While Bitcoin maxis scorn 'dirty trick' NFT project Ordinals, others see overblown debate

NFT project Ordinals caused quite the stir on crypto Twitter after it launched as a relatively cheap way to create NFTs on the Bitcoin blockchain.

The project takes advantage of a few historical changes in the way the blockchain works and creates fully on-chain NFTs that are effectively tied to individual satoshis, the smallest denomination of a bitcoin. But ultimately they result in adding data to the blockchain that’s not used for transactions, arguably clogging it up just to sell pictures of monkeys (or penguins, or whatever else the NFT crowd is into these days).

It’s this congestion that has caused some Bitcoiners to reject the Ordinals project outright. 

“Bitcoin was designed for transactions, not JPEGs,” said Bitcoin core developer Luke Dashjr on Twitter this week, adding, “The point is this is an attack on Bitcoin, and pro-Bitcoin people should unanimously work together to stop it (or at least not actively interfere with those making that effort).”

Francis Pouliot, another outspoken Bitcoiner, chimed in, claiming that the Bitcoin blocksize had been artificially and mistakenly increased in what he described as a “dirty trick,” asserting that “scammers” were exploiting this to make the NFTs. He said the mistake should be undone.

A pseudonymous Bitcoin-focused account called Bitcoin is Saving, which has 237,000 followers on Twitter, supported undoing the move. They claimed the NFTs were a denial-of-service attack on Bitcoin nodes, referencing a common hack where computers are spammed with so many messages they wither under the stress. It proposed a software change known as a soft fork to fix it.

"Stuffing the blockchain with arbitrary data is not the win you think it is. It’s why all of the limitations exist to begin with. To stop these people." added Blockstream engineer Grubles.

The other side of the JPEG

Yet while some hardcore Bitcoiners were hostile to Ordinals, many others felt this reaction was overblown. 

“Bitcoin is permissionless, folks are free to do what they’d like,” Trust Machines marketing advisor Dan Held told The Block. He noted on Twitter that it brings more financial use cases for Bitcoin, and drives more demand for block space, increasing fees for miners.

Bitcoin core developer Peter Todd agreed but for different reasons, arguing that the ability to embed NFTs into Bitcoin isn't new and that people shouldn't blame the 2021 network upgrade known as Taproot, which improved Bitcoin's efficiency and privacy.

“This freakout re: Ordinals is stupid. You've always been able to embed as much data as you can pay for in BTC transactions. Taproot didn't change that,” he told The Block.

A widely shared blog post originally claimed that Taproot has massively reduced the cost of putting data into the Bitcoin blockchain. Yet Todd argued that it was actually an earlier upgrade called segwit that made the biggest change, reducing the cost of adding such data by around 75%. He said Taproot only made this up to an additional 10% cheaper, while making it easier to store this data in single transactions (as opposed to spreading it among multiple ones). The blog post was later updated to acknowledge this.

“The claims that taproot enables a 75% discount are just wrong. Segwit is what introduced that discount, and segwit did that years ago,” Todd said. He noted that where Ordinals stores its data is better than in the UTXO space — where transactions are — since it can be pruned by nodes anyway. 

Bitcoiner Magnus Granath, known as Hodlonaut — who created the Bitcoin Lightning Torch in 2019 — said that NFTs don’t really belong on Bitcoin and are somewhat useless. “But since the fee market will sort this out, it looks overblown,” he said. He noted one positive, though, that this issue highlights the risks of protocol changes leading to unintended consequences.

Sitting on the fence

Not everyone wanted to jump to conclusions, with some saying that this was a smallish and healthy debate to have.

“It’s going to take some time for people to have all the nuances of this debate sink in to understand their finer implications," said Swedish researcher (and former Arcane Assets CIO) Eric Wall. "I don’t think it is strange if you’re upset after two to three days of thinking about it. This is a healthy discussion and people get to show their technological understanding and ideological priorities."

In agreement was Adam Back, CEO of Blockstream. He said it was a fairly mild discussion compared to what’s normal for Bitcoiners on Twitter. Yet he did say it wasn’t without consequence. He noted that adding lots of JPEGs to the Bitcoin codebase will increase the initial time it takes to sync a node from scratch and that it’s a pretty inefficient way to publish media files. 

“It’s not fully harmless — jokes aside,” he said.