From a technical perspective, ordinals are inscribed onto satoshis by embedding data within a Bitcoin transaction, taking advantage of the scripting language and the ability to include arbitrary data in a transaction output. This is a significant shift from Bitcoin’s original purpose as a peer-to-peer electronic cash system, as described in the seminal Bitcoin whitepaper by Satoshi Nakamoto. Bitcoin was designed to be a decentralized currency, free from the control of any single entity and resistant to censorship and fraud.
The controversy around ordinals stems from the belief that they are a misuse of the Bitcoin network’s resources. Critics argue that the network, which is upheld as the most secure blockchain system, should not be burdened with what they consider “spam” — data that does not directly relate to financial transactions. Given Bitcoin’s limited block space, which is a finite resource, the concern is that ordinals could lead to unnecessary network congestion and increased transaction fees, as users compete for space in the blockchain’s ledger.
Moreover, there is a philosophical argument that inscribing data onto Bitcoin’s blockchain is a waste of a finite asset. Bitcoin’s supply is capped at 21 million coins, and its security is underpinned by immense computational power and energy consumption. Using such a precious and limited resource to inscribe digital art or other collectibles seems to some as an imprudent application of this groundbreaking technology.
The recent data suggesting that the Ordinals market is now four times larger than the next two NFT markets combined, including those on Ethereum and Solana, further intensifies the debate. While this growth underscores the demand and interest in utilizing Bitcoin for NFT-like applications, it also highlights the urgency of the discourse on the appropriate use of the Bitcoin network.
While ordinals showcase the versatility of the Bitcoin network, allowing for innovation beyond mere currency transactions, there is a strong case to be made that such practices could undermine the network’s efficiency and original purpose. As the world’s first decentralized digital currency, Bitcoin’s most valued asset is its security and the trustless nature of its transactions. The community continues to grapple with the balance between innovation and the preservation of the network’s core values and utility.
