Ordinals, the beginning of the end of BTC?

Ordinals is a new NFT protocol on Bitcoin Core (BTC) that allows storing of data directly in the blockchain. The protocol is based on tracking individual Satoshis and reusing them as NFTs. This is referred to as “inscriptions“. Tracking is based on the order in which Satoshis are either mined or used in transactions.

(Article by Tilman republished from tb358de.Substack.com)

A loophole in the 2021 Taproot upgrade, along with earlier SegWit changes, allows virtually unlimited storage of arbitrary data for NFTs on the BTC blockchain, capped only by block size – at mere fraction of the normal gas costs.

Because ordinals use BTC’s existing infrastructure, there is no need for a separate token, another blockchain, or changes to the bitcoin code. Ordinals are fundamentally different from the otherwise-common NFT implementations on various smart contract blockchains.

There, the file and NFT often reside in two different environments. The file may be hosted on a central cloud server or an open file system outside the blockchain. Only the reference to the file path is added to the NFT. If the file storage service deletes the image, fails, or the file is corrupted or the path is compromised, the NFT no longer references an active file.

Ordinals, on the other hand, store files directly on the blockchain. The information added to the Bitcoin blockchain using ordinals only needs to adhere to the limit of about 4 MB. They are real files and not just references to other files. The ordinals are permanent, immutable parts of the BTC blockchain and must be downloaded and stored by all full nodes.

The introduction of ordinals arguably shows that Bitcoin’s original goal of being an alternative to the fraudulent fiat money system cannot be fulfilled and therefore other use cases are to be developed. Ordinals target the passion for collecting that can become an obsession for some, to which everything else is subordinated. Via this, a further spread of Bitcoin ought to be ensured.

Cryptocurrencies that allow ordinals will either simply destroy themselves from the inside, because the blockchain grows faster than storage space becomes cheaper, and thus more and more full nodes disappear for cost reasons, or there can be some help from the outside, in which illegal content such as child pornography is stored on the immutable blockchain, which each full node then has stored.

Read more at: tb358de.Substack.com