{"id":5159,"date":"2023-02-13T16:52:10","date_gmt":"2023-02-13T16:52:10","guid":{"rendered":"http:\/\/ci02b7d2668000241a"},"modified":"2023-02-13T16:52:10","modified_gmt":"2023-02-13T16:52:10","slug":"the-implications-of-bitcoin-inscriptions","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/culture\/the-implications-of-bitcoin-inscriptions","title":{"rendered":"Inscriptions: Just A Fad, Or A Real Threat To Bitcoin Becoming Decentralized Money?"},"content":{"rendered":"
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This is an opinion editorial by Stephan Livera, host of the \u201cStephan Livera Podcast\u201d and managing director of Swan Bitcoin International.<\/em><\/p>\n

So, we\u2019ve recently seen a Bitcoin transaction take up nearly an entire block<\/a> and default mempools (300 MB) get filled up<\/a>. What\u2019s going on with all this Ordinals and inscriptions madness? <\/p>\n

The Quick Explainer<\/h2>\n

Ordinals are a made up way of tracking sats (a fraction of a bitcoin) across transactions. Now, I stress it is a made up way of tracking sats, as it does not meaningfully impact bitcoin\u2019s fungibility. As explained by creator Casey Rodarmor on my podcast<\/a>, it\u2019s a convention of numbering sats in the order they\u2019re mined into existence, and tracking them across transactions in a first in, first out (FIFO) method. So, as Bitcoin transactions are made up of inputs and outputs, the first satoshi in the first input is considered to be transferred to the first output of a transaction. There are conventions around which Ordinals are uncommon, rare, epic, etc.<\/p>\n

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What\u2019s An Inscription? <\/h2>\n

An inscription is another made-up convention where sats can be inscribed with arbitrary content, a kind of Bitcoin-native digital artifact or NFT. Using the convention, they can be sent around and stored in a Bitcoin unspent transaction output (UTXO). Now, because they are coded in such a way that they are written into transaction witnesses, they never enter the UTXO set. The UTXO set is seen as having heightened consideration for the network because every<\/em> node (even pruned nodes) must maintain this UTXO set. So, I guess it could have been worse\u2026<\/p>\n

What\u2019s The Bull Case For Ordinals And Inscriptions?<\/h2>\n

To steel man the case a little: The pro Ordinals and inscriptions case could broadly be understood as: \u201cCome for the fun, rich art, stay for the decentralized digital money.\u201d<\/a> <\/p>\n

You could also agree with some of the critiques of shitcoin NFTs<\/a>, and see this as a way of arguing that \u201cBitcoin does it better\u201d e.g., Bitcoin inscriptions are immutable, always on chain, simpler and more secure than shitcoin NFTs. <\/p>\n

Concerns Raised With Inscriptions<\/h2>\n

The main concerns here are:<\/p>\n