Bitcoin Non-Fungible Tokens (NFTs) have been making waves in the cryptocurrency world recently, with many people asking questions about their purpose and potential implications. NFTs are digital assets that are unique and distinct from one another, and they are being used to create digital collectibles, artwork, music, and more.
Ordinal Inscriptions are a type of NFT that can be minted on the Bitcoin blockchain. Unlike Ethereum NFTs, which depend on off-chain metadata that can be modified, Ordinal Inscriptions enable all data to be inscribed directly on-chain. This was the flaw in Ethereum NFTs that software engineer Casey Rodarmor sought to fix with the launch of the Bitcoin ordinals protocol.
Those in favor of Ordinal Inscriptions believe they could cause an important shift in the Bitcoin community and improve the technology behind NFTs. However, there has been a lot of debate over whether they are a “good use” of block space. The challenge has been that as more Ordinals are being inscribed, the cost of Bitcoin transactions has risen. That’s because Ordinals introduce additional, non-financial data on the Bitcoin blockchain that bog down on-chain confirmation times. This includes images, audio clips, even games.
The debate over whether these individual units must be deemed equal is unfolding before our eyes, and it is important to understand. Bitcoin is money, and that’s the largest and most important use case, impacting the most people in the world. Which is why many believe that ordinals and other use cases both known today and yet to emerge will remain niche.
Ultimately, the markets will decide whether or not Ordinal Inscriptions are demanded and are valuable. The permissionless nature of Bitcoin allows for this competition to play out. Bitcoin is governed by consensus rule – which is why running a node is essential and why the Blocksize war was foundational for Bitcoin.
Despite the potential benefits of Ordinals, Bitcoin is money, and any changes to the protocol should be slow and methodological. Bitcoin is an open, permissionless protocol and moments like this are healthy for its long-term success.
As an advisor with clients who have Bitcoin and questions on Ordinals, the most significant takeaways revolve around what makes Bitcoin unique. Most, if not all, other cryptocurrencies are decentralized in name only – Bitcoin is not. But due to the decentralized nature of Bitcoin, developers are free to modify Bitcoin’s current rule set. If demand is there and the modifications result in splits in Bitcoin holders and the community, investors will have a choice over what to do with their money.
Ultimately, the conversations and debates happening about Ordinals is good. It allows Bitcoin to test its resilience and robustness. We will continue having these conversations as Bitcoin proceeds on its path toward global adoption. Regardless of opinions of “right” or “wrong,” being an open, permissionless protocol allows for moments like this to occur, and that’s healthy long-term.
It is important to remember that Bitcoin is money, and that is the largest and most important use case, impacting the most people in the world. Ordinal Inscriptions may be an exciting development, but they are not the desire for many to use Bitcoin’s block space. Ultimately, the markets will decide if Ordinals are demanded and are valuable.
The permissionless nature of Bitcoin allows for this competition to play out. If we see a hard fork, any new tokens or projects would accrue to clients and they could then decide if they want to hold, sell or buy. Being an open, permissionless protocol allows for moments like this to occur, and that’s healthy long-term.
Bitcoin is an open, permissionless protocol and moments like this are healthy for its long-term success. As an advisor with clients who have Bitcoin and questions on Ordinals, it is important to remember that Bitcoin is money, and that is the largest and most important use case, impacting the most people in the world.
Ultimately, the conversations and debates happening about Ordinals is good. It allows Bitcoin to test its resilience and robustness. We will continue having these conversations as Bitcoin proceeds on its path toward global adoption. Regardless of opinions of “right” or “wrong,” being an open, permissionless protocol allows for moments like this to occur, and that’s healthy long-term.
The permissionless nature of Bitcoin allows for this competition to play out. If we see a hard fork, any new tokens or projects would accrue to clients and they could then decide if they want to hold, sell or buy. Being an open, permissionless protocol allows for moments like this to occur, and that’s healthy long-term.
At the same time, free and open markets will dictate if Ordinals are demanded and are valuable. The permissionless nature of bitcoin allows for this competition to play out. Those not in favor of Ordinals see this as an impediment to the ability of Bitcoin to scale and reach full global adoption.
Ordinals challenge the fungibility of Satoshis in the Bitcoin network. All Satoshis should be equal, or it begins to lose a significant trait of money. But ordinals can alter the value of these units of money. Take rare collectible coins as an example: While a penny may have a face value of exactly one cent, its design and mint year could make it worth a dollar or more in the eyes of some beholders.
Ultimately, the beautiful thing about Bitcoin is that it’s permissionless and the ultimate free market for uses. And this is what fosters change. Bitcoin is money, and any changes to the protocol should be slow and methodological. Inscriptions are yet another example of attempts to change the blockchain. Inscriptions became eligible in Bitcoin blocks with the most recent upgrade to the protocol called Taproot.
At the same time, it is important to remember that Bitcoin is money, and that’s the largest and most important use case, impacting the most people in the world. Which is why many believe that ordinals and other use cases both known today and yet to emerge will remain niche.
Ultimately, the markets will decide whether or not Ordinal Inscriptions are demanded and are valuable. The permissionless nature of Bitcoin allows for this competition to play out. Bitcoin is governed by consensus rule – which is why running a node is essential and why the Blocksize war was foundational for Bitcoin.
Regardless of opinions of “right” or “wrong,” seeing the conversations and debates happening about Ordinals is good. It allows Bitcoin to test its resilience and robustness. We will continue having these conversations as Bitcoin proceeds on its path toward global adoption. Ultimately, the beautiful thing about Bitcoin is that it’s permissionless and the ultimate free market for uses. And this is what fosters change.
