• The article discusses the concept of ordinals and inscriptions, which are made up conventions used to track sats (a fraction of a Bitcoin) across transactions.
• Inscriptions are digital artifacts coded in such a way that they are written into transaction witnesses, never entering the UTXO set.
• Supporters of Ordinals and Inscriptions argue that it allows for decentralised digital money with fun, rich art – but there are also concerns raised regarding reduced accessibility to transact on Bitcoin and full nodes being unable to handle increased storage and bandwidth requirements.
What Are Ordinals And Inscriptions?
Ordinals are a made up way of tracking sats (a fraction of a bitcoin) across transactions. It is a convention of numbering sats in the order they’re mined into existence, and tracking them across transactions in a first in, first out (FIFO) method. An inscription is another made-up convention where sats can be inscribed with arbitrary content, a kind of Bitcoin-native digital artifact or NFT. These inscriptions never enter the UTXO set as they are coded in such a way that they are written into transaction witnesses instead.
The Bull Case For Ordinals And Inscriptions
The bull case for ordinals and inscriptions could broadly be understood as: „Come for the fun, rich art, stay for the decentralized digital money“. It could also be seen as an argument that „Bitcoin does it better“ than other shitcoin NFTs, as Bitcoin inscriptions are immutable, always on chain, simpler and more secure than these alternatives.
Concerns Raised With Inscriptions
The main concerns around using inscriptions include reducing accessibility to transact on Bitcoin due to the transaction backlog created by degens paying lower fees per real byte because of witness discounts; reduced ability for users to run full Bitcoin nodes because of increased storage and bandwidth requirements; and the possibility of illegal material being recorded into Bitcoin’s blockchain which might discourage some users from engaging with it.
What Can Be Done?
There has been some discussion around changing how fee estimates work so that when sending an inscription or NFT type transaction, you need to pay more if you want your transaction confirmed quickly – this would help to reduce mempool spam from Ordinal/Inscription degens who don’t care about tx fees anyway. There have also been discussions around increasing default mempool sizes so more transactions can fit into each block without causing backlogs – although this will require miners running larger blocks than what is currently accepted by most miners today.
Conclusion
Ordinals and inscriptions provide interesting novelty within Bitcoin but come with certain tradeoffs that must be considered carefully before implementation. Hopefully we can find ways to strike the right balance between allowing people to engage in creative activities while still maintaining high levels of accessibility for all users seeking to transact with Bitcoin.