A Bitcoin Ordinal depicting a poop emoji was sold for 1.2 BTC — equivalent to roughly $28,000 as of press time — on March 1.
The ordinal is labeled Inscription #121 and was minted on block 773820.
It is unclear whether the transaction was a legitimate sale or a wash trading attempt to drive more interest in the ordinal and overall NFT ecosystem.
NFT Wash Trading
Wash trading is when the buyer and seller in a transaction are the same or are in cahoots — usually to drive an asset’s price up artificially by generating interest and causing FOMO.
Due to a lack of regulation and the inherent anonymity in the industry, NFT markets have been rife with wash trading since their inception. For now, it is very difficult to tell whether a buyer and seller in a trade are different people.
Historically, NFT wash traders have exploited the digital nature of these markets and the lack of regulation to fake sales. They put up the NFT for sale at an exorbitant price, then purchase it using a different account. This gives the impression that the NFT is valuable, which drives interest and can potentially lead to a real sale to an unsuspecting buyer.
Due to the inherent anonymity in the crypto and NFT industry, it is difficult to tell whether a trade is legitimate or not at first glance. Wash traders can use as many wallets and accounts as needed to try and hide their actions, and investors should be increasingly cautious when dabbling in NFT trades.
In 2022, research revealed that roughly 95% of all trading volume on NFT platform LooksRare was linked to wash trading.
Meanwhile, Dune Analytics’ research found that roughly 45% of all NFT trading volume on Ethereum was linked to shady trades.
Ordinals are extra bits of data attached to satoshis, or sats, which are the lowest denomination, or the atomic unit, of Bitcoin. Each BTC is made up of 100,000,000 sats — similar to how each dollar is made up of 100 cents.
In a nutshell, the Ordinal Protocol allows users to embed extra data in sats. The data can be audio, video, text or a jpeg image. In the case of Inscription #121, the ordinal is a jpeg image of a poop emoji.
The Ordinal Protocol was developed by Casey Rodarmor and launched on Jan. 21. The crypto community remains divided on whether ordinals are good for the Bitcoin ecosystem or detrimental for its overall image.