Bitcoin Ordinals has shown a strong desire for Bitcoin collectibles, but are they really the best solution for the future?
This is an opinion editorial by Olga Ukolova, director of the board of LNP/BP Standards Association.
Part One: I love art and money, and I collect them both
From reading the Ordinals resources (the manual, Ordinal Theory Overview, the BIP documentation), one can see that there is a fairly simple idea behind the concept. An idea with classical numismatic roots: if I have a rare coin (and a satoshi is a rare coin, since the supply is limited), then I want to keep it for as long as possible, either for fun or for my personal collector. pleasure and appreciation for the beauty of the coin, or for the purpose of passing it on to future generations so they can sell it at a higher price than I ever could.
If we add the concept of inscriptions to this idea, we fall further down a fascinating numismatic rabbit hole, as coins that are minted in extremely rare supply often experience a large increase in value and can serve a great philosophical purpose.
As an example, we can see the history of the double eagle gold coin minted in 1933 in the United States, which is currently worth $18.9 million, making it one of the most valuable collectibles in the world. At first, the concept of minting such a coin was proposed by US President Theodore Roosevelt and it was an extremely seductive opportunity for the designer. Augustus Saint-Gaudens who in 1905 wrote about the project“I have long wanted to do what little I could to improve the shameful condition of our money, but now that I have the opportunity I approach her with fear and trembling.”
Saint-Gaudens set to work, but little did he know that the son of his noble intention would be killed by a person bearing the same name as the one who planted the seed of inspiration in his hands and mind. In 1933, President Franklin Delano Roosevelt took the country off the gold standard, making the 445,000 gold coins illegal to possess and ordering that they be collected and melted down.
For the double eagle piece, everything had been perfect from the point of view of modern Bitcoin values: it was made of pure gold, it had unique inscriptions, the supply was extremely limited and, especially after it became illegal, there were many want to own it. . The coin even had its own shipping accident, with around 20 pieces going missing before the entire supply was destroyed.
Part Two: Gold is Dead! Long live Bitcoin!
In the context mentioned above, ordinals and inscriptions make a lot of sense and follow a fairly old tradition. People have always collected beautiful, expensive, or hard-to-find things (stones, shells, gold pieces, minerals, animals, spices, clothing, etc.). So what exactly is “good” about ordinals?
- For the person who loves bitcoin as a collectible or cannot afford to own a large fraction of it, it becomes something of great value. Ordinals allow them to stamp some personal uniqueness and property value onto their satellites, at least until the internet provider giants rip them apart.
- For collectors (numismatists, especially), Ordinals offers a digital way to own, store and ship the coins you find valuable.
- Ordinals go hand in hand with one of Bitcoin’s key features, which is being a store of value. Also, if you have a unique satoshi, you will use it for your dear life.
Part Three: I’ll Show You My Sat If You Show Me Yours
But there are things that ordinals lack, both socially and technically. In real life, collectibles, like money, love silence. If he has a 22-carat black diamond in his apartment, he can show it off to some of his coworkers from time to time, but he probably doesn’t want a neighborhood thug cartel to know about it.
This brings us to the need for privacy while operating and owning rare and expensive assets. As Bitcoin is pseudonymous, so are ordinals, because they inherit the properties of the time chain, are totally dependent on it, and do not introduce any additional way to make your ownership of an asset private.
Ordinals affect Bitcoin and add complexity and technical difficulties for many participants, from miners to regular users. Bitcoin is not very scalable and was not meant to serve as a file storage system that would cost users all of their fiat savings to make a transaction. If I pay for my coffee, I don’t want it costing a fee the size of Ethereum and being mined after a week because someone decided to sign up some satellites with a “My Heart Will Go On” MP3 file for Valentine’s Day. As a miner, I may not want to see JPEG garbage on my node and I don’t want to validate it, so I may delay its acceptance as long as possible.
As noble as the roots of ordinals are, given the current Bitcoin development landscape, we find ourselves back at the old 2017 debate about block size and chain pollution (or spamming). time. So many spears have been broken over this, that it’s painfully hilarious to find ourselves seething into this narrative again. I guess when it comes to collectibles, the block size debate can go on forever for Bitcoin.
Also, inscription with a JPEG or MP3 doesn’t really make a satoshi that much more unique or add much added value to it, any more than a small child’s marker scribbles don’t make the walls of your apartment look like the walls of the Louvre. .
We could go further on the flaws with the ordinals and registrations approach, but Bitcoin Twitter has been doing a great job for us over the past few weeks, so we will humbly skip to the last chapter of this article.
Part Four: How to make collectibles really good for Bitcoin?
As described at the beginning of the article, the human need to create, own, and trade collectibles and art is more than valid, but ordinals and many other existing solutions that offer to address those needs can add more problems than they purport to solve. So, let’s play a game and imagine a perfect collectible. Think about the features you must have and try to find a suitable solution to meet the requirements.
A perfect collectible is an item that has the following parameters:
- Has owner. The first owner of a collectible is always its creator, who has the rights to change the art, add inscriptions to it, sell it, rent it, etc. Property rights must be transferred from one owner to another, with no possibility of sale. the collectible twice (aka avoid double spending) and with the ability to verify the uniqueness of the asset, completely peer-to-peer, without appealing to any third party.
- Asset ownership should be private by default with the option to reveal the art and author to the general public. Because? First of all, we all know that artists have a very tender soul and not everyone can take criticism lightly, which can bring a lot of unpleasant and massive consequences. Second, as described above, if I created a painting using rare and expensive materials, or if I own a rare piece of art, stone, or metal, I don’t want everyone to know about it, as that could present many attack vectors. , both digital and physical, for me as the owner. Lastly, if a collectible gains value over time, it’s best to keep it out of the public eye and reveal or sell it when the time is right and the value is higher.
- Collectibles should not live on the Bitcoin time chain. They must not create any additional burden, changes or discussions at the mainchain level, neither for users nor for miners or node brokers. It should not affect the block size or inject large amounts of irrelevant data into the blocks. Bitcoin, at its best, should remain nothing more than a settlement layer for various trades on one asset. All the data, all the knowledge of the existence of the asset must be kept on the client side.
Sounds like a nice fairy tale, doesn’t it? Well, while some choose to dream of perfect solutions, we prefer to make our dreams come true. And we have created a protocol that meets all the criteria mentioned above, and that solution is called rgb.
What is RGB? It is a smart contract and rights ownership system that helps collectors and artists create valuable assets, sell and buy them in a private and scalable way, with no time chain footprint, in Bitcoin, with no additional token.
RGB takes the burden off the Bitcoin time chain by placing all asset data on the client side, using the concepts of client-side validation and one-time stamps introduced by Peter Todd back in the day. The same ideas allow for peer verification of a collectible, without relying on third parties or miners. bring privacy to holders and creators by applying zero-knowledge cryptographic primitives such as bulletproofing, ensuring that no one can hijack the transaction or genesis of an asset. Consequently, RGB does not affect the Bitcoin fee rate, thus preserving its market cost and avoiding all possible debates around.
To summarize, we can say that not all JPEG files are art or collectibles, and not all collectibles are bad or harmful; it is often a matter of as to operate them.
And, in this sense, RGB is really “really good for Bitcoin”.
This is a guest post by Olga Ukolova. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
