Robert Steinadler, 2 months ago
Non-fungible tokens are one of the biggest drivers for Ethereum’s decentralized ecosystem of financial applications. For a long time, Bitcoin was missing this feature and it appears that some Bitcoiners were even happy about it. Not everybody is a proponent of JPG ownership, right? Things have changed with a new protocol that is called Ordinals.
What is Ordinals and how does it bring NFTs on Bitcoin?
Rare Pepes were the first NFTs that were secured by the Bitcoin blockchain and later migrated to Ethereum. In this sense, Bitcoin already had NFTs but of course, that’s not what we are looking at today when we visit OpenSea or Magic Eden. Back in the day, these Bitcoin NFTs were based on the OP_RETURN functionality.
Ordinals are very different from that approach and it is based on the Taproot update that was implemented last year. The protocol can write data on the Bitcoin blockchain which is also unique. Ethereum is not storing the NFTs on-chain. Instead, the files are stored on a server and each token links to the corresponding directory containing the file.
What is even more impressive are the so-called inscriptions. Instead of creating a token, Ordinals is tracking single Satoshis, the smallest denomination of BTC, and ascribing non-fungible features on an opt-in basis. This solution has some merit since each Satoshi remains fungible and only those users who are willing to opt in ascribe non-fungible features rather than being forced to use that system.
While this solution seems to be brilliant and some Bitcoiners are cheering over the fact that NFTs are possible on Bitcoin, not everybody is happy with Ordinals. One of the reasons is that the Taproot update wasn’t meant to be used in that way. One could argue that Ordinals is an accident.
Some Bitcoin proponents like the Blockstream CEO Adam Back have voiced their concern, calling Ordinals NFTs spam. Others like the Bitcoin developer Luke Dashjr have even called for a spam filter effectively blocking transactions that are making use of Ordinals.
This has caused yet another controversy. Some believe that such a spam filter is attempted censorship which goes against Bitcoin’s core values. Critics argue that valuable block space is taken that should be used to transact value rather than JPG files. It remains to be seen if the Bitcoin community can embrace the Ordinals protocol or if it gets rejected over these concerns.
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