(Bloomberg) -- NFTs are coming to the Bitcoin blockchain, sparking a debate among those who say the digital representations add a much-needed fresh use case and the purists concerned about deviating too far from the origins of the peer-to-peer cryptocurrency network. 

Nonfungible tokens such as the now infamous Bored Apes and CryptoPunks are one of the driving forces that made Ethereum the most commercially important blockchain, where users can mint and trade digital assets that have been worth millions of dollars. Bitcoin was designed as a cryptocurrency, while Ethereum was build as a next-generation version that can handle decentralized applications.  

NFTs are now feasible on the Bitcoin network after developer Casey Rodarmor recently launched a protocol known as Ordinals that allows the digital artifacts to be carried on the original crypto blockchain.   

While Bitcoin miners, who process and validate data on the blockchain, welcome the invention since it can boost fees for them, critics are concerned an influx of new trading volume may crowd out other financial transactions. 

The NFTs are made possible by a major upgrade on the Bitcoin blockchain in November 2021. Called Taproot, the upgrade aimed to improve the platform’s privacy and efficiency, opening up a slew of opportunities for Bitcoin developers to build applications native to the network. That has enabled people to inscribe certain data, including images and texts, into transaction data to create an NFT that can be traded and gifted on the Bitcoin blockchain. 

“If this takes up any bit of traction, this will improve mining economics massively,” said Nick Hansen, chief executive at crypto-mining services firm Luxor Technologies. “Miners got compensated for adding those transactions to the blockchain.” 

Bitcoin miners earn a fixed supply of token rewards released from the blockchain and fees for processing transactions. The fees are a much smaller revenue stream than the rewards given the relatively low transaction volume compared to Ethereum.

However, some critics are concerned the rise of Bitcoin-native NFTs can potentially crowd out other types of transactions. Adam Back, chief executive of crypto infrastructure company Blockstream, considered the inscriptions as “the sheer waste and stupidity of an encoding. At least do something efficient.”

Rapid adoption of NFTs on Ethereum has created high fees and congestion while the blockchain continues to improve its scalability. Yuga Labs, the creator of the popular Bored Apes Yacht Club collection of NFTs, launched a sale of Ethereum-based NFTs Otherdeeds in May, transaction costs skyrocketed as people rushed to mint and trade the digital assets. The fees rose higher than the value of the tokens themselves at times around the sale. 

©2023 Bloomberg L.P.