Bitcoin NFT mania: Over 100k Ordinals inscribed, but controversy looms
A Bitcoin-based (BTC) non-fungible token (NFT) protocol, Ordinals, has minted over 100,000 NFTs since its launch on January 21, 2023.
100,000 Bitcoin NFTs minted so far
Bitcoin-based NFT protocol Ordinals has made waves in the crypto world. As the latest crypto trend continues to take off, more than 100,000 “NFTs” have been permanently carved onto Bitcoin since the launch of Ordinals in January 21, 2023.
These inscriptions, often called Bitcoin NFTs or Ordinal NFTs, are all stored entirely on-chain. This results in media, such as images, videos, PDFs, and much more, being permanently placed on the immutable decentralized ledger that we call the Bitcoin blockchain.
For some, the Ordinals protocol has become a brand new toy that allows them to pump out shiny, fun Bitcoin “NFTs.” Some mainstream projects have even been copied and ported onto BTC. For others, with more in-depth knowledge of the inner workings of blockchain technology, the Ordinals protocol spells trouble. Amongst the more blockchain-savvy crowds, the Ordinals protocol has been met with fierce criticism, especially as the negative consequences of its use continue to pile up.
The perfect storm
Since Ordinals “Inscriptions” are stored entirely on-chain, many have pointed out that these “NFTs” are taking up precious blockchain space to host data that is completely useless in the financial context of the BTC ledger.
Traditionally, any non–financial data contained in a Bitcoin transaction had a storage constraint of 40 bits, which was recently increased to 80 bytes. However, this constraint was lifted on November 2021 with the introduction of the Taproot upgrade.
The Taproot upgrade was originally implemented to facilitate the development of more advanced smart contracts on the Bitcoin blockchain. The Ordinals protocol leverages this upgrade along with another recently implemented improvement called SegWit (Segregated Witnesses).
SegWit was introduced in 2017 to combat scalability issues by raising the transaction size limit and lowering the transaction fees associated with “witness” transaction data. Well, with these two updates put together, the perfect storm gave way to a hurricane of Bitcoin “non-fungible tokens.”
The elephant in the room
Ordinals are moved by moving a specific satoshi stored in the wallet of the NFT owner, meaning that further transactions do not enjoy any particular fee discounts and do not put any significant strain on the network. Only minting new NFTs has been viewed as controversial by many network participants.
All network full nodes will have to download this data, significantly increasing the storage requirements of the devices running the node software. Ironically, two updates that were originally meant to combat scalability issues found on the Bitcoin network while maintaining its decentralized nature, have paved the way for a trend that is pushing Bitcoin users towards a more centralized network.
With the blockchain growing larger than necessary, the resources needed to run a full node become harder and harder to meet. This, in turn, creates an environment where normal household computers are not equipped to run a full node, which leads to a more centralized network.
Transaction fees, block size, weird data
Apart from being a quaint little trick that some within the community have taken a liking to, Bitcoin NFTs bring absolutely nothing new to the table (especially when you consider the fact that Bitcoin NFTs have been around since 2014 through protocols like Counterparty). They are, quite literally, a wate of space.
Ordinals inscriptions are bloating up the blockchain unnecessarily, and that’s just the tip of the iceberg. On-chain data reveals that there has been a substantial surge in transaction fees on the Bitcoin network over the last month due the launch of the Ordinals protocol and its success with the masses.
Other less-technical problems have also been brought to light by the Ordinals protocol. Since anyone can pretty much put any type of file on the Bitcoin blockchain, as long as it fits the block limit, some people have taken it upon themselves to ensure that there would be no shortage of crazy, random, and downright disturbing content.
Only a few days following its launch, the Ordinals protocol facilitated the inscription of pornographic content on the Bitcoin blockchain. Of course, the permissionless nature of the blockchain makes curating content absolutely impossible, but some might say that any kind of curation would not be required if the space reserved for non-financial data were to be strictly limited once more.