How NFTs Will Create an Internet Fast Lane

Leave it to Bitcoin. The real purpose for NFTs has finally been found.

Bloomberg reports that the launch of Ordinals, an NFT protocol layer for the Bitcoin network, has driven up the cost of transaction fees. We saw the same thing with Ethereum, which led to the launch of several Layer-2 blockchains. Will we now begin to see similar developments for Bitcoin, where several Layer-2 blockchains compete for lower level players while promising lower transaction fees?

One could have assumed Ethereum’s gas-fee problem was unique to that blockchain, but I think we can all agree that wasn’t the case. You see, the problem isn’t the blockchain. It’s the data. NFTs require a lot of it.

It’s to be expected really. The Internet itself is a data-rich medium. In the early days, video bogged down the network and slowed page load times. Why? The Internet was too primitive. But as development continued, the technology was able to support more video. Today, the second largest search engine on the planet is video-sharing platform YouTube. Ah, progress!

NFTs aren’t going away. It’s likely that their use will grow. And as they do, they’ll expand to other blockchains. But they’ll require more data, and those blockchains will have to adapt to the market. When that happens, NFTs will drive up the transaction fees on every blockchain on which they’re introduced. That will ultimately lead to what Big Business has wanted all along—an Internet fast lane.

I believe there will be an Internet fast lane, but it will consist of blockchains. I don’t think that will slow commerce for everyone else. There will be thriving blockchains for Big Business and thriving blockchains for everyone else. And there will be bridges between them.

That’s it for today. Short and heavy. I’ll be spending the weekend selling books at one of the world’s largest flea markets.

Snark and commentary are in italics. Inclusion of an item doesn’t mean I agree or endorse the ideas presented. Of course, it also doesn’t mean I don’t.

Cryptocracy is a decentralized newsletter published several times a week. I curate the latest news and crypto analysis from some of the brightest minds in crypto, and sometimes offer a little insightful and snarky commentary. Always fresh, always interesting, and always crypto. Original articles on Fridays.

First published at Cryptocracy. Not to be construed as financial advice. Do your own research.