The arrival of the Ordinals protocol has led to a sharp increase in the average Bitcoin block size as users start to inscribe images and larger files such as audio and video as Ordinals. Since the start of the year, the average block size of a Bitcoin has jumped by 66% from 1.2 MB to around 2 MB.

What Are Ordinals?

Designed and deployed by former Bitcoin Core contributor Casey Rodarmor, Ordinals is a new protocol on Bitcoin that allows users to send and receive sats, the atomic unit of Bitcoin, that can carry optional extra data.

The protocol uses “inscriptions,” which are arbitrary content like text or images that can be added to sequentially numbered satoshis to create unique “digital artifacts.” These artifacts, which are NFTs in effect, can be held and transferred across the Bitcoin network like any other sats.

Since the launch of the Ordinals Protocol earlier this year, Bitcoin’s average block size has been trending upward. In mid-February, the average block size of a Bitcoin hit an all-time high of above 2.5 MB for the first time since the inception of the leading cryptocurrency, data by YCharts shows.

How Ordinals Impact Bitcoin Block Size

Bitcoin blocks, data structures within the blockchain primarily used to store a record of transactions, were initially designed to hold up to 36 MB in size. However, for security reasons, Satoshi Nakamoto, the pseudonymous creator of Bitcoin, reduced the block size to 1 MB in 2010.

In 2017, Bitcoin’s block size limit was replaced by a block weight limit of 4 million “weight units” with the implementation of the Segregated Witness (SegWit) upgrade. This changed how data in Bitcoin blocks is “counted,” — giving some data more weight than others.

Perhaps more importantly, the upgrade represented an effective block size limit increase. Bitcoin blocks can now have a theoretical maximum size of 4 MB, consisting of 3 MB of signature data and 1 MB of transaction data, and a more realistic maximum size of 2 MB.

While this limit remains in place, the average Bitcoin block size is increasing as users fill it up with inscriptions. Since January, more than 358,000 Ordinals have been inscribed to the Bitcoin network, per a Dune Analytics dashboard.

A look at recently-recorded inscriptions reveals that the bulk majority are simple texts or image files. However, there are also increasing GIFs, videos, and other larger files that take up more size.

It is worth noting that Ordinals bring additional financial incentives to miners, who have generated more than $1.5 million in transaction fees from these NFTs so far. That is because Ordinals introduce miner extractable value, or MEV, which is the maximum value miners can obtain from producing new blocks beyond the block rewards and transaction fees.

According to a report by research firm FSInsight, Ordinals could eventually create a sustainable demand for block space. This could address one reasonable criticism of Bitcoin’s security model: the lack of miner revenue attributable to fees.

Nevertheless, Bitcoin purists have been critical of the Ordinals project, arguing that it could price out the actual financial activity and thus damage Bitcoin’s image as a reliable P2P payments network.

“Bitcoin is designed to be censor resistant. This doesn’t stop us from mildly commenting on the sheer waste and stupidity of an encoding. At least do something efficient,” Blockstream CEO and long-time Bitcoiner Adam Back said.

This article originally appeared on The Tokenist

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