Are NFTs the right fit for the Bitcoin network?
The release of ordinals version 0.4.0 into the Bitcoin mainnet has brought up discussion on whether the protocol is good for the Bitcoin ecosystem.
Bringing NFTs to the Bitcoin blockchain
Ordinals is a non-fungible token protocol created by Casey Rodarmor, a software engineer, and was launched on the Bitcoin mainnet on January 21st, 2023. The protocol was recently updated and allows for digital artifacts, which is the Bitcoin version of NFTs.
The industry rift
The discussions about the release of Ordinals has created controversy among industry experts. Siding with Ordinals offers more financial gain for Bitcoins. However, Bitcoin maximalists are saying that Ordinals is starting to draw attention from the bitcoin founder’s vision of the coin being a peer-to-peer cash system.
A renowned blockchain expert named Dan Held tweeted: “Ordinals = NFTs on Bitcoin.” Held defended the idea that Ordinals are good for Bitcoin. He supported his reasoning with a few factors, stating that Ordinals attracts more financial use cases to Bitcoin and ‘drives more demand for block space.”
Held, one of the board members reviewing the developments of the Ordinals protocol, also noted that since Bitcoin is permissionless, no one can stop you from building on it. He also said that paying transaction fees is not considered spam.
Division among the crypto community
Some industry experts have pointed out that Ordinals are taking up space on the Bitcoin network block, which could increase transaction fees. A Twitter user with the pseudonym “BitcoinIsSaving” expressed his/her opinion saying that the 237,600 Ordinals users are “privileged wealthy whites” who want to use the images as status symbols.
The accumulation of digital images may lock out marginalized people from the Bitcoin network. The user said that marginalized people from developing countries will have to pay heavier transaction fees and that the “privileged, wealthy whites” should not accumulate digital artifacts just because they are in a position to do so.
However, Eric Wall, a cryptocurrency researcher, disagreed with BitcoinIsSaving stating that Bitcoin’s built-in block size limit would maintain the transaction.
Other notable industry persons, such as Adam Back, Blockstream CEO and Bitcoin core developer, were not thrilled that the meme culture was being adopted in the Bitcoin network. Back noted that even though you cannot stop the Ordinals enthusiasts, the sensor resistance doesn’t stop concerned beings from commenting on the industry changes. He, however, expressed his dislike of the Ordinals and called it a ‘sheer waste and stupidity of an encoding’ and consuming a lot of block space.
However, Back’s sentiments were met by a counterattack by the host of The Daily Gwei, Ethereum bull Anthony Sassano, for wanting to censor “undesirable” transactions, which many believe goes against the ethics of Bitcoin.
The Creation Process of the Ordinals
Casey Rodarmor, another industry expert, explained to the Ordinals in a blog that the Bitcoin NFT-like structures are developed by inscribing satoshis with arbitrary content. The inscribed Bitcoin native coins are ready to be secured or dispersed to other Bitcoin addresses.
The inscriptions happen on the Bitcoin mainnet; no extra side chain or separate token is needed. The images can be transferred, tracked, hoarded, lost, bought, sold, and rediscovered.” the inscriptions are digital artifacts and, like NFTs, are always on-chain, immutable, and decentralized