The Bitcoin community has been abuzz with conversations around how Ordinal Inscriptions could signal a technical improvement to NFTs. But the increased fees and transaction speeds associated with them could stifle Bitcoin’s primary use case as a medium of exchange, as Isaiah Douglass explains today.
Afterwards, Rosie Perper introduces The Airdrop, CoinDesk’s brand new web3 newsletter. Sign up for the newsletter here and get airdropped some DESK tokens in the inaugural issue releasing at 12 noon ET today.
Bitcoin NFTs Challenge the Blockchain’s Largest Use Case: Money
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There has been a lot of noise and questions recently about Ordinal Inscriptions.
So what are they? The simple answer is that ordinals are NFTs that you can mint on the Bitcoin blockchain.
But Orindal Inscriptions aren’t your usual NFTs. Unlike Ethereum NFTs, which depend on off-chain metadata that can be modified, Ordinal Inscriptions enable all data to be inscribed directly on-chain.
It was this flaw in Ethereum NFTs that caused software engineer Casey Rodarmor to deem Ethereum NFTs incomplete and launch the Bitcoin ordinals protocol.
Those in favor of change believe Ordinal Inscriptions could cause an important shift in the bitcoin community and improve the technology behind NFTs.
Yet many questions I’ve been receiving from clients boil down to, “is this good or bad for bitcoin?” and “will this disrupt the usability of it.”
The challenge has been that as more Ordinals are being inscribed, the cost of bitcoin transactions has risen. That’s because Ordinals introduce additional, non-financial data on the Bitcoin blockchain that bog down on-chain confirmation times. This includes images, audio clips, even games.
Those not in favor of Ordinals see this as an impediment to the ability of Bitcoin to scale and reach full global adoption.
Inscribing non-fungible characteristics to Satoshis, the individual increments of Bitcoin, may challenge Bitcoin’s use case as first and foremost money.
Ordinals challenge the fungibility of Satoshis in the bitcoin network. All Satoshis should be equal, or it begins to lose a significant trait of money.
But ordinals can alter the value of these units of money. Take rare collectible coins as an example: While a penny may have a face value of exactly one cent, its design and mint year could make it worth a dollar or more in the eyes of some beholders.
Bitcoin is money, and that’s the largest and most important use case, impacting the most people in the world. Which is why I believe that Ordinals and other use cases both known today and yet to emerge will remain niche.
Introducing CoinDesk’s First Web3 Newsletter: The Airdrop
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We’re excited to debut The Airdrop, our new weekly newsletter where we discuss the stories trending across Web3 that creators, collectors, builders and brands are buzzing about.
While some may still view Web3 as a marketing buzzword, blockchain-based artists, game developers and community builders have embraced the term to refer to a future internet characterized by a decentralized economy and creative ownership. It’s still early in the development of Web3 but there’s always a lot to cover.
Whether you’re a self-proclaimed internet degen or are curious about the cultural and technical implications of a decentralized future, this newsletter will highlight new technologies and companies that are shaping our digital interactions and bringing Web3 to the mainstream.
Each week, I’ll break down the biggest Web3 trends and explain why they matter. I’ll also highlight podcast segments, TV interviews, upcoming NFT releases, metaverse projects on the rise and provide useful tools to help you broaden your understanding of Web3.
Since 2015, Consensus has served as the premier event for calibration, collaboration and resolution among tens of thousands of professionals and builders forging the future of finance, technology and the new digital economy. Join us in Austin April 26-28 to connect with developers, investors, founders and brands that are serious about delivering on crypto and Web3’s transformative potential. Take 15% off with code CFA15. Learn more and register.
Other platforms that offer yield-earning programs should “take note” and come into compliance, the regulator said a day after crypto exchange Kraken said it will pay a $30 million fine to settle SEC charges.
Disclaimer: The information contained in this newsletter, and any information linked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. You should seek additional information regarding the merits and risks of investing in any cryptocurrency or digital assets.
