Bitcoin Will Do Just Fine With NFTs

Hard-core Bitcoiners worry that internet memes such as smoking monkeys and pixelated cats will clog the blockchain.

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Casey Rodarmor, the creator of the recently introduced NFT protocol called Ordinals that is at the center of all this angst, is saying you shouldn't worry about it. It appears to him that inscriptions, or the newfangled nonfungible tokens, are giving the oldest blockchain a new use case that may increase its utility as well. Due to the large amounts of data required to inscribe the digital images, GIFs, and representations, opponents of Bitcoin claim they'll crowd out regular payments with high fees, undermining Bitcoin's original vision as a peer-to-peer payment system.   

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Until quite recently, NFT collections such as Bored Apes and CryptoPunks were predominantly based on the Ethereum platform and served as the catalyst that led to Ethereum becoming one of the world's most commercially important blockchain platforms. According to CryptoCompare, the average number of transactions per day on the network has reached the highest level since February 2021, which is the highest since the beginning of the year. The protocol's launch in late January ushered in tens of thousands of NFT-like inscriptions, but that still pales in comparison with the 1.38 million NFTs that were created on Ethereum during that same month, according to blockchain data firm Nansen. 

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Following an epic price collapse in 2022, the largest cryptocurrency has experienced a dramatic 50% rally since January, which has renewed attention on the token.

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Among Rodarmor's favorite activities are Bitcoin and generative art, both of which he has enjoyed for a long time. Emeryville, a California-based programmer, who runs a monthly meet-up for Bitcoin developers in the San Francisco area, has dabbled in generative visuals for live music performances as well as the high-end art market on Ethereum platforms. 

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“I don't consider myself an artist, but I've done a lot of generative digital art, sort of like programmer art,” Rodarmor said.  

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As a high-school dropout, he was forced to meander through community college for several years before transferring to the University of California, Berkeley, where he graduated in 2009. Prior to starting work on the Ordinals project in January 2022, he worked as a software engineer at Google for over two years and had stints at a couple of crypto companies. 

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While working at Google in 2013, Rodarmor came across Bitcoin and the explanatory "white paper" that accompanied it. According to him, he likes things that take power away from the government. "I was very excited that this had a chance of working, a chance of creating better money that would benefit everyone, and therefore I was very excited about it." 

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As many Bitcoin purists do, Rodarmor is a big advocate of cryptocurrency as a path to financial freedom. It is because of this sentiment that so-called "maximalists" have adopted the tenet that no alternative can compete with Bitcoin in terms of it being a secure permission-less network. 

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Despite the fact that the network is highly secure, it may not be as scalable as other blockchains such as Ethereum, which is also home to some of the largest decentralized exchanges in the world.

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“I decided to make Ethereum NFTs, but I wouldn't feel comfortable telling anyone to buy them because of security concerns and centralization," Rodarmor said. “Well, I guess I'm going to have to figure out a way to make some JPEGs on Bitcoin if I want to sell them.”

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In the field of mathematics, ordinals are shorthand for ordinal numbers, which are used in expressing the position of objects. Rodarmor explained, in an interview with a podcast, that the protocol allows users to send and receive sats - the smallest measuring unit of Bitcoin recorded on the blockchain - that can carry optional extra data in ordinal progression, which can be sent or received between users. 

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The Ordinals protocol wouldn’t be possible without Bitcoin’s previous technical upgrades such as SegWit and Taproot. They have effectively enabled large amounts of non-financial data to be stored on the blockchain. 

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So far, the Bitcoin collection has been dominated by a series of Bored Ape JPEGs, as well as inscriptions of Donald Trump and fallen crypto executive Sam Bankman-Fried.

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Ironically, some of the first NFTs on the Bitcoin network are images that have been popular on Ethereum, such as Ether rocks and Bored Apes, as well as the Nyan Cat, an animated flying cat with a pop-tart body that was sold for nearly $600.000 in 2021.

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With Bitcoin NFTs gaining momentum in recent years, Rodarmor is considering whether to build a decentralized marketplace for inscriptions on the blockchain where people can exchange NFTs directly for Bitcoin - a decentralized market where everyone can participate. Currently, the developer and his team, which includes a few interns he met on Twitter, are in the process of trying to ensure that there are no software bugs and that the code can be used by everyone. Rodarmor explained that all the Ordinal NFT trades appear to be taking place over the messaging services Discord and Telegram. 

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“I think what people really want is for us to implement trustless offers, which allows people to swap bitcoins for inscriptions, and that’s exactly what I think people are looking for,” he said. 

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In recent years, Rodarmor has taken on Ordinals as a full-time job, though he has not yet made a profit off of the protocol as a whole. In the meantime, he is accepting donations as a means of support. Additionally, Rodarmor is thinking of ways to make it easier for those who contribute to the protocol to accept donations and receive payments in return for their contributions.

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“People are already inscribing even though we don't have official support from collections,” he said.