Intro
Delving into the realm of Bitcoin transactions, the age-old debate surrounding their fundamental purpose has persisted since the early days of Bitcoin's inception. The question of whether Bitcoin primarily serves as a medium for financial transactions or evolves into a secure, distributed data store capable of encompassing a myriad of functionalities, ranging from app data to domain names, has been a point of contention. Although this controversy has subsided in recent years due to a well-considered compromise, the advent of taproot has introduced a design quirk, paving the way for the emergence of a groundbreaking NFT protocol named Ordinals, which challenges pre-existing limits.
You now have the opportunity to possess the artwork which is real, rather than merely a contract referring to an artwork stored in centralized databases. Ordinals enable the storage of diverse data on the most decentralized blockchain, ensuring its immutability against any modifications.
Quite revoluting, confusing, exciting, or any other emotional rush, just keep it in the big head of your’s for a moment and read through(It’s a compliment, uwu🥰)
Now you as a developer can store upto 4MB of data of your choice on a single satoshi out of a million in each Bitcoin, quite fascinating huh
Some quick Data to prove that I’m right and a bigot and will force you to convert your faith from Solana, Ethereum to Bitcoin(without giving airdrop, sad huh
Don’t believe me yet, see the below graph(Proof of Data XD!)
What is the Value Proposition here
During the Christmas week, Crypto degens ploughed $106 million in Ether and other tokens into Bitcoin Cats, a so-called NFT game which is purely taking money on the Ordinals Hype and is not launched yet.
Whoa, that is a huge number and that also just based of pre speculation, there must be a problem that ordinals are solving per se then, I am not quite sure about that but the Ordinals definitely contain some qualities that may explain the whole hype.
Value Addition for Users
Immutability - Ordinals are stored directly on the top of Bitcoin Blockchain vs it’s counterpart NFT that is a metadata stored in a smart contract on-chain but the reference to the real piece of art is stored on a 3rd party cloud.
So basically, NFT’s are just a reference link to it’s adjoining art whereas Inscriptions are stored on the witness data of a BTC Transaction.
Secure - The immutability of the BTC witness data which resided permanently on the blockchain, which also means that Bitcoin users can store their digital artifacts on the chain and use it as a digital currency immediately.
Exclusivity - Provides Access to the Digital Gold i.e. Bitcoin’s Blockspace is Prime Real Estate which is quite exclusive due to is fixed supply and among them many individual satoshi’s can be identified as quite rare which increases the value by many folds.
Liquidity - BTC is the most liquid traded digital asset on the planet and is the most digital currency there. This makes the Inscriptions more liquid than other ecosystems such as ETH, and Solana discarding the fees.
Storage Cost - The average transaction cost of Bitcoin is far more than other popular L1’s but the key for ordinals is the immutable data stored on blockchain and in that aspect, if we store the NFT’s JPEG directly on the ETH block space, it is quite expensive too, below are the figures
The cost of permanent storage in the Ethereum blockchain is $50/kB (as of our launch) making the storing of NFT/JSON on Ethereum’s blockchain prohibitively expensive.
Conversely, Bitcoin’s fully on-chain storage costs are much lower upto $0.05/kb!!!!—making the project feasible.
Value Addition for the BTC Community
Increase the BTC Usecases - Bitcoin originally served as a medium for peer-to-peer transactions. However, the advent of Bitcoin NFTs has opened avenues for artists to leverage Bitcoin for the sale of their digital creations. This disruption challenges the dominance of Ethereum and other networks in the digital art marketplace, potentially reshaping the landscape. This development not only attracts a fresh influx of users but also empowers them to utilize Bitcoin for creative and entertainment endeavors, fostering a thriving ecosystem.
Increases the Miner Interactions - There is a simple demand and supply rule in finance, “what is less becomes more”(by me), so as you have seen in the graphs above, the demand for block-space increased drastically after the introduction of Ordinals and the miner fee increased eventually, which makes them less dependent on solely on the Fixed Block Reward less thus increasing the enthusiasm and participation of more miners.
Uncensorable - Inscriptions can’t be censored and that’s quite a big leap for NFTs, it means you can store important historical documents on BTC chain and they will never cease to exist incase there is not a worldwide catastrophe shutting off internet of the all the good nodes!
Huge Inflow of VC Money
While Bitcoin holds the esteemed position of being the patriarch of the crypto realm, its reputation for innovation and pushing boundaries is not always in the forefront of discussions. Some advocate for maintaining this status quo, yet some envision a different trajectory.
Some Recent Fundings are - Investors include Geometry, Collider Ventures, StarkWare, UTXO Management, Bitcoin Frontier Fund, Masterkey and Newman Capital has invested a whopping $7.5 million!! in Taproot Wizards, a Bitcoin-focused Ordinals project that was inspired by the original Bitcoin wizard Reddit meme from a decade ago.
German-based company Trac Systems, the parent company of Tap Protocol, has announced a $4.2 million fundraising round, led by Sora Ventures, aimed at developing Bitcoin's capabilities as a developer platform through the Ordinals system. Trac Systems is developing on top of Bitcoin and utilizing it as a platform for tokenization, gamification, and DeFi(you can make games on BTC!!)
Another UK-based ordinals infrastructure platform OrdinalsBot has raised more than $1 million in a Seed funding round.
And to put the cherry on the top, a new fund backed by the owner of Bitcoin Magazine plans to raise $5 million to activity trade Ordinals and inscriptions.
But why is so much money flowing into the BTC ecosystem? And the answer is drum rolls🥁🥁!! – Recursive Inscriptions
Why VC are all over Bitcoin again
Apart from the technical prowess of Ordinals such as Immutability and Secureness, the chance of customizing each individual atom of the digital Gold(BTC) is quite tempting.
The Point of Direction VCs are gonna take through with Ordinals are very different one side is betting on the rarity of the blockspace of the rarest Digital asset ever made and is playing with the Inscription Collection such as Taproot Wizards, Nodemonkes etc.
Another one is more interesting, as they are hedging their bet on the NFT case of Ordinals with the possibility of redemption of Bitcoin as a immutable data availability solution or in easy words using Bitcoin as AWS.
Quite Revoluting huh, but it is made possible with another great technical breakthrough in Ordinal space which is making the VC their pockets light which is BRC-69/Recursive Inscriptions
Recursive Inscriptions - the future of BTC Block Space
Now it gets really crazy, imagine you want to upload a whole 3d animation library on Bitcoin (people have done this),you can store the entire code libraries on BTC’s Satoshi.
Ordinals previously had a 4-megabyte limit on what could be inscribed on Bitcoin but recursive inscription bypasses this by creating a chain of inscriptions, each calling data from existing inscriptions(just like the regular Leetcode Recursion). Recursive Inscriptions makes the creation of complex data structures poosibele that can get arbitrarily large because each inscription can point data to a future inscription, thus surpassing the 4MB limit on every inscription.
They can supposedly be proposed as a solution to the block space limit on the Bitcoin blockchain to allow the creation of extremely complex data structures stored on the network.
Recursive Inscription paves the way for many interesting use-cases that can be built and many are working on some of those with full force
Value Proposition of Recursive Inscriptions
I’ll walk you through some possible usecases which are been researched/buidl upon or will be build upon in the near future
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Making Incriptions much cheaper- Instead of inscribing 10,000 JPEG files for a PFP collection individually which would be quite expensive, you could inscribe the 200 traits from the collection and then make 10,000 more inscriptions that each use a small amount of code to request traits and programmatically render the image. The result is the same. The art is just stored on-chain in a much more efficient way which could have saved over a million dollars in transaction fees in the case of @BitcoinApes_. -
Using the Blockspace as AWS- We can inscribe full 3d games on Bitcoin which NinjaAlerts are doing at the moment and they have fully inscribed a Nintendo Emulator on Bitcoin, in which anyone can play Nintendo games fully on-chain. -
Making Bitcoin Native Internet- Bitcoin Metaverse compatible is also possible and Bitmaps are doing exactly, they are a protocol that offers a way for users to claim ownership over Bitcoin blocks. Bitcoin is essentially getting an internal internet where every file can request data from the other files on Bitcoin, -
Open Source Immutable objects in any shape- We can inscribe packages of code that everyone can call and
@OnChainMonkey has one exactly this. They inscribed the p5.js and Three.js npm packages fully on-chain and then used recursion to make calls to those packages from the inscriptions in their upcoming Dimensions drop which allowed them to create beautiful 3D art in under 1 KB. And the best part is that anyone can do this.
The data below backs it up, recursive inscriptions are gaining popularity among the dev’s and core bitcoin community likewise
Some Cool Projects to Follow on Recursive Inscriptions
Perceptrons - It is a child of harmony between AI and Bitcoin. It is an experimental attempt to deploy run-time AI on-chain. While many projects have attempted to store AI artworks (outputs from AI models) on-chain, Perceptrons attempts to store the actual AI models themselves (the neural networks that produce the outputs) on-chain. Not only are the models stored on-chain, but the feed-forward algorithm is also stored on-chain. Not merely a static piece of art—you can interact with Perceptrons by asking them to do image recognition tasks. Perceptrons permanently live on the Bitcoin network—ever evolving. They grow. They die. And finally, they’re reborn again in a different form.
It does the miracle by splitting the AI models into different inscriptions and composing them at runtime
You can play with the Neural Network on-chain through the link below
EVM.INK - You thought that inscriptions were tied to Bitcoin only, psssIntroducing a very cool project which explores and provide us to create Ordinals on different blockchains including ETH, BSC, Polygon and more.You thought that inscriptions can’t be multi-chain, sighhh!
Another Cool trick he got upon his sleeves is multichain recursive inscriptions!!Imagine you inscribe on a single Satoshi of MATIC then link it another Satoshi on Ethereum and then complete your 10mb Pixelated 3D NFT on BSC, this is exactly that, read through the doc below to get your heads off
The Fundamentalist Dilemma
Don’t Overcrowd Bitcoin VS Use Bitcoin as you want, there is a thesis that at some point in the not-so-distant future, the rate of new bitcoin issuance to miners via Coinbase rewards will be very low relative to the size of the market those miners are securing. Transaction fees on-chain must rise progressively to counterbalance the anticipated reduction in bitcoin seigniorage throughout the halving schedule. Yet, historically, there's been no observable evidence of this occurrence.The corresponding fees from Ordinals, Stamps, and Recursive Inscriptions are a possible solution to Bitcoin’s long-term security budget issues.
Non-financial use cases of Bitcoin Blockspace will be priced out in future and
Bitcoin as freedom money will be the primary usecase for bitcoin
In fact various attempts are being made in the opposite directions of the inscriptions, such as one is by Luke Dashjr, is calling Inscriptions “scam” and proposing an answer to “spam filtration” in a part of the Taproot transactions, aiming to dam Ordinals and BRC-20 tokens, which he described as exploiting a vulnerability in Bitcoin Core.
What can me more ironic that one of the core Taproot Wizards developer has designed a script that cause nodes to reject any blocks that include inscriptions. But no such events has gathered any momentum and there is no stop sign showing on the front of Ordinals Boom.
For some quick data, the number of UTXOs on bitcoin has increased 73% since the beginning of 2023 to over 140 million. BRC-20s, for instance, create new permanent transaction sets that cannot be pruned, and may ultimately affect bitcoin’s decentralization as full nodes require more physical storage.
For inscriptions to mature as a scalability solution rather than just a fad, they must enable valuable applications instead of repetitive token minting which is becoming more possible by the use recursive inscriptions and further technological developments.
So, choose your side wisely
References
Some Data Lords to Follow
Funding Proofs
