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Bitcoin
Ordinals, Inscriptions and the DeFi/NFT Bitcoin Adventure.
Until recently, NFT issuers were profiting by releasing their hideous collections on the Ethereum, Polygon, Solana, and other blockchains.
The craze around NFTs drew attention (and investors) away from Bitcoin, propelling Ethereum and other POS chains. Every celebrity has already launched a collection after discovering this gold mine.
It was nothing but ephemeral hype.
It caught us off guard when NFT issuers declared the launch of entire collections on Bitcoin.
The current Bitcoin-NFTs association begins with Taproot and the capabilities for smart contracts the Taproot upgrade added to Bitcoin.
Casey Rodarmor, formerly associated with Core, released Ordinals in January 2023, providing a protocol that enables NFTs on Bitcoin.
Mixed reactions emerged, with some well-known Bitcoin figures voicing their disapproval of this development.
In 2023, NFTs on Bitcoin are a thing, but do we want them on the blockchain?
As Chainlink blog explains:
The key innovation of ordinal NFTs is that they provide a system for numbering each individual sat.
A unique ID for every single satoshi on the Bitcoin blockchain. Each ordinal, in its most basic form, is simply a satoshi that has been assigned a unique number. Here’s how it works.
In ordinal theory, individual satoshis are numbered in the order that they are mined. The first ordinal is the first satoshi ever minted, dating back all the way to 2008. When a satoshi is transferred, the order is preserved through a first-in, first-out system based on the order of transactions.
Ordinals allow inscriptions in the Bitcoin blockchain, allowing the addition of numismatic value on satoshis, making these sats collectibles. Ordinals turn sats into tradeable and collectible assets, transferred or traded using Bitcoin transactions. Inscriptions are digital artifacts that can contain an image. (for details visit the Ordinals Guide).
We can’t reverse changes. Asking miners to censor NFTs will achieve nothing. Miners are seeking fees and additional transactions, and Ordinals are providing this service.
People wanted to mint NFTs on Bitcoin, which they did with ordinals. Right now, we can figure out an effective way to reduce spam of jpegs and make Ordinals useful. As it is currently, blocks are getting filled with silly images (spam) instead of consuming this space with data that solve real-life issues.
NFTs may have a future and even low-quality designs can contain value, but it would be better not to clog the network with spam images and raise fees with non-economic activity. A better approach is side-chains with IPFS hosting the files.
We can be ready for waves of hype unleashed with Ordinals, but it won’t be an exciting development for Bitcoin.
Releasing poor-quality remakes of popular collections on Ethereum will not make Ordinals attractive. There could be a game-changer project, but there are also many differences between Bitcoin and crypto fans.
Bitcoin holders were not interested in DeFi either when some projects introduced it to Bitcoin side-chains. Few put their Bitcoins as liquidity in DeFi, and probably nobody will care to mint NFTs and gamble away precious sats.
Without dismissing the idea, Bitcoin side-chains can work better for Ord and allow NFTs to thrive without pressuring the settlement layer with jpeg-spam. An interesting concept, but controversial.
Twitter: @1BTCBitcoin
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