What is Ordinals – The controversial Bitcoin NFTs

Ordinals is a protocol recently created by Casey Rodarmor, a Bitcoin developer. This novel protocol allows the creation of non-fungible tokens (NFT), which are stored directly within the Bitcoin network. However, this new concept of NFTs in the Bitcoin network has brought different opinions about how it could negatively affect the king of the cryptocurrency ecosystem. Let's see what Ordinals is and why it has generated so much controversy.

What is Ordinals

Ordinals is a protocol recently created by Casey Rodarmor, a Bitcoin developer. This new protocol allows the creation of non-fungible tokens (NFT), which They are stored directly within the Bitcoin network. According to its creator, the goal of this protocol is to allow users of the Bitcoin network to explore, transfer and receive satoshis that can include videos and images. Other projects that have tried to introduce the concept of NFTs into the Bitcoin network (such as Counterparty or Stacks), but these are stored in a second layer of Bitcoin such as Taproot. Ordinals on the other hand, stores the NFTs directly on the Bitcoin network itself.

How Ordinals works

Ordinals allows the creation of NFTs on the Bitcoin network through a process known as registration. This process is based on adding assets to individual satoshis, which allow you to put content in a Bitcoin transaction and assign it to an individual satoshi. The inscriptions are then stored in the signature of a Bitcoin transaction. This process remains entirely on the Bitcoin network without using sidechains. This process is possible thanks to the Bitcoin Taproot update, which introduced the concept of Smart Contracts in Bitcoin. The update fixed vulnerabilities present in Segwit, another second layer of Bitcoin. Taproot removed 80 byte limit on OP_Return function that was present on the network. Through this update you can now add more information in the section witness, raising the maximum size of Bitcoin blocks to 4 MB, with an average weight of 1,2 MB. As we can see in the following graph, the usage activity of the OP_Return function experienced its peak during the birth of the first collections of NFT sidechains of Bitcoin, such as the famous “Rare Pepe”.

Why Ordinals has caused controversy

The controversy around Ordinals focuses on the use of the network. The first recorded Ordinals transaction was added to the network with a weight of 360 KB, well above the usual weight of Bitcoin transactions. Recently The heaviest Bitcoin transaction in history was recorded, reaching 3,92 MB, something that has not been well received by Bitcoin maximalists like Adam Back, one of the first Bitcoin developers who worked closely with Satoshi in the early days of the network. Under his thinking and that of many users, the introduction of NFTs to the Bitcoin network would only cause the network to be filled with junk content and, consequently, the size of the database and the cost of transactions will increase. Adam Back said something quite curious that precisely goes against the principles of Bitcoin; He mentioned that miners could censor Ordinal transactions to avoid filling the network with garbage. Something unfortunate about the part of him that he decided to delete immediately.

The truth is that they are not on the wrong track with the issue of transaction costs, given that an uptick in transaction costs on the Bitcoin network has been seen since the first Ordinals NFT was minted on the Bitcoin network. It should be noted that, in general terms, the increase has not been that great either, given that on previous occasions Bitcoin transaction costs were higher than the current ones and Ordinals had not yet seen the light.

Are Ordinals the first Bitcoin NFTs?

Ordinals is certainly not the first attempt to introduce the concept of NFTs to Bitcoin. The first time we were able to witness this concept on the Bitcoin network was through Counterparty, a protocol built on Bitcoin which allowed the concept of NFTs to be introduced into the network. Unlike Ordinals, Counterparty stores its NFT images on private servers outside the network. One of the best-known collections present on Counterparty is the one we mentioned previously, the “Rare Pepe”. This difference is what makes Ordinals create so much controversy, given that the allow NFTs to be stored directly on the network causes both a increase in transaction costs and at the same time the size of the Bitcoin database increases considerably (currently it is around 432 GB).

Conclusions about Ordinals

The concept introduced by Ordinals has been innovative in the sense of using the technology provided by Taproot to be able to directly store the NFTs within the Bitcoin network itself, something that Bitcoin maximalists have not liked at all. They are certainly not on the wrong path, given that, as mentioned in the title of the Bitcoin White Paper, Bitcoin is cited as a P2P electronic payment system that was designed with the idea of ​​solving the problems present in the current financial system. This must be the reason for Adam Back's anger, given that he was part of the genesis team that developed Bitcoin in the beginning and is outraged that a use other than that initially stated.

Although it is also true that Bitcoin being open source, anyone who wants to develop any concept and develop it within the network is within their rights, so Ordinals is here to stay regardless of public opinion. It should be noted that proposals such as Adam Back's to censor Ordinals registration transactions would go against one of the fundamental principles that characterize Bitcoin; resistance to censorship. So it is quite deplorable of him to quote these words in public knowing who he is. Other users have stated that the solution to this problem could be to fork the network as happened previously with the Bitcoin Cash Dilemma, which ended up being a complete fiasco over the years. Bitcoin Cash forked to offer a larger block size of transactions for increase network speed and reduce commission payments. Something that has already been solved with the introduction of Segwit and Taproot, leaving in the background to the project that Roger Ver has always defended tooth and nail, where the use of the network is extremely less than that of its original counterpart.