The writing of Bitcoin scripture
There are 100,000,000 Satoshis (Sats) in every Bitcoin. Like cents to dollars, each is identical to one another, serving the sole purpose of being a fungible replacement to the declining-value-dollars we use around the world today. That is until a sniggle led to a snaggle that is causing a serious snafu.
The Snafu
Individual Sats can now be ‘inscribed’, meaning text or images can be uploaded into the data they store on-chain. With over 35,000 Sats already carrying art and meaningful text in their provenance, they’re quickly creating the Bitcoin protocol for a Non-Fungible Token; a Sat inscribed with a piece of art is uniquely identifiable and valuable compared to any ordinary Satoshi. Much like if a dollar bill had a Banksy doodle on it.
What does this mean? For those of us interested in blockchain and smart contracts as a medium for art, it means the chain with the most provenance and value of all can now store art that pushes cultural and technological boundaries. For Bitcoin Maxis, it means less block space for financial transactions. Thus, the debate begins.
The problem—or opportunity, depending on who you are—is the result of a significant compromise, a fateful upgrade to the Bitcoin blockchain, and some savvy coding. Within it lies the answers to questions like how Bitcoin NFTs work and how to make one. We’ll get to the context of this discussion, but first we’re going to cover the interesting stuff, which will also serve to help you understand the conversation at hand.
The interesting stuff… how can I interact with a Bitcoin NFT?
To create, buy, sell, or trade a Bitcoin NFT, you either have to use a no-code site, or be running a Bitcoin node. The two most popular no-code solutions are Ordinals Bot by @satoshibles and Gamma by @trygamma. They’re extremely simple, but also limiting.
Doing it yourself is more complicated. I’m going to summarize a detailed Twitter thread by @0xMakerLee, which goes in depth on the details of creating a Bitcoin NFT here. The process essentially involves running a Bitcoin node, setting up a Taproot wallet, loading some bitcoin, and finally, creating an inscription by adding an image file to a transaction. Beyond some command line prompts, that’s a pretty good summary of Maker’s excellent walkthrough, but I suggest you read his thread if you plan on inscribing a Sat yourself. Maker also generously reminds individuals to create a fresh wallet every time they go through this ordeal. Otherwise, you may accidentally do something like send your Sat inscribed with priceless art to a miner (via transaction fees), since most blockchain software does not yet recognize the Ordinals FIFO inscription protocol.
The sniggle that led to a snaggle… what do all these new words mean?
Coming back to the cultural debate surrounding Ordinals and Bitcoin NFTs, we now have some additional context to unpack, which will help us to understand everything a lot better.
A quick glossary: Ordinals is the protocol that recognizes inscribed Sats properly with a FIFO system; and Taproot is more than a wallet with inscription utility, it’s the upgrade to the Bitcoin blockchain that a savvy developer was able to use to create the Ordinals protocol for inscribing data onto Sats. Now that we know the words, let’s cover some history.
The entire ordeal is much more thoroughly outlined in Dennis Porteaux’s (@pourteaux) blog post about the topic, but I’ll do my best to summarize it here.
First, let’s start with the fact that data attached to Sats isn’t new. In 2014, it became possible to attach small notes to the blockchain via 80 byte messages, in a function called OP_RETURN. This was useful for calling hashes to external links and other things. And Dennis even used it to create what he is calling some of the first on-chain Bitcoin art; a haiku and a protest. Significantly, as Dennis pointed out, this data is ‘prunable’ by the blockchain, meaning it doesn’t have to be downloaded by all nodes every time they complete a transaction. Thus, no strain to the chain. It was intended to be a compromise to the need for on-chain transaction messages that wouldn’t compromise the block speed required for Bitcoin to become a global financial transaction network. Culturally, this is important, as it represents the community’s agreement not to pursue something like the Bitcoin NFTs we are seeing today for reasons of not slowing down Bitcoin’s block speed with too much work.
In fact, they still haven’t agreed to forego the limit on block data. The nascent onslaught of art onto the Bitcoin blockchain became possible by accident, when two upgrades called Taproot and SegWit unwittingly opened up the potential for limitless Bitcoin data storage short the block size limit, without using OP_RETURN at all. This is the heart of the debate.
The result is that Bitcoin now faces the potential to have its credibility as a global financial network encroached upon by a bunch of degens who couldn’t help but mint their cheap art onto the chain. At least, that’s how the Bitcoin Maxis would put it. Others say NFTs have increased the ‘usefulness’ of the Bitcoin blockchain, creating a richer ecosystem around it and strengthening rewards for miners who collect transaction fees by securing the system. I’d argue that both are simply inscribing their vision of a Bitcoin future through speculation. But what happens culturally when the longest standing and most valuable blockchain starts becoming inscribed with iconic artwork, rich with meaning and provenance. Is that something we can ignore and turn away from?
In fact, the questions begging for an answer, are what is Bitcoin beyond what it has the potential to become? Should an oligopoly of minds decide that a democracy of dollars is wrong to support this path? Do they really know better or is there something else motivating their ideas?
In a nuanced discussion such as this, it’s difficult to support anyone who ‘knows’ the answer in favour of anyone who is hoping to find out. Right now, the artists are asking questions and the maxis are making demands. As always, we’re in favour of a decentralized protocol being used in a decentralized way.