years. One of the recent criticisms came from a group dubbed Anonewsco in September 2022. As CoinTelegraph reported, the group alleged certain symbols used by Yuga Labs in its famous BAYC art were evocative of racism, Nazism, and other unethical ideologies.
Furthermore, Blockchain News has recently disclosed that numerous lawsuits have been made against Yuga Labs for its NFT collecting. One of them is a class action lawsuit brought by Rosen Law Firm regarding Yuga’s NFTs and the cryptocurrency ApeCoin (APE).
According to the law company, people who bought these assets between April 23, 2021 and December 8, 2022, may be eligible for compensation for the monetary losses they sustained when the market declined.
Yuga Labs currently has a somewhat shady reputation as a result of being in hot water multiple times in previous years. Future Bitcoin Ordinal auctions hosted by the company may take place, but only time can tell whether they will be fruitful or met with the same level of criticism.