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Title: Rare Satoshis and a marketplace to acquire them: Magisat Post by: Vlad.Sas on September 27, 2024, 01:12:43 AM Part 1: Rare Sats: What are they? Do they exist?
Rare Sats! Some satoshis may be special and different from others. This is a controversial topic, as is anything related to Ordinals Theory. I'm posting this because I believe this subject is much more fun and intriguing compared to any other altcoin or token out there. I ask you to read patiently, probe my arguments if you think they're lacking, and possibly be open to a new collecting hobby. To understand Rare Satoshis, we first need to understand Ordinals (Bitcoin NFTs). This IS NOT a post about NFTs, I promise! However, in the journey to create Bitcoin NFTs, Casey Rodarmor, the creator of ordinals.com discovered a much more interesting and intriguing asset: Rare Satoshis. The first part of Ordinal Theory concerns itself with satoshis, giving them individual identities (ids) and allowing them to be tracked. The second part (required for Bitcoin NFTs) concerns itself with binding data posted on the Bitcoin network to satoshis through a "convention". Let's dive into this first part! This part of the Ordinals Theory creates two "strong conventions" (I'll explain why I'm calling them "strong" in a minute):
As Bitcoiners, we understand that sats are simply a measuring unit for Bitcoin. By default, the Bitcoin Network has no way of identifying a particular satoshi. However, I would argue that UTXOs can be seen as sats containers, and unlike a glass of water where you have the water molecules chaotically moving through the glass, UTXOs are static and much more akin to a stack (of sats). Yes, sats are a measuring unit, but they are more similar to millimeters than to milliliters. Millimeters of material, unlike milliliters can be preserved when moved and uniquely identified. That's what Ordinals Theory does. Let's now circle back to why I call the two conventions needed to identify sats "strong conventions", and why this part of the Ordinals Theory makes much more sense than the second. Occam's Razor (https://en.wikipedia.org/wiki/Occam%27s_razor) is the problem-solving principle that recommends searching for explanations constructed with the smallest possible set of elements. In simpler words, this principle states: "The simplest explanation is usually the best one." This also applies to conventions. When a convention is created to aid a certain purpose (in this case identifying an tracking sats), the simplest rules are the preferable ones. In this case, both the way to assign ids(incremental, starting from 0) and the transfer rule (FIFO) for sats are the simplest ones. The fact that these conventions follow Occam's Razor principle emboldens us to believe that even with Ordinals Theory erased from the collective memory, the next attempt at identifying and tracking sats will be based on the same exact conventions that the current Ordinals Theory postulates. Now that we understand how sats are tracked, we can dive into what makes a satoshi rare. There are multiple types of satoshis that have interesting properties. The broader classification includes:
I would argue that it makes sense to dive into this asset class because (1) it's fun, (2) they can be discovered (especially among old Bitcoin), (3) they can be "hunted" from different sources by shuffling your Bitcoin around, and (4) they can be traded. Caution is advised when trying to hunt them because this activity usually involves sending your Bitcoin to custodial actors such as Binance, in hope that you will withdraw another set of sats that are rare. Part 2: How are Rare Sats trustlesly traded? Transfering UTXOs containing rare satoshis can be transferred untouched by simply making sure that the transaction that involves them as input contains an output of identical size and at an identical offset. Say I want to transfer a UTXO of 1000 sats from address A to address B without losing any of the 1000 sats. I will add the UTXO as input 0 and another UTXO that doesn't involve sats that i prefer to keep as input 1. Output 0 will have the same size as the input and go to address B, and output 1 will be the change. We do this to preserve all satoshis form our UTXO that contains rare sats and pay the fees with sats from another, less interesting UTXO. Trading When you want to sell rare sats in a trustless manner, you sign a PSBT (Partially Signed Bitcoin Transaction) with SIGHASH_SINGLE|ANYONECANPAY. What that means is that you agree to involve a UTXO (that contains the rare sats) in a transaction (as input) if and only if you get an output with the desired amount of BTC to a specified address. This PSBT is stored by the marketplace and is then publicly displayed as "for sale". When the buyer decides to go for the trade, the marketplace gets the buyer to sign the other inputs of the transaction ( the full transaction is shown in the image below). https://pbs.twimg.com/media/GC6_xd-WYAAoCzh?format=jpg In a typical marketplace transaction, the buyer signs the transaction, sends it to the marketplace and the marketplace puts together the full Bitcoin transaction and submits it. The necessity for padding UTXOs exists because to have the buyer receive the rare sats, while still having the input with the rare sats at the same index as the output with the payment (required so that the input UTXO with rare sats of the seller to be involved in the transaction), we need two random inputs from the buyer on positions 0 and 1, and an output with the sum of these two inputs at index 0, so the output at index 1 can be reserved for the rare sats (having the same number of sats as the input with the rare sats and going to the buyer). Part 3: The implications of rare sats trading One can observe that the trading of these assets has several implications in the Bitcoin Network. I'll briefly list them:
That's all! I thought this asset class might be much more interesting for Bitcoiners here than any other altcoin or on-chain image collectibles. I can see an appeal in collecting rare sats, similar to how humans collected old and special coins throughout history. The infrastructure needed for this activity is evolving and is getting better and better UI/UX. You can engage with Rare Sats by using a wallet that recognizes them (such as Xverse (https://www.xverse.app/) and trading them on marketplaces such as Magisat (https://magisat.io/). Let me know your thoughts! |