• This opinion editorial discusses the recent emergence of Ordinals and Inscriptions, which are made up conventions to track sats (fractions of Bitcoin).
• Supporters argue that these conventions can make Bitcoin transactions more fun and secure than shitcoin NFTs.
• However, there are concerns about reduced accessibility for transactions, as well as potential for illegal content to be recorded on the blockchain.
What Are Ordinals and Inscriptions?
This is an opinion editorial by Stephan Livera, host of the “Stephan Livera Podcast” and managing director of Swan Bitcoin International. We’ve recently seen a Bitcoin transaction take up nearly an entire block and default mempools (300 MB) get filled up. What’s going on with all this Ordinals and inscriptions madness? The Quick Explainer: Ordinals are a made up way of tracking sats (a fraction of a bitcoin) across transactions. Now, I stress it is a made up way of tracking sats, as it does not meaningfully impact bitcoin’s fungibility. As explained by creator Casey Rodarmor on my podcast, it’s a convention of numbering sats in the order they’re mined into existence, and tracking them across transactions in a first in, first out (FIFO) method. An inscription is another made-up convention where sats can be inscribed with arbitrary content, a kind of Bitcoin-native digital artifact or NFT. Using the convention, they can be sent around and stored in a Bitcoin unspent transaction output (UTXO). Now, because they are coded in such a way that they are written into transaction witnesses, they never enter the UTXO set.
The Bull Case For Ordinals And Inscriptions
The pro Ordinals and inscriptions case could broadly be understood as: “Come for the fun, rich art, stay for the decentralized digital money.” You could also agree with some of the critiques of shitcoin NFTs, and see this as a way of arguing that “Bitcoin does it better” e.g., Bitcoin inscriptions are immutable, always on chain, simpler and more secure than shitcoin NFTs.
Concerns Raised With Inscriptions
The main concerns here are: Reduced accessibility to transact on Bitcoin because of inscription/NFT degens creating a transaction backlog and paying a lower fee per real byte because of the witness discount; Reduced ability for users to run a full Bitcoin node because of the increased storage and bandwidth requirements; The possibility of illegal material being recorded into Bitcoin’s blockchain that might discourage some users from using it or participating in its network effects.
The Pros Of Ordinals And Inscriptions
Supporters argue that these conventions can make Bitcoin transactions more fun and secure than shitcoin NFTs by providing immutable records written onto its blockchain while still allowing users to have creative control over their own funds via inscriptions—essentially giving users access to create their own digital artifacts within its network without any additional fees or cost incurred outside normal miner fees associated with running any kind of standard transaction within its system.
While ordinals & inscriptions may offer interesting possibilities for creativity within bitcoin’s network effect model & provide unique data points & information about how those satoshis were used & moved throughout its history—it’s important to remember that these features should not replace core tenets related to scalability & privacy within bitcoin’s overall design & architecture if we want to build out mass adoption & usage amongst its user base at large