Bitcoin Ordinals have demonstrated a strong desire for collections in Bitcoin, but is it the best solution for the future?
This is an editorial opinion by Olga Ukolova, board director for LNP/BP Standards Association.
Part One: I Just Love Art And Money, And I Collect Both
From reading up on Ordinals resources (handbook, Overview of Ordinal theory, BIP documentation), one can see there is a fairly straightforward idea behind the concept. An idea with classic numismatic roots: If I have a rare coin (and the satoshi is indeed a rare coin, because the supply is limited), then I want to keep it for a long time, for fun, for a private collector. pleasure and appreciation for the beauty of coins, or for the purpose of passing them to the next generation so that they can sell them at a higher price than I could ever be able to.
If we add the concept of inscription to this idea, we will fall even deeper into the fascinating numismatic rabbit hole, because coins printed in rare sources often end up experiencing a huge increase in value and can serve a great philosophical purpose.
As an example, we can see the history of gold, double eagle coin minted in 1933 in the US, which is now worth $18.9 million, becoming one of the most valuable collections in the world. First, the concept of printing coins was proposed by the US President Theodore Roosevelt and it was a great opportunity for the designer Augustus Saint-Gaudens who in 1905 wrote about the project, “I have long wanted to do something that could increase. us, but now that I have the opportunity I approach with fear and trembling.
Saint-Gaudens got the business, but did not know that a child of noble intentions would be killed by a man with the same name as the one who planted the seed of inspiration in his hands and mind. In 1933, President Franklin Delano Roosevelt took the country off the gold standard, making 445,000 gold coins illegal to own and ordering them to be collected and melted down.
For the double eagle piece, everything is perfect from the point of view of the value of modern Bitcoin: It is made of pure gold, has a unique inscription, the supply is very limited and, especially after it became illegal, there is a passion to own it. . The coin even suffered a boating accident of its own, as about 20 pieces were lost before the total supply was depleted.
Part 2: Gold is dead! Long live Bitcoin!
In the context mentioned above, Ordinals and inscriptions make a lot of sense and follow a fairly old tradition. People always collect things that are good, expensive or hard to get (stones, shells, gold pieces, minerals, animals, spices, clothes, etc.). So, what exactly is “good” about Ordinals?
- For those who like bitcoin as a collectible or can’t afford to own a large fraction, it is an item of great value. Ordinal allows them to stamp some personal uniqueness and proprietary value onto sats, at least until the internet provider giant rips them off.
- For collectors (numismatists, in particular) Ordinal brings a digital way to own, store and transmit the coins they value.
- Ordinal along with one of the main characteristics of Bitcoin, is that it is a store of value. Moreover, if you have a unique satoshi, you will HODL to it for dear life.
Part Three: I Will Show My Sat If You Show Me Yours
But there are things that fall short of Ordinal, from a social and technical perspective. In real life, collectibles, like money, love silence. If you have a 22-carat black diamond in your apartment, you can show it off to some of your friends every now and then, but you probably don’t want the thug cartel from the neighborhood to know about it.
This makes us need privacy when operating and owning rare and valuable assets. As Bitcoin is a pseudonym, as well as Ordinals, because they inherit the property of the timechain, they are totally dependent on it and do not introduce any additional way to create ownership through private assets.
Ordinal affects Bitcoin and increases the complexity and technical difficulties for many participants, from miners to ordinary users. Bitcoin is not scalable and is not intended to be a file storage system that will count all your fiat savings to make a single transaction. If I pay for coffee, I don’t want the cost of having an Ethereum-sized fee and mined after a week because someone decided to inscribe some sats with an MP3 file “My Heart Will Continue” for Valentine’s Day. As a miner, I probably don’t want to see JPEG garbage on my node and I don’t want to validate it, so I can delay accepting it for as long as possible.
But the noble color of the Ordinals, taking into account the current Bitcoin development landscape, we, again, find ourselves in the good old debate of 2017 over block size and pollution (or spamming) timechain. So many spears have been broken because of this that it’s funny that we’re boiling it back into this narrative. I guess, when it comes to collectibles, the block size debate can really last for Bitcoin.
Also, an inscription in JPEG or MP3 doesn’t make satoshi more unique or provide much additional value, just like a child’s doodles don’t turn your apartment wall into a Louvre wall.
We could go on and on about the flaws in the Ordinals and Inscriptions approach, but Bitcoin Twitter has done a great job for us over the past few weeks, so we’ll move on to the final chapter of this article.
Part Four: How To Build A Good Collection For Bitcoin?
As explained at the beginning of the article, the human need to create, acquire and exchange collections and art is more correct, but Ordinal and many other existing solutions that offer to solve these needs can add more problems than they claim to solve. So, let’s play the game and imagine the perfect collection. Think about the traits it should have and try to find a suitable solution to meet those requirements.
A perfect collection is an object that has the following parameters:
- Have it. The first owner of the collection is always the creator, who has the right to change the art, add inscriptions, sell, rent, etc. double collectible (aka, prevent double spending) and with the ability to verify the uniqueness of the asset, peer to peer, without appeal to third parties.
- Asset ownership should be private by default with the option to open art and authors to the public. Why? First of all, we all know that artists have a soft soul and not everyone can take criticism lightly, which can lead to unpleasant and big consequences. Second, as I explained before, if I make a painting using rare and expensive materials, or if I have a rare piece of art, stone or metal, I don’t want the whole world to know about it, because it might introduce them. many attack vectors, both digital and physical, for me as the owner. Finally, if the collection gains value over time, it is best to keep it out of the public eye and open or sell it when the time is right and the value will be greatest.
- The collection should not live on the Bitcoin timechain. They should not create additional burdens, changes or debates at the main chain level, neither for users nor for miners or node runners. It must not affect the block size or inject irrelevant data into the block. Bitcoin, at best, should remain no more than a settlement layer for the various operations carried out through the asset. All data, all knowledge of the existence of the asset must be stored on the client side.
Sounds like a good fairy tale, right? Well, while some choose to dream of the perfect solution, we prefer to make our dreams come true. And we have built a protocol that meets all the criteria mentioned above, and the 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 in a private and scalable way, with zero timechain footprint, in Bitcoin, without the addition of tokens.
RGB takes the burden off the Bitcoin timechain by putting all asset data on the client side, using the concept of client-side validation and one-to-one seals introduced by Peter Todd back in the day. The same idea enables peer-to-peer verification of collections, without relying on third parties or miners. It brings privacy for owners and creators by implementing zero-knowledge cryptographic primitives such as bulletproof, thus ensuring that no one can hijack transactions or asset genesis. Consequently, RGB does not affect the cost level of Bitcoin, thus preserving market costs and avoiding all possible debates around it.
To summarize, we can say that not all JPEGs are art or collections, and not all collections are bad or dangerous – often the problem how to operate people.
And, in this regard, RGB is “very 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.