NFT transaction sends biggest shock on Bitcoin network in recent history
While everyone and their cat were focused on whether Bitcoin would kick off February with renewed upside or retracement, something interesting happened. The Bitcoin network registered the largest block in the last four months.
Initial findings revealed that the large transaction within the block attracted no fees, which is an unusual outcome. According to reports, the transaction was conducted by an NFT project called Taproot Wizard.
Even more interesting is that the data sent via the Bitcoin blockchain was an NFT sent in its entirety as a JPEG image.
Transaction data on the Bitcoin blockchain has historically been limited to very small packets of data. Sending an entire JPEG NFT means the amount of data being sent will be significantly higher.
The Bitcoin network has historically been limited in terms of transaction capacity and speed because of block size limits. The transaction has been linked to Taproot Wizard, an NFT project that is experimenting with innovation on the Bitcoin blockchain.
Bitcoin core has opposed those experiments for the same reason why Bitcoin’s block size remains unchanged. Adding support for NFT functionalities may require implementing larger block sizes.
This might unlock new challenges for the network, such as lower security. Experts also believe that larger blocks may compromise the network’s anti-censorship properties.
Did the transaction spoof Bitcoin investors?
Bitcoin has struggled to sustain its upside since the start of this month. This is around the same time that the block size limit surged. There was some speculation that the incident may have been an attempted network attack.
Such speculation is the type that triggers FUD back in the market, which might have triggered some concern among investors.
Bitcoin is down by almost 5% from its current year-to-date high of $24,258, to its $23,129 press time price. Despite this, there is one interesting observation that may support the next major price move.
Bitcoin’s 50-day moving average is currently about to cross the 200-day moving average from below. If it does, it will form a golden cross which is traditionally considered a bullish sign.
But all this is subject to prevailing market conditions which may favor the bulls or the bears.