Critics of the new protocol argue that it undermines Bitcoin’s initial purpose as a platform for monetary transactions, while proponents of the new use case argue that it should be welcomed alongside other requests for block space.
Ordinals is a new protocol that was just released this month. It is designed to store non-fungible tokens (NFTs) on the Bitcoin blockchain. This has the effect of driving a wedge between Bitcoin purists, who believe that the blockchain should only be used for monetary transactions, and those who believe that the network is large and flexible enough to host a variety of use cases, including meme-themed art.
The developer of Ordinals, Casey Rodarmor, asserts that the protocol uses “inscriptions,” which refers to arbitrary content such as text or images, added to sequentially numbered satoshis or “sats” – the smallest unit in Bitcoin – to create one-of-a-kind “digital artefacts” that can be held and transferred across the Bitcoin network. This assertion was made by Rodarmor.
The new Ordinals protocol for Non-Fungible Tokens (NFTs) has ignited a discussion in the Bitcoin community over the appropriateness of using Bitcoin for uses other than traditional cash. The Segregated Witness (SegWit) update in 2017 and the Taproot upgrade in 2021 made the new protocol practicable.
To address the scalability of Bitcoin, SegWit added a new block field to contain witness data, while Taproot addressed security issues to enable the on-chain storage of massive quantities of NFT data. The NFT project is being seen differently by different members of the Bitcoin community, with some seeing it as a “attack” and others welcoming it with open arms.
Proponents of the protocol say it fits within Bitcoin’s security and incentive paradigm, while detractors say it would compete with regular payment processes and increase prices. Ordinals’ introduction has rekindled an old argument in the Bitcoin community.
As a result of this new protocol, the original intent of Bitcoin is now being questioned. There has been some discussion on whether Bitcoin should be used for non-financial purposes since the introduction of Ordinals, a new protocol that enables the storing of NFT data on the Bitcoin network. Others in the Bitcoin community see it as a way to combat the dwindling block subsidy and increase transaction fees, while still others perceive it as an assault.
The protocol has been praised by Bitcoin expert Dan Held, who tweeted that it was excellent for Bitcoin. In the meanwhile, Bitcoin Core developer Luke Dashjr has referred to it as a “assault.” A different programmer, Peter Todd, dismissed the backlash by saying that as much information as desired may be included in Bitcoin transactions for a fee. The argument over whether Bitcoin has any other practical use outside being a currency persists.
According to Pourteaux, the maximum size of a Taproot transaction is infinite provided it is lower than a block. The connection between Taproot and Ordinals is explained in further detail by surgeon and Bitcoin enthusiast Dennis Pourteaux in a recent blog article.
While Pourteaux does not take a side in the ongoing argument about Ordinals, he does think the conversation is healthy for the Bitcoin ecosystem as a whole. Pourteaux claims that discussions like this are what keep Bitcoin safe since they bring together the brightest brains to figure out what to do next.
Ordinals are a fun art project for Rodarmor, another Bitcoin fan, and a chance to spread the word about Bitcoin. According to Rodarmor, the use and creation of Ordinal inscriptions necessitates operating a complete node, and the company hopes this will motivate more individuals to do so for the greater good of Bitcoin. They also highlight the fact that Ordinals are permissionless, utilise just Bitcoin, and have no additional tokens or sidechains.