This is an opinion editorial by Bitcoms, a Bitcoin writer.
“So fast, shiny things merge together”
-William Shakespeare, “Dream of a summer night”
“Inscriptionsare a way to write arbitrary information to the Bitcoin blockchain. “Ordinalsis a convention used to track individual sats and link them to signups. This article does not attempt to argue for or against Bitcoin Ordinal listings. Rather, it argues against the confusing, inaccurate and sometimes questionable ways in which they can be presented, marketed and sold.
It deals with a widespread error that insinuates that ownership of ordinal entries is enforced and protected by the rules of the Bitcoin protocol itself (I maintain that is not the case). And while this mistake can be asserted duplicatively or innocently, it is still pernicious because it can make ordinal listings more attractive to potential buyers.
Here is a typical example:
“Ordinals allow a variety of data, including text, images, and video to be inscribed on a single Satoshi (the smallest denomination of a Bitcoin) and permanently stored on the Bitcoin blockchain.”
–Introductory Materials for the ordinal market
This suggests that ownership of an entry will be protected by the permanence and immutability of the Bitcoin time chain itself. But Bitcoin does not enforce ownership of listings, because a listing is not “listed on a single satoshi” on the blockchain at all.
While the two output data And cookie data are stored on the Bitcoin blockchain after the SegWit upgrade, claiming registration data is inextricably linked to an “enrolled” satoshi creates a misleading notion that such a link is recognized by Bitcoin itself.
In reality, the link between an inscription and a specific satoshi is fabricated off-chain by a specially designed external indexer. This extracts data from the Bitcoin blockchain and presents it according to an elegant but ultimately centralized and arbitrary system of rules called “Ordinal Theory”. These rules are completely foreign to the Bitcoin protocol itself and have been described by their author as close to astrology.
Registration error propagation
But in my opinion, the statements in many places where ordinal inscriptions can be created, viewed, bought and sold, as well as in media coverage, do not explain the role of the ordinal indexer clearly enough. Thus, the idea that inscriptions are embedded “on” or directly “into” satoshis, and that inscription data and a corresponding sat are inextricably linked in the Bitcoin protocol without the need for an external indexer, created a dangerous mistake for potential investors. .
Here are some examples of such statements:
“Ordinal listings, similar to NFTs, are digital assets listed on a satoshi, the smallest denomination of a bitcoin.”
“…Ordinals are ‘inscribed’ on a single satoshi…Inscription is the process of putting a piece of data on the blockchain, where it will forever remain accessible and immutable.”
“Each sat can be inscribed with data, such as JPGs, GIFs, PDFs and more, creating a Bitcoin ordinal which is then held in a wallet.”
“What are Bitcoin Ordinals? Launched in January 2023, they enable the creation of NFTs on the Bitcoin blockchain by attaching data to individual satoshis using a process called registration.
“For the uninitiated, ordinal listings, akin to NFTs, are digital assets inscribed on satoshis (the smallest monetary unit in bitcoin).”
“Ordinals write a serial number on a satoshi, the smallest monetary unit in bitcoin.”
“Ordinals are inscribed directly on individual Satoshis, which are then included in blocks on the Bitcoin blockchain.”
“…bitcoin network upgrades…enabled each satoshi…to store a few megabytes of data, from text and images to audio and video.”
“The token functions… are all accomplished by writing data into satoshis, the smallest divisible unit of a bitcoin.”
As stated at the outset, this article does not attempt to show that ordinal inscriptions are good or bad. It simply sheds light on the deceptive, sometimes sloppy and possibly sometimes fraudulent ways that falsely imply that Bitcoin itself will enforce ownership of the listing without using any external tool.
So what can be done to ensure that potential buyers of ordinal inscriptions do not fall victim to this fallacy? We can continue to clear up the confusion by pointing this out.
This is a guest post from Bitcoms. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.