Will Ordinals and NFTs Destroy Bitcoin?

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In this video, I discuss "ordinals," which is a new protocol that allows you to number individual sats and inscribe them with text or images, thus creating actual NFTs on the Bitcoin blockchain itself.

There are 2 strong traditions in Bitcoin culture:

1) Don't shovel unrelated crap into the Bitcoin blockchain: keep the blockchain as small as possible to make it easier for everyone in the world to run a node, which helps to keep Bitcoin decentralized.

2) Allow everyone to use Bitcoin as they see fit: it's an open and permission-less system

The advent of NFTs and other inscriptions on Bitcoin provides an interesting battleground for these competing traditions.

Thanks to the November 2021 Taproot soft fork, it is now possible to put NFTs and other pictures or text directly on the Bitcoin blockchain, using inscriptions and ordinals.

Ordinals allows us to organize sats into a particular order and thus identify individual sats. These sats can then be "inscribed" with actual text or pictures and sent around the Bitcoin network.

Inscriptions have the potential to contribute to blockchain bloat, as well as mempool crowding and driving up transaction fees.

In addition, if bad images like child porn are inscribed on the Bitcoin blockchain, governments could use this as an excuse to jail otherwise innocent Bitcoiners who are running full nodes.

Bitcoin is open to everyone and permission-less.

That being said, if you believe in Bitcoin's fundamental global mission to provide neutral money to 8 billion, you probably won't be putting any of your own inscriptions on the chain and contributing to blockchain bloat.

My guess is that people who want to store NFTs and other inscriptions on Bitcoin will eventually be priced out by Bitcoin's better financial uses, including as a global final settlement layer.

Not investment advice! Consult a financial advisor.

2010 debate about adding extra stuff to the Bitcoin blockchain:

How Bitcoin Destroys All Altcoins (Taro):

Ordinals and inscriptions are here:

Inscriptions contribute to blockchain bloat and drive up transaction fees:

Ordinal theory handbook:

Ordinals:

I am not being paid or otherwise compensated by any company or cryptocurrency project that I mention in my videos.

My opinion is not for sale. Please do not contact me with any affiliate or advertising deals.

#bitcoin
#ordinals
#nft

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[gusgalvanini]

I used to be indifferent towards NFTs, but you made a great argument, I would hate for the Bitcoin blockchain to be used by vile disgusting people, I am now against NFTs for this reason, I think it can bring negative attention to BTC from the authorities and they might use it as an excuse to repress, thanks for shinning a light in this.

[jonathanteoct]

This is the most serious threat I have seen on the bitcoin network so far. Somebody should start a petition to the bitcoin devs (and miners and full node operators) about this. There should not be stupid shit on the blockchain and miners and full node operators should not have to become censors to decide if some jpeg constitutes objectionable content. Just keep jpegs out of the blockchain completely!

[SteveCox]

A couple other points that might be good to expand on this topic in a future video. 1. Pruning data (especially non-UTXO data) from your full node and the pros and cons. 2. Fungibility of bitcoin in the lightning network.

[Ed]

I am really against NFTs on the main chain. Why isn't this done in other layers? Will there be some kind of voting done whether majority of people approves this change? And the unnecessary bloat for full nodes also sounds bad...

[georgewashington]

Love your stuff. Embarrassed to say I never heard of ordinals until today. Looking into it further but agree w/ your premise that BTC is too important to allow it to be polluted.

[atom]

Matt, thank you so much for keeping me/us informed. You are the most trusted bitcoin guy on YouTube. Really appreciate it, I’ve learned so much over the years

[kodyrrr]

Thanks. I was wondering what this Oridnal stuff I was seeing on Twitter was all about. This helps, good job.

[FloridaBackroads]

Thanks so much for this well presented issue. Something else to worry about.

[Ledgerjedi]

Man, I got ran over by a truck 4 months ago & got some soft tissue brain damage in the frontal cortex according to the MRI doctor. Ever since, I've been kinda retarded.

I'm very thankful for your channel because you break down concepts that I tend to struggle with in a very simple, digestible manner. THANK YOU BROTHER.

Further, according to my doc the best way to help improve my executive functioning again is to learn and grasp new information. Therefore, you're literally helping my brain heal. So I mean it from the bottom of my heart!! THANK YOU.

Lastly, I would like to support your channel more. Some youtubers have basically a subscribe and give monthly option, I'd like to respectfully suggest that you turn that feature on, because I'd happily subscribe monthly and I'm sure others would as well. I don't need any extra benefits or anything just wanna help fund the info war, and you my friend are on the front lines.

Assalamu Alaikum brother.

[AB-jtic]

Great video. Agree with your take here. ...I did not like the Bitcoin tweet you featured that mentioned skin color. As global, neutral money, I don't think BTC cares what color someone's skin is. (Bad ideas are bad ideas regardless of skin color)

[xx]

This is concerning, it seems to go against the spirit of Bitcoin. In my view, and I think most others as well, Bitcoin is purely money (store of value, unit of account, medium of exchange) and that’s it. The purity is what draws me to it. This seems to defile that sanctity.

[deeangel]

That can happen to any Blockchain not just Bitcoin. The thing I see with the OGs all in Ordinals and like to keep it a little quite because they see the high levels of future growth.

[kangkwongluke]

Thank you for another great video - informative, thoughtful and fair. At the end of the day, the future of bitcoin, especially its global adoption, will depend on how many sensible people there are in the world. Your work certainly contributes to growing those numbers, so thank you again Matt!

[Name-tjiz]

I was very early in developing NFTs within the ETH ecosystem. Last night I took the deep dive in to ordinals knowing nothing about ordinals and basing most of my knowledge from your teaching of lighting taproot and taro. To me everything about the NFT boom was reflective of moments in art history—opportunist, artist, counter culture, money, oligarchs. Here’s a book reference that put much of this picture in to perspective for me (Boom
Mad Money, Mega Dealers, and the Rise of Contemporary Art by Michael Shnayerson).

I believe you also had another video that eloquently eluded to step-up in basis. BTC Art, BTC real estate to me further validates use case for digital assets.

Thank you for your videos always 🙏. I honestly drive everyone I know to your teachings. It’s brought me so much confidence in not only navigating the advent of this technology but also my social and financial future.

P.S. I associate among some of the top solidity devs in the world and in a prior video few months ago I dropped some BTC counter narratives they shared with me, please let me know if you want to take a look at what they had to say, I’ll drop it in another comment here or next video. So far you have dominated them in forecasting the ETH outlook and I made sure I shared events with them which you detailed. Let’s put it this way, because we were able to inform them well in advanced, I see that they are somewhat broken and aren’t as ETH maxi as the once were.

Thank you thank you thank you, can’t express my gratitude enough.

[jessicameyer]

This seems unnecessary for Bitcoin. I don't like it.

[ymene]

Matthew you've been on the grind lately! Thanks alot for all the videos ⚡️

[randyjones]

I can already see the next hard-fork war brewing. The battle to fork the chain in order to redact all the existing ordinals and prevent anymore from being created. If CP becomes an attack vector Bitcoin opponents use to discredit the project, we may have no choice.

[sharpenedge]

Matt, could you talk a little about what we plebs can expect after a hard fork, in detail? What actions should we take, if any? Do we immediately hold an equal number of coins on both chains? Etc.

Thank you for all you do!

[alexander]

Wow. This is the first time I've legitimately started to doubt the future of bitcoin.

[doctorona]

Wow!.. What an education today Matthew.. I had no idea about these features... and I can't stand it! Why Why Why must something as pure as BTC be tampered with by individuals! I can see the Big Banks and the WEF throwing wrenches into the system as well.
For the record, I am 100% against this.. if this is allowed, it should cost more sats if you want to satisfy your egos!