4 Things Every Artist Needs To Understand About Bitcoin Network’s Update for Native NFTs
Digital artifacts have come to Bitcoin, essentially breaking Ethereum and Solana’s virtual duopoly on NFTs. But many have expressed their disdain for the technology based on inventor Casey Rodarmor’s Ordinal protocol. And with good reason.
Ordinals’ inscription feature enables storage and tracking of NFT content on the BTC blockchain, but as industry observer “Bitcoin is Saving” notes, “just because you can, doesn’t mean you should.”
Indeed. Ethereum, with its proof-of-stake model, is much better positioned and equipped to accommodate the NFT industry and support responsible artists as they explore the next frontier of the new cultural economy.
Ethereum’s code change to Proof of Stake enabled its validation process to use 99.95% less energy than a Proof of Work (PoW) protocol, like that used for Bitcoin transactions. By reducing the electricity needed to validate a transaction, Ethereum severed the lifeline PoW blockchain platforms provide to climate-destroying fossil fuel power plants used by Bitcoin miners. NFT artists now have a clear technology option that doesn’t contribute to climate pollution.
The virtual reality artist known as Sutu, for example, leverages the resources that enable creativity to flourish around evolving technology while embracing global equity and environmental stewardship.
In championing the conscious crypto creator movement, Sutu highlights the social and financial viability of sustainable and transparent NFT practices. His limited-edition Neonz collection of 10,000 retro-futuristic avatars on Tezos sold for around a million dollars while publicizing clean NFT practices and demonstrating innovative avenues the arts community can follow to harness technology in the pursuit of sustainability.
Ordinals give serial numbers to satoshis, Bitcoin’s micro fractional currency, making them unique and non-fungible. Creators can then inscribe a satoshi with digital content — a picture, scanned document, video clip, etc. Moreover, by taking advantage of the cryptocurrency’s Taproot and Segregated Witness features, these inscriptions can be as large as 4 megabytes, certainly large enough to accommodate these media.
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That’s where much of the problem arises.
Bitcoin originally was intended to facilitate financial transactions only, and it has done an effective job of carrying out this task. But flooding the BTC blockchain with bulky, cumbersome NFTs causes several critical problems:
1. It threatens to lock “small blockers” who rely on the chain’s limited scale to eke out revenues and small profits.
These players often are part of cottage industries in disadvantaged communities who cannot hope to compete with syndicates and Bitcoin pools to mine the larger blocks. As Bitcoin is Saving observed, “marginalized peoples in developing countries will have to pay more to run their Bitcoin nodes and send transactions.” For example, a few days after the launch of Ordinal inscriptions, Luxor mined a block weighing in at 3.96 MB. While many blocks can grow to that size given thousands of financial transactions, this one contained only 63 because one is a 3.94 MB digital image.
2. It obliterates Bitcoin’s original intent.
If often-frivolous NFT projects grow legs on the Bitcoin blockchain, they may clog the entire process of precious bandwidth. Think of NFT inscriptions as farm tractors on the freeway. They take up multiple lanes and move slowly. Smaller financial transactions, which the chain was built and intended to serve, get stuck in the queue and cannot get around the lumbering traffic in front of it. They must bide their time until the tractor reaches its destination and pulls off the road. As the Luxor example shows, a single block could accommodate more than 10,000 financial transactions or one NFT.
3. It can cause costs to rise.
Because Ordinal inscriptions are performed, conducted and stored on Bitcoin’s main network, the added congestion will put pressure on the supply of miners’ ability to record data efficiently. Keeping these assets on-chain is a low-return use of resources that will drive up fees and transaction costs. And because NFT inscriptions will draw bigger payoffs, miners will likely favor them over the recording or financial dealings. Merchants, investors and other stakeholders will either have to match the higher NFT fees or be left behind.
4. It opens the door to spam, bloatware, malicious data and socially unredeeming “artifacts.”
Rodarmor already has been forced to acknowledge this drawback and scramble to remove an extreme pornographic inscription from the front page of Ordinal’s website. The offending satoshi, which was on the site for about 30 minutes, has been taken down but the image can never be expunged.
Opening Bitcoin to NFTs compounds the blockchain’s already difficult path to scaling and facilitating adoption. Legitimate financial transactions will feel the pinch as large NFT nodes soak up the available space and squeeze small miners and nodes out of the most profitable workflows.
The inscription practice also brings into question Bitcoin’s fungibility and anonymity. If a few satoshis contain NFTs that fluctuate in value, they are different from their peers. Making some of the several satoshis unique could allow them to be easily traced, removing privacy protection, which is one of the blockchain’s most valuable assets.