How Ordinals Broke the Bitcoin Community (And Why It Was Necessary)
The new Ordinals protocol was launched in January 2023. And it made everyone’s answer to the question “What is Bitcoin?” much more complicated. Software engineer Casey Rodarmor launched the protocol on Bitcoin’s mainnet on January 21. It allows digital artifacts such as images, text, programs, and even video games to be written directly onto the Bitcoin blockchain. In other words, Ordinals mean NFTs on Bitcoin.
This upgrade has caused a rift in the Bitcoin community. Some purists call Ordinals a attack on Bitcoin, while others use it to troll over-serious Bitcoin enthusiasts known as Maxis, loading as much redundant data into each block as possible. Despite the urgency of this NFT debate, writing data onto Bitcoin blocks is nothing new. Long before Ordinals, a few old-school Bitcoiners floated the idea of incorporating a domain name system into Bitcoin. The project, called BitDNS, was quickly shot down by Satoshi. “Stacking every proof-of-work quorum system in the world into one dataset does not scale,” Satoshi wrote in 2010, sealing his fate.
The Ordinals drama, while it may seem petty, has resurrected a necessary and ancient (in crypto terms) question: Should Bitcoin be used for non-financial purposes? To understand the answer, we must first understand why this debate is raging in the first place.
Why the fuss about Ordinals?
Adding NFTs to the Bitcoin network challenges our perception of the first and most ubiquitous cryptocurrency – and the shared response across the crypto community hints at why. To understand the fuss (justified or not) surrounding Ordinals, we need to understand the prism of meanings people attribute to Bitcoin.
For the Libertarian-leaning Maxis, Bitcoin is an identity. On the one hand, it is a means of protecting savings and fighting inflation. But on the other hand, it is a political statement. It is a means of instantly transferring money to anyone, cheaply and without permission. To them, Bitcoin is a middle finger for the Federal Reserve, the government and every bank in the world. In 2022, when GoFundMe withheld millions of dollars donated to Canadian truckers protesting COVID vaccine mandates, the Bitcoin community circumvented government and financial regulations by sending hundreds of thousands of dollars of Bitcoin directly into the truckers’ wallets.
In some ways, these anti-government, anti-inflation, anti-damn-almost-everything Bitcoin purists identify themselves as much by who they are as by who they aren’t. And they sure as hell aren’t the NFT flaunting meme words on the other side. Painting with a brush so broad it wouldn’t fit in a semi-truck trailer: The Bitcoin community is made up of right-leaning freedom-lovers, and the NFT community is made up of left-leaning creators.
To the average NFT enthusiast, Bitcoin is just another cryptocurrency and the mainnet is just another digital playground. But placing NFTs on Bitcoin challenges the identity of the average Bitcoiner. Asking a Maxi what they think about adding NFTs to Bitcoin is like asking a monk if you can defecate in his holy water. What do you think he would say? We can say that it is just water – Bitcoin is a chain like any other – and another elixir can be made holy with the same alchemical incantations. But holy water is not just water for the monk, and Bitcoin is not just another chain for Maxis.
Yet, in their blind, religious insistence on the purity of Bitcoin, Maxis may be missing out on what NFTs and other data on the Bitcoin network could mean for the future of their beloved chain.
Why Ordinals Are Good for Bitcoin
A question being asked across the crypto community is, “Why do NFTs need to be on Bitcoin?” The lazy answer is that it creates more use cases for Bitcoin. But that answer doesn’t get to the heart of what’s at stake with Ordinals, Bitcoin, and cryptocurrency on a cultural level. Perhaps Bitcoin, as a thing separate from its users and enthusiasts, is not meant to have multiple use cases. And use cases for use cases’ sake is one of the main criticisms of crypto in general.
As we rush into the second quarter of this tumultuous century, and as more companies grunt and sweat under the weary enterprise of bringing the next billion people into the Web3, some of their efforts will be successful. More people will use blockchain technology, whether they realize it or not. And there will be those of us in the background—perhaps in quiet, tavern-like corners of the internet—watching the illustrious advances around us, wondering why this or that object (digital and otherwise) has to be on a link.
Perhaps with the Ordinals argument, we are seeing an early iteration of a conversion we will repeatedly have in the near future. Why do NFTs must be on Bitcoin? The answer from some is, “Because they can be!” And isn’t that what Bitcoin is all about? Because when you first start regulating which data can or cannot be stamped on the chain, you are inevitably left with the question of who will decide. Perhaps the Ordinals debate has flashed us forward to a future where being on the chain is taken for granted, and we no longer ask why an item is on the chain at all. But instead we ask, “Why that care of this chain?”
But beyond the philosophical implications that Ordinals have on Bitcoin and crypto-text, they provide some real potential benefits. The upgrades that made Ordinals possible were the SegWit upgrade from 2017, which created a separate field in each transaction called a “witness”, allowing people to provide more data such as scripts and even smart contracts. Then the Taproot update in 2021 furthered Bitcoin’s smart contract capabilities, bringing us to Ordinals in 2023.
Because Bitcoin’s transaction fees are determined by the amount of data in each transaction, and Ordinals add more data to each block, Bitcoin’s transaction fees increased significantly after Ordinals’ launch. In no small part because groups like the Taproot Wizards decided to troll the network with ever-larger blocks, including the largest block in Bitcoin history, with 4MB of data.
Ordinals proponents may argue that the ability for miners to make more money on larger blocks will increase the demand for block space and fees. This in turn could lead to wider markets and stronger demand for block space, giving a much-needed boost to the overall ecosystem. For example, miners can prioritize transactions with higher fees, which leads to increased income for them. This in turn can make the network more secure as miners are incentivized to maintain it.
You could also argue that the same spirit that drives trolls to “exploit” the Ordinals protocol and clog the Bitcoin network with unnecessarily large blocks of data is exactly the same spirit that forced Bitcoin Maxis to illegally send money to protesting truckers. Bitcoin is about permissionless action: doing something just because you can and not letting anyone stop you. At least that is what it has become.
What Ordinals Mean for Bitcoin’s Future
In Satoshi’s whitepaper, he does not mention the words permission or permissionless once. Instead, one of the first things he mentions is trust. Satoshi wanted to fix the inherent problems of relying on third-party financial institutions to facilitate electronic payments. One of the problems Satoshi pointed out was the cost of mediation, which “increases transaction costs, limits the minimum practical transaction size, and cuts off the possibility of small random transactions.”
In 2008, Satoshi seemed intent on making microtransactions worldwide without third-party trust or intervention a common occurrence. In 2023, increased transaction fees, increased block sizes, and the need for moderation of lewd images within days of Ordinals being launched seem to be moving against this original ideal of Bitcoin.
Are NFTs on the Bitcoin Network Enabling Satoshi’s Original Mission? Probably not. But perhaps that is not the question we should be asking. Just as fundamentalists of all religions may cling zealously to the literal words of their founding documents, perhaps many of us—Maxi or not—have clung too closely to word in the Bitcoin whitepaper and lost sight of the original ideals.
The question is not whether we have the right to use Bitcoin for things outside of Satoshi’s original vision; The question is not about “JPEGs on the main web.” It is beyond that. We have to ask ourselves if we have one commitment to rethink what Bitcoin is and what it can be. In the same way that NFTs on Ethereum will transform from JPEGs to digital housing documents or medical records, use cases for Bitcoin will also change.
The short-sighted among us say, “Just because you can make NFTs on Bitcoin doesn’t mean you should.” And they are right. Just because you can make NFTs on Bitcoin means that you must. Maybe NFTs on Bitcoin aren’t the ultimate use case, and maybe Satoshi would be horrified by the recent behavior on his pristine, sacred chain. But it is also possible that NFTs mean wider use of Bitcoin. And wider use could mean more people exchanging small amounts of currency without trusting a third party, just as Satoshi envisioned. Because sometimes you have to deviate from an original vision to achieve it, and sometimes the practical use cases just stem from the impractical ones.
