Started by Bitcoin, Mar 13, 2023, 11:02 am
0 Members and 1 Guest are viewing this topic.
Bitcoin Ordinals have demonstrated a strong desire for collectibles on Bitcoin, but are they really the best solution for the future?
This is an opinion editorial by Olga Ukolova, the director of the board for the LNP/BP Standards Association.
From reading up on Ordinals resources (the handbook, Ordinal theory overview, the BIP documentation), one can see there is a pretty straightforward idea behind the concept. An idea with classical numismatic roots: If I have a rare coin (and a satoshi is indeed a rare coin, as the supply is limited), then I want to store it for as long as possible, either for fun, for my personal collector pleasure and appreciation for the beauty of the coin, or for the purpose of passing it to future generations so that they can sell it at a higher price than I possibly ever could.
If we add the concept of inscriptions to this idea, then we fall even deeper down a fascinating, numismatic rabbit hole, as coins that are minted in an extremely rare supply often eventually experience a huge increase in value and can serve a great philosophical purpose.
As an example, we can see the history of the golden, double-eagle coin minted in 1933 in the U.S., which is currently worth $18.9 million, making it one of the most valuable collectibles in the world. At first, the concept of minting such a coin was proposed by U.S. President Theodore Roosevelt and was an extremely seductive opportunity for designer Augustus Saint-Gaudens who in 1905 wrote of the project, "I have long wished to do what little I could to improve the shameful condition of our money, but now that I have the opportunity I approach it with fear and trembling."
Saint-Gaudens got down to business, but little did he know that the child of his noble intention would be killed by a person carrying the same name as the one who planted the seed of inspiration into his hands and mind. In 1933, President Franklin Delano Roosevelt took the country off of the gold standard, making the 445,000 gold coins illegal to own and ordering that they be gathered and melted down.
For the double-eagle piece, everything had been perfect from the standpoint of modern Bitcoin values: It was made of pure gold, it had unique inscriptions, the supply was extremely limited and, especially after it became illegal, there was eagerness to own it. The coin even had a boating accident of its own, as around 20 pieces disappeared before the total supply got destroyed.
In the above-mentioned context, Ordinals and inscriptions make a lot of sense and follow a pretty old tradition. People have always collected things that were either beautiful, expensive or hard to get (stones, shells, gold pieces, minerals, animals, spices, clothes, etc). So, what exactly is "good" about Ordinals?
But there are things which Ordinals are lacking, from both social and technical perspectives. In real life, collectibles, as money, love silence. If you have a 22-carat black diamond in your apartment, you can show it off to some of your peers every now and then, but you probably don't want a thug cartel from the neighborhood to know about it.
This brings us to the need of having privacy while operating and owning rare and expensive assets. As Bitcoin is pseudonymous, so are Ordinals, because they inherit the properties of the timechain, are totally dependent on it and do not introduce any additional ways to make your ownership over an asset private.
Ordinals affect Bitcoin and add complexity and technical difficulties for many participants, from miners to regular users. Bitcoin is not very scalable and it was not meant to serve as a file storage system that would cost users all of their fiat savings to make one transaction. If I pay for my coffee, I don't want its cost to have an Ethereum-sized fee and to be mined after a week because someone decided to inscribe some sats with a "My Heart Will Go On" MP3 file for Valentine's Day. As a miner, I might not want to see JPEG garbage on my node and I don't want to validate it, thus I can delay acceptance of it for as long as possible.
However noble the roots of Ordinals are, taking into account the current Bitcoin development landscape, we, again, find ourselves in the good old debate of 2017 over block size and polluting (or spamming) the timechain. So many spears have been broken over this, that it is painfully hilarious to find ourselves boiling in this narrative again. I guess, when it comes to collectibles, the block size debate can indeed last forever for Bitcoin.
Also, inscription with a JPEG or MP3 doesn't actually make a satoshi that much more unique or bring a lot of additional value to it, just as the marker doodles of a toddler do not make your apartment walls those of the Louvre.
We could continue further on with the flaws that the approach of Ordinals and inscriptions have, but Bitcoin Twitter has been doing a great job for us over the past few weeks, so we'll humbly move to the last chapter of this article.
As described in the beginning of the article, the human need of creating, owning and exchanging collectibles and art are more than valid, but Ordinals and many other existing solutions that offer to address those needs can add more problems than they claim to solve. So, let's play a game and imagine a perfect collectible. Think about the traits it should have and try to find a proper solution to meet the requirements.
A perfect collectible is an object that has the following parameters:
Sounds like a nice fairy tale, doesn't it? Well, while some choose to dream about perfect solutions, we prefer making our dreams come true. And we have built a protocol that meets all the above mentioned criteria, and that solution is called RGB.
What is RGB? It is a smart contract and rights ownership system that helps collectors and artists to create valuable assets, sell and buy them in a private and scalable manner, with zero timechain footprint, on Bitcoin, with no added token.
RGB takes the load off of the Bitcoin timechain by putting all of the data of the asset on the client side, using the concepts of client-side validation and single-use seals introduced by Peter Todd back in the day. The same ideas enable peer-to-peer verification of a collectible, without relying on any third parties or miners. It brings privacy to holders and creators by applying zero-knowledge cryptographic primitives such as bulletproofs, thus ensuring that no one will be able to hijack the transaction or genesis of an asset. Consequently, RGB does not affect the Bitcoin fee rate, thus preserving its market cost and avoiding all possible debates around it.
To summarize, we can say that not all JPEGs are art or collectibles, and not all collectibles are bad or harmful -- it's often a matter of how to operate them.
And, in this regard, RGB is indeed "really good for Bitcoin."
This is a guest post by Olga Ukolova. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Page created in 0.318 seconds with 16 queries.