Metaversal, a Bankless newsletter, provides weekly level-ups in NFTs, virtual realms, and collectibles
Dear Bankless Nation
Bitcoin is a digital currency, which is mostly traded these days.
This dynamic is due in large part to Bitcoin’s conservative and narrowly designed development. This is the idea. Go all-in on singularly optimizing for the status of censorship-resistant, decentralized money.
Ethereum has clearly taken a more holistic approach, focusing on money anddecentralized apps, such as NFTs.
But Bitcoin’s strict design doesn’t prevent NFT-like creations.
To the dismay of many hardcore Bitcoiners, a growing number of experimenters have been taking advantage of Bitcoin’s limitations to create new types of non-fungible creations.
Let’s now get to the bottom of what’s happening in the Bitcoin NFT scene.
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The Bitcoin NFT buzz is behind
Bitcoin’s community is currently dealing with an increase in Bitcoin NFT mins after Ordinals. This protocol converts individual bitcoin satoshis into non-fungible digital artifacts and was launched earlier this month.
The “old guard” Bitcoiners have reacted with disapproval to Ordinals. This is similar to how they criticized Bitcoin-based Counterparty NFTs back in 2014.
Counterparty veterans, as well as new and old experimenters, are praising Ordinals’s approach for Bitcoin’s NFT industry. These new NFTs are also driving up transaction fees revenues for Bitcoin miners. This could point the way to a future where cultural activity can replace the decreasing block subsidy.
How NFTs Work
Ordinals revolves around Inscriptions, a new Bitcoin-native mechanism. According to the Inscriptions mainnet announcement:
“Inscriptions” are digital artifacts that can be used to create Bitcoin blockchain-based currency. These digital artifacts are created by inscribing ord-encoded sats. They can be viewed using the ordinals explorer. They don’t require a separate token or sidechain, nor do they need to be converted to Bitcoin.
An inscription transaction is a way to include content such as an image, text or SVG. The transaction witness contains the content and signatures that prove that a transaction has been authorized.
em >[…] The inscription is placed on the first sat in the transaction’s first output. This permanently marks the transaction and distinguishes it from its peers. It is not just a sat; it is an integral part of the complex tale of human art and culture.
By using ordinal theory, it is possible to find the unspent output that contains an inscribed sat, its movements, ownership, and transactions. Inscriptions can then be traded, gifted and bought.
The onchain element
The media in Ordinals mints is stored entirely on Bitcoin blockchain. This means that there are no external dependencies e.g. Private servers or IPFS. These NFTs can be always retrieved from Bitcoin.
It is possible to mint completely onchain Ethereum NFTs in a different way, but it is more expensive than onchain minting. Ordinals makes it possible to mint onchain Bitcoin NFTs much cheaper than onchain Ethereum NFTs.
Total cost = 20 dollars
Onchain NFTs are praised by many in the Ethereum ecosystem as the best and most resilient means of storing metadata. Onchain digital artifacts for Bitcoin could also be celebrated due to their robustness.
What are people saying
1. Dennis Porteaux did an amazing, balanced dive into the technical and factional contexts surrounding Ordinals.
Illegitimate bitcoin transactions
The longstanding compromise on transaction sizes, how Taproot and SegWit inadvertantly blew it up, and the nascent NFT protocol emerging in its wake
2. Eric Wall emphasized the irony in hardline Bitcoiners accepting censorship of Bitcoin NFTs.
3. Casey Rodarmor has argued against Bitcoin Essentialism
The big picture
Ordinals’ rise is not a flash in the pan in Bitcoin ecosystem. The Bitcoin NFT scene has been blossoming since last year.
Artist, data scientist and NFT historian chainleft created PEPERMANENT in Nov. 2022, prior to the current Ordinals buzz.
Series 12 Card 33 PEPERMANENT @ChainLeftist https://t.co/MOoP2jYB7N
This NFT boom is quite interesting when you consider that Bitcoin desperatelyneeds to grow in the years ahead if miners want to make enough money to stay around and continue securing Bitcoin. The BTC block subsidy keeps halving every 4 years.
Ordinals thus, is such an important step towards a teeming market on Bitcoin, despite the fact that hardliners want to keep blockspace for only currency uses cases. We will have to wait to see how things turn out, but Ordinals NFTs will be here for the long-term.
Review the Ordinals website and docs to learn more about Bitcoin NFTs
If you missed it Doubling down on NFT Security
William M. Peaster, a professional writer, is the creator of Metaversal-a Bankless newsletter that focuses on the emergence and use of NFTs within the cryptoeconomy. He has also contributed content to JPG, Bankless, and other publications.
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