The Bitcoin (BTC) based non-fungible token (NFT) protocol Ordinals has minted over 100,000 NFTs despite only launching on January 21, 2023, but some believe it should never have launched.
According to Dune’s analysis dataAlmost 107,000 ordinals have already been released, which shows great interest in the project, but many believe that the project is wasting precious space on the bitcoin blockchain to save what they see as nothing more than useless data.
This is because ordinal NFTs, called “Inscriptions”, are stored entirely on-chain, including the content that the tokens represent, resulting in the media being stored directly on the blockchain.
This means that signups result in data such as images, short videos, and PDF versions of the bitcoin whitepaper being stored directly on-chain. This is all data that every full node on the network will need to download in order to operate, which significantly increases the storage requirements of the devices on which the node software runs.
Traditionally, non-financial data on the bitcoin blockchain was stored in so-called OP_RETURN entries limited to 80 bytes, enough for eighty ASCII characters, basically one short sentence, after an increase from the previous limit of 40 bits.
None of those limits allowed images or PDFs, let alone videos, but the recent introduction of the Taproot update triggered on November 12, 2021 introduced a fix for this limitation. Instead of using the OP_RETURN input,
The inscriptions are stored in the OP_FALSE, OP_IF, and OP_PUSH inputs of the Taproot script route spend scripts.
Taproot was meant to make it easier to develop more advanced smart contracts on the Bitcoin blockchain, but the Ordinal developers discovered that it also offered an easy trick to looking at larger amounts of data than is normally allowed on the blockchain. .
The situation is a good example of why introducing new features and increased complexity to blockchain systems meant to be reliable and robust, such as Bitcoin, has become an excruciating process.
With the way the bitcoin blockchain currently operates, there is no limit other than block size, with Bitcoin’s core software limiting the size of this data to 400,000 bytes or just 0.4 megabytes, one-tenth of that. of a block. This is because with the introduction of SegWit in 2017, the transaction size limit was raised to 400,000 peso units, with the current block size equal to one byte each.
Consequently, it is now possible to store 5,000 times more data on the Bitcoin blockchain, and there is no way to stop this use of the blockchain without another protocol upgrade. Such transactions can easily consume block space that financial transactions might also need, also driving up transaction prices and slowing down their processing times.
SegWit also featured a 75% discount on the token transaction data fee: the type of data in which NFTs are stored, which means that NFT minting is also more profitable per byte stored on-chain than simple financial transactions.
This also does not play in favor of the claim by Ordinal proponents that this system is subsidizing miners by paying a significant amount of transaction fees.
Data from Dune Analytics shows that a total of $129,000 worth of BTC was spent in fees to sign up Ordinals NFTs. Additionally, Taproot’s utilization rate took off significantly, according to another chart.
Similarly, Bitcoin’s average daily block size also saw a significant increase, despite the fact that the average number of transactions per block has not followed the same pattern since the introduction of ordinals.
Ordinals are moved by moving a specific satoshi stored in the NFT owner’s wallet, which means that subsequent transactions do not enjoy any particular fee discount and do not put significant pressure on the network. Many network participants consider only the minting of new NFTs to be controversial.
NFTs are unique digital assets that are stored on a blockchain, a decentralized digital ledger that enables secure transactions without the need for a centralized authority.
Each NFT is unique and can represent anything from digital artwork to tweets, music, or video. Unlike cryptocurrencies like bitcoin or ethereum (ETH), which are fungible and interchangeable, each NFT is distinct and has its own value based on its rarity, authenticity, and demand.
The findings are fresh reports that Reddit’s Collectible Avatars program has awarded millions of free NFTs to users, including newbies.
