The crypto world is abuzz with the news of a new innovation that is changing the game in the world of digital assets. The Ordinals Protocol is a new innovation that allows developers and artists to create and store digital artifacts directly on the Bitcoin blockchain. This has opened up new possibilities for the transfer and storage of digital assets, with the added benefit of immutability and tamper-proofing.
As mentioned in our previous article, last week OnChain Monkey became the first 10K NFT collection inscribed on Bitcoin, marking one of the early attempts to explore the possibilities of inscribing NFTs onto the Bitcoin blockchain. If you’re interested in learning more about OnChain Monkey and its impact on the NFT world, feel free to check out our earlier article on the topic.
What are Bitcoin Ordinals?
Bitcoin Ordinals can be considered NFTs, but they have a few differences. To begin with, most NFTs are created and tracked through a smart contract. However, the assets that these smart contracts represent are often hosted elsewhere.
For example, some NFT platforms make use of the decentralized storage system, IPFS, to store the NFT artworks, audio files, videos, etc. However, ordinals are inscribed into the satoshi and therefore, these Bitcoin-NFTs are stored on-chain. They are validated in blocks along with other transactions and stored in the network’s distributed ledger.
Moreover, traditional NFTs usually have metadata that allows creators to change the appearance and characteristics of an NFT. For instance, some NFT projects will ask users to refresh their metadata to update their NFTs with higher-resolution images.
However, since ordinals are stored on-chain, their data is immutable and cannot be changed. Also, unlike NFTs, ordinals do not provide creators with the option to receive royalties on subsequent sales.
In a nutshell, ordinals are immutable and complete digital artifacts. Unlike traditional NFTs, they cannot be tampered with and they reside completely on-chain. For these reasons, the creator of the Ordinals Protocol, Casey Rodarmor, believes that these digital artifacts are “intended to reflect what NFTs should be.”
The Popularity of Ordinals
Since their introduction, Ordinals have been a huge hit. They have brought thousands of new users to the Bitcoin blockchain. Evidence of this is in the fact that non-zero Bitcoin addresses touched a record 44 million on Feb 14.
Moreover, since these satoshis carry extra on-chain data, Bitcoin block sizes have also increased over the last couple of weeks. Recently, Bitcoin registered its largest-ever block, coming in at a massive 2.52 MB. In comparison, the average Bitcoin block size before the introduction of ordinals was around 0.7 MB to 1.5 MB.
Previously, miners only received network fees for monetary transactions. However, with the introduction of ordinals, the network will be used for non-monetary purposes for the first time in its history. This will increase the transaction volumes and bring more revenue for miners.
As such, data from Glassnode indicates that miners have collected nearly $600,000 in transaction fees from ordinals in the last two months alone. Such an additional revenue stream could be extremely important when block rewards dwindle or no longer exist in the future.
Criticism of Ordinals
Not everyone is on board with these digital artifacts. For instance, in a recent tweet, Adam Back, the CEO of Blockstream, referred to ordinals as a frivolous waste of block space. Others highlighted the increase in transaction fees thanks to ordinals.
“Marginalized peoples in developing countries will have to pay more to run their Bitcoin nodes and send transactions because privileged wealthy whites want to put JPEG drawings on the blockchain as status symbols,” read a recent tweet.
Ordinals are here to stay
The introduction of Bitcoin Ordinals could prove to be a game-changer in the crypto industry. The technology has already seen a surge of interest from developers, artists, and other users looking to store their digital artifacts on the Bitcoin blockchain.
While it’s clear that there are differing opinions on the use of ordinals on the Bitcoin network, some see it as a significant step forward in the world of digital assets.
Overall, the development of Bitcoin Ordinals highlights the growing importance of blockchain technology in our digital lives. As more individuals and businesses seek ways to protect and transfer their digital assets, blockchain technology provides a secure and decentralized solution. While Bitcoin Ordinals are not without their critics, they represent a significant innovation that has the potential to transform the way we store and transfer digital assets.
As with any emerging technology, it remains to be seen how Bitcoin Ordinals will be adopted and integrated into the broader crypto ecosystem. However, the potential benefits of this technology are clear, and it will be interesting to see how it evolves in the years to come. With the continued advancement of blockchain technology and the increasing demand for secure and decentralized solutions, it seems likely that we will see further developments in the use of ordinals and other blockchain innovations in the future.
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