🤔 NFTs on Bitcoin?! (Issue #59)

Ordinals are anything but ordinary.

Author

Craig Wilson
February 11, 2023

In this issue:

  • How a new protocol is upending NFTs and Bitcoin 🙃

  • Dookey Dash is done but there's plenty more Yuga fun to come ⚔️

  • Reddit gets ready for Super Bowl LVII 🏈

Right, let's get straight into it!

DYOR 🔬

Ordinals and Inscriptions

There's been one topic and one topic alone dominating Twitter threads, Spaces, and crypto Discord this week: Ordinals and Inscriptions. The TL;DR is this: Open-source Bitcoin developer Casey Rodarmor created a protocol called Ordinals that makes it possible to track individual Satoshis (SATS are the smallest unit of Bitcoin) and "inscribe" them with images, GIFs, videos, or other data.

The result has been a rush to try to inscribe all manner of memes, profile pictures, and other digital content (including, in one instance, a playable version of DOOM, and in another, an infamous pornographic image) because, like the first 999 numbered ENS domains, many people believe the first 10,000 (or 100,000) inscribed Satoshis could one day be extremely valuable. Also, early movers have been making a killing

Alongside the rush to chalk up early inscriptions, in some corners of crypto land, people are also trying to inscribe what they deem historically or numerically significant SATS. Those with rare serial numbers, so to speak, or those produced at critical junctures like forks or halvenings (when the Bitcoin network doubles the difficulty of mining new coins, which happens at certain intervals by design to slow the creation of the finite currency).

Two of the most notable Ordinals projects to date are Ordinal Punks (100 pixelated Punk images derived from CryptoPunks) and OCMs (OnChainMonkeys) — because derivatives are easier when you're in a landgrab... and crypto folk love punks and apes.

Because there's no OpenSea for Ordinals yet — though there might be by the time you read this, given how fast people are building new services to take advantage of the hype, speculation, and oodles of cash to be had — so trading has to date been OTC (over-the-counter) and, I shit you not, largely managed via Google Sheets.

If this sounds like the Wild West... well, it's exactly that, albeit without the saloons, horses, or shootouts. Scammers are having a field day, and you're encouraged to proceed with extreme caution, frens.

Painted pennies

As my colleague, Wilfred Odero, explained to me this week (along with most of the rest of what you'll read here, thank you, Wilfred!), you can think of SATS as pennies and inscriptions as paintings on the back of them. That means they're not exactly NFTs, because they retain an element of fungibility... but Inscriptions are commonly being called Bitcoin NFTs nonetheless.

Just like you could accidentally spend a painted penny if the teller only looked at the coin's face, a Bitcoin node can't tell the difference between an inscribed SAT and a regular one. Just as you could easily spend your painted penny by mistake if you're not paying attention, you could accidentally send an inscribed SAT in a transaction, or it could go to a miner instead of the intended recipient if you're not careful.

Unlike the spent penny, you could always look up where your inscribed SAT winds up... but this being crypto, where transactions are irrevocable, you wouldn't be able to retrieve it if you transferred it by mistake. The recipient would have to send it back to you.

A common solution right now is to set up separate wallets (Sparrow Wallet is a popular choice) to store or trade inscribed SATs, and as Rodamor explains, you can think of Ordinals as a lens of sorts. Using the Ordinals block explorer, those who want to participate can view inscribed SATS, but the underlying Bitcoin network is effectively oblivious.

While the network may be oblivious, Bitcoin Maximalists are not, and plenty have expressed indignation at this use of their beloved blockchain for purposes for which it was never intended. One reason Maxis don't approve is they don't want demand on, or volatility in, the network that isn't tied to Bitcoin's core, financial purposes. Of course, we've seen this play out before with Rare Pepes.

It's always been possible to assign arbitrary data to Bitcoin. Where Rare Pepes took advantage of a soft fork/upgrade called SegWIT (Segregated Witness) to attach content to Bitcoin, Ordinals are helped by a more recent one called Taproot which makes the process simpler and more cost-effective (inscribing costs $10-20). That means a future hard fork could, in theory, remove the unspent transaction loophole that makes Inscriptions possible.

Building the plane in the air

In the early days of Ordinals (i.e. the first week of February), if you wanted to inscribe SATS you needed to be running your own Bitcoin node (the blockchain equivalent of running your own email service)... but already someone's built a tool to get around that.

Elsewhere, some people are offering inscription as a service, creating projects that bridge ETH NFTs to BTC NFTs, and replicating popular ETH projects. There's even a regularly updated OrdinalHub rounding up all related services, sites, and other related initiatives.

By this time next week, Ordinals may have numerous marketplaces, hugely popular profile picture collections, and inscriptions from big-name artists. They may inspire all sorts of new Bitcoin use cases and drive up interest in the OG cryptocurrency again. Or... the sector might find the Next Big Thing and move on.

Further reading:

To the moon 🌛

  • Jack Butcher's Checks VV experiment had been dominating NFT news before Ordinals. Now delightful projects referencing it are creating web3 history in real-time. NFTnow's got a great explainer on the rapid rise of Check derivatives.

  • Nike chose the first four [dot]swoosh collaborators who'll get to help design digital wares for the brand and will get a share of the revenue from their sale.

  • Yuga Lab's toilet-humor game, Dookey Dash, came to an end. Despite anti-cheat measures, it's clear some people still managed to get around them. But before the dust has even settled, Yuga's already announced its next interactive event:

Sounds rare 🖼

On Monday, you can catch Metaversal’s own Matt Miller and his co-hosts VonMises and ayybee in conversation with Flamingo Dao's @jdh and @ChrisF.

You can set a reminder here to tune in to the Spaces.

IYKYK 💪

🤝 Connect for more from Metaversal 🔌

You can find more rapid-fire updates, insights, memes, and other procrastination fodder from the Metaversal team on any of your preferred platforms, we’re on Twitter, LinkedIn, Instagram, Mastodon, and TikTok.

This week’s edition was compiled by Metaversal’s content director, Craig Wilson. You can find him on Twitter or Mastodon.

Until next time, see you in the metaverse!