• This opinion editorial discusses the recent use of Ordinals and inscriptions on Bitcoin transactions, which are a made up way of tracking sats across transactions.
• Ordinals and inscriptions can be used to create Bitcoin-native digital artifacts or NFTs that never enter the UTXO set, as they are coded in such a way that they are written into transaction witnesses.
• The main concerns raised with inscriptions include reduced accessibility to transact on Bitcoin, reduced ability for users to run a full Bitcoin node, and the possibility of illegal material being recorded into Bitcoin’s blockchain.
What Are Ordinals And Inscriptions?
Ordinals are a made up way of tracking sats (a fraction of a bitcoin) across transactions. It is 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. They are coded in such a way that they are written into transaction witnesses and never enter the UTXO set.
What Is 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.” It could also be seen as arguing that “Bitcoin does it better” than shitcoin NFTs because it is immutable, always on chain, simpler and more secure.
What Are The Concerns Raised With Inscriptions?
The main concerns here are reduced accessibility to transact on Bitcoin because of inscription/NFT degens creating a transaction backlog; reduced ability for users to run a full Bitcoin node because of increased storage and bandwidth requirements; and the possibility of illegal material being recorded into Bitcoin’s blockchain that might discourage some users from using it.
How Has This Impacted Transactions?
Recently we’ve seen large Bitcoin transactions take up nearly an entire block and default mempools (300 MB) get filled up due to these conventions around ordinals & inscriptions being used by some people within the space.
In conclusion, while there may be some creative uses for ordinals & inscriptions when it comes to expressing your creativity through crypto art or even creating digital tokens without relying on smart contracts or third party platforms like Ethereum – there still remain some legitimate concerns about how this impacts transaction speeds & fees as well as accessibilty for those running full nodes.