NFTs in the Bitcoin blockchain - Ordinal Theory

[BlackHatCoiner]

In a spam attack when someone is pushing garbage into the blockchain (as it is a "freedom protocol") the fee market kicks in and increases the cost for them.

The Bitcoin blockchain doesn't recognize incentives and types of spam attacks in this matter. Nor do humans know with 100% certainty. There is spam, and whether it is used to fulfill the owners of some shitcoin or not, the same damage is done. If the Bitcoin network allows for specific types of transactions, then idiots who push their shitcoins are also welcomed to broadcast their transactions if they're okay with the rules.

When there is incentive (meaning a useless token with actual price that they can sell for real money to cover the cost of the spam attack) then the fee market is only harming the real regular uses trying to send bitcoin around since the attacker is earning money to spam the network.

But, that's bitcoin. Regular users should acknowledge this first, and move on. The network's state isn't dictated by anyone. If someone can tolerate the premium fee, he's welcomed to float the chain with NFTs. We endorse censorship resistance.

Besides, there is a nearly infinite number of manners to create altcoins using the Bitcoin blockchain. You can't prevent them all.

[garlonicon]

Besides, there is a nearly infinite number of manners to create altcoins using the Bitcoin blockchain. You can't prevent them all.

Yes, but even if you create an altcoin that is based on Bitcoin, then still, your altcoin should have its own chain, to store non-Bitcoin data. There is a way to commit to Bitcoin blockchain, instead of pushing data on-chain. It is cheaper, and more private, so why spam the blockchain, when there is a better way with no spam?

Also, there are better networks for pushing arbitrary data, for example testnet, because it has no financial value, so it can be only used to push data publicly, because those coins are worthless by definition, so your spam will not affect real life transactions. Also, in testnet it is even easier, because you can make any non-standard transactions, and you can use zero satoshis, so all of your coins can be used just to cover your fees (and you don't need to wrap it inside TapScript at all).

Edit: When it comes to altcoins, it was mentioned by Satoshi in BitDNS discussion:

Piling every proof-of-work quorum system in the world into one dataset doesn't scale.

Bitcoin and BitDNS can be used separately.  Users shouldn't have to download all of both to use one or the other.  BitDNS users may not want to download everything the next several unrelated networks decide to pile in either.

The networks need to have separate fates.  BitDNS users might be completely liberal about adding any large data features since relatively few domain registrars are needed, while Bitcoin users might get increasingly tyrannical about limiting the size of the chain so it's easy for lots of users and small devices.

So, as you can see, there is no need to spam the blockchain, when there are better options.

[pooya87]

@BlackHatCoiner raises good points but we should draw the line between being censorship resistant and having no limits and allowing everything. As a matter of fact, Bitcoin is filled with limitations. Limits in consensus rules such as number of allowed sigops, block size (weight), max op count, etc. and a lot of standard rules on top of that such as size of OP_RETURN.
All of these limitations are designed to keep the system healthy and we should fight to keep it that way.

[n0nce]

In a spam attack when someone is pushing garbage into the blockchain (as it is a "freedom protocol") the fee market kicks in and increases the cost for them.

The Bitcoin blockchain doesn't recognize incentives and types of spam attacks in this matter. Nor do humans know with 100% certainty. There is spam, and whether it is used to fulfill the owners of some shitcoin or not, the same damage is done. If the Bitcoin network allows for specific types of transactions, then idiots who push their shitcoins are also welcomed to broadcast their transactions if they're okay with the rules.

Sure, the blockchain doesn't care, but in a maximally free situation, the NFT people would 'win' in the sense that it may only be worth paying high transaction fees (due to high demand for these JPEGs) to send around either expensive NFTs or large Bitcoin transactions. It may not be worth it / profitable anymore to use Bitcoin as an everyday currency.
Don't underestimate the NFT market; while we think it is ludicrous and stupid, there is a lot of money in it. Money that may make the Bitcoin blockchain unusable in favor of becoming a platform for JPEGs.

So I do understand both sides, but lean towards the 'keep it payment-related' side. We already have payment networks on Bitcoin that are easier and more scalable to extend (e.g. for adding JPEGs). Besides reducing blockchain usage by their very existence, instead of increasing blockchain usage (which is precisely 'NFTs on the Bitcoin blockchain' are doing).
We should encourage reducing blockchain usage if possible, so this stuff here seems like a massive step-back.

[HeRetiK]

Sure, the blockchain doesn't care, but in a maximally free situation, the NFT people would 'win' in the sense that it may only be worth paying high transaction fees (due to high demand for these JPEGs) to send around either expensive NFTs or large Bitcoin transactions. It may not be worth it / profitable anymore to use Bitcoin as an everyday currency.
Don't underestimate the NFT market; while we think it is ludicrous and stupid, there is a lot of money in it. Money that may make the Bitcoin blockchain unusable in favor of becoming a platform for JPEGs.

So I do understand both sides, but lean towards the 'keep it payment-related' side. We already have payment networks on Bitcoin that are easier and more scalable to extend (e.g. for adding JPEGs). Besides reducing blockchain usage by their very existence, instead of increasing blockchain usage (which is precisely 'NFTs on the Bitcoin blockchain' are doing).
We should encourage reducing blockchain usage if possible, so this stuff here seems like a massive step-back.

I also lean towards the "keep it payment-related" side, but the way I see it, if NFTs become commonly used on the Bitcoin blockchain -- and I mean long-term, not just as a fad -- that, to me, is a completely valid use case, even if I personally don't see much in it.

Maybe it's my rose colored glasses, but I still believe that colored coins / NFTs will eventually find meaningful use cases -- arguably colored coins already have, in the form of stablecoins and even ICOs, if they weren't so scam-ridden. And while NFTs are in my opinion currently little more than a philosophical exercise, exploring the ownership of intangibles, I do think they might become the building blocks of something bigger once the hype around digital collectibles has subsided. That doesn't mean that the Bitcoin blockchain is the right place for this, but if a few rich kids are willing to pay premium for the clout of owning an NFT on the OG Blockchain, so be it. Might be annoying in the short term, but like I said, I have doubts that it will stick. In the end there's only money in NFTs as long as someone else is willing to pay for it.

[BlackHatCoiner]

It is cheaper, and more private, so why spam the blockchain, when there is a better way with no spam?

There is orders of magnitude difference between "why spam the blockchain, when there are more effective ways" and "stop spamming the blockchain, it does us harm". Of course and there are less expensive solutions to have NFTs on-chain, but you (or at least, the Bitcoin protocol) don't ever force somebody do something for their good. There is also a less inefficient manner to burn coins; yet people send them to 1111111111111111111114oLvT2. Hell, a great percentage of the Bitcoin userbase still uses Legacy addresses.

@BlackHatCoiner raises good points but we should draw the line between being censorship resistant and having no limits and allowing everything. As a matter of fact, Bitcoin is filled with limitations.

I'm not suggesting that we should disable every single limit most clients have by default, but I'm just curious to know when we consented that line. Because as far as I know, developers drew a line in non-standardness and users followed later on without much debate. For example, what's the explanation behind the limit of OP_RETURN at 80 bytes by default?

Furthermore, standardness being what safeguards the system is flawed in the first place. Consensus rules protect from whatever. There's nothing stopping a group of miners from setting up a market, or just sharing their node URI, with NFT users, wherein they bypass the non-standard rule of dumping transactions with Ordinals etc., normally having their transactions included into blocks. And that's even worse, because now regular users don't see how much filled the mempool is, and the fee they select will not correspond accurately.

In fact there is pretty much only incentive for miners to disable most non-standard rules.

Sure, the blockchain doesn't care, but in a maximally free situation, the NFT people would 'win' in the sense that it may only be worth paying high transaction fees (due to high demand for these JPEGs) to send around either expensive NFTs or large Bitcoin transactions. It may not be worth it / profitable anymore to use Bitcoin as an everyday currency.

If there is demand for expensive NFT transactions, shouldn't the users have the freedom to make them?

[digaran]

WOW, this is perfect, I read that we can add videos into the blockchain by this thing! Amazing, just imagine sending child porn, government secrets as NFTs.

So if it's bad don't try to change the rules, which is a hard thing to do, instead try to figure out a way to fight back.
e.g., Next thing you know someone will create series of forbidden NFTs and governments will go after every node/ miner/ block explorer to "manage the situation".

Dibs on OnlyFans.com as NFT. 😂

[n0nce]

Sure, the blockchain doesn't care, but in a maximally free situation, the NFT people would 'win' in the sense that it may only be worth paying high transaction fees (due to high demand for these JPEGs) to send around either expensive NFTs or large Bitcoin transactions. It may not be worth it / profitable anymore to use Bitcoin as an everyday currency.

If there is demand for expensive NFT transactions, shouldn't the users have the freedom to make them?

Sure, as I said, if we assume a maximally free market, that would / should be the outcome.
I just personally don't think that this is right. I believe the availability of a reliable, decentralized, worldwide payment network and digital currency is much more important to civilization than NFTs.

While I don't hate the idea of NFTs, the problem is that they're just glorified contracts that nobody can / does enforce. If someone plagiarizes some digital art you own, no matter whether your proof of ownership is 'traditional' (buyer receipt or proof you made it yourself) or whether that proof is an NFT on some blockchain, you will still need to denounce / report the user who technically stole it and still need authority of some kind to take down the copy.
Imagine movie studios minted an NFT of their movies and then hoped that would stop piracy. Of course it wouldn't. That makes NFTs mostly pointless; there's little to no benefit to traditional contracts.

So, allowing Bitcoin as a payment network to be taken over for the sake of something that's basically pointless, because there is nobody to enforce it, is very silly in my opinion.

[pooya87]

I'm not suggesting that we should disable every single limit most clients have by default, but I'm just curious to know when we consented that line. Because as far as I know, developers drew a line in non-standardness and users followed later on without much debate. For example, what's the explanation behind the limit of OP_RETURN at 80 bytes by default?

Furthermore, standardness being what safeguards the system is flawed in the first place. Consensus rules protect from whatever. There's nothing stopping a group of miners from setting up a market, or just sharing their node URI, with NFT users, wherein they bypass the non-standard rule of dumping transactions with Ordinals etc., normally having their transactions included into blocks. And that's even worse, because now regular users don't see how much filled the mempool is, and the fee they select will not correspond accurately.

In fact there is pretty much only incentive for miners to disable most non-standard rules.

Some of the standard rules are meant as "soft discouragement" to encourage people to seek better solutions that don't harm Bitcoin (like the OP_RETURN limit). For example the NFT guys could easily create a side-chain that is secure by merged-mining which would in turn provide a much better market (incentive) for miners to make money while securing that side-chain without "attacking" bitcoin.

[ABCbits]

WOW, this is perfect, I read that we can add videos into the blockchain by this thing! Amazing, just imagine sending child porn, government secrets as NFTs.

People already do some of that, see https://www.righto.com/2014/02/ascii-bernanke-wikileaks-photographs.html.

So if it's bad don't try to change the rules, which is a hard thing to do, instead try to figure out a way to fight back.
e.g., Next thing you know someone will create series of forbidden NFTs and governments will go after every node/ miner/ block explorer to "manage the situation".

For better or worse, obtaining and decoding/re-assemble arbitrary data from Bitcoin blockchain is quite difficult for most person, so i expect government would focus on different leak method which is more accessible.

--snip--

Some of the standard rules are meant as "soft discouragement" to encourage people to seek better solutions that don't harm Bitcoin (like the OP_RETURN limit). For example the NFT guys could easily create a side-chain that is secure by merged-mining which would in turn provide a much better market (incentive) for miners to make money while securing that side-chain without "attacking" bitcoin.

There's no need to create new side-chain. RSK and Liquid could do that. In fact, i would recommend those people to use RSK which is decentralized and secure thanks to merge mining with BTC network.

[BlackHatCoiner]

I just personally don't think that this is right. I believe the availability of a reliable, decentralized, worldwide payment network and digital currency is much more important to civilization than NFTs.

Honest question: what would happen if instead of NFTs, we had actual transactions of the same size, that were made in favor of the Bitcoin adoption? Wouldn't regular users still have to pay lots in fees? Does this reasoning conflict rather the 1 MB block instead of bitcoin being a currency-exclusive network?

While I don't hate the idea of NFTs, the problem is that they're just glorified contracts that nobody can / does enforce.

I do believe there is no point in owning an NFT, for the reasons you outline. But I can't force this view to anyone who believes otherwise. I can try to convince him to not buy dumb and pointless things, but I can't forbid him from doing so. You don't go well with freedom if you follow that route. It's similar to saying "I personally don't recognize point in Bitcoin, so let's forbid energy from being spent in Bitcoin mining".

For example the NFT guys could easily create a side-chain that is secure by merged-mining which would in turn provide a much better market (incentive) for miners to make money while securing that side-chain without "attacking" bitcoin.

Or not mess with NFTs in the first place, as it's plain dumb concept. But, if they want to, I won't be an obstacle. They're already discouraged from the main layer, as it's too expensive. But you know what they say-- never underestimate the power of stupid people in large groups.

[n0nce]

WOW, this is perfect, I read that we can add videos into the blockchain by this thing! Amazing, just imagine sending child porn, government secrets as NFTs.

People already do some of that, see https://www.righto.com/2014/02/ascii-bernanke-wikileaks-photographs.html.

Following that link, I discovered 'Crypto Graffiti' in the comments section. They even have a Bitcointalk project page. Not providing a link to the website on purpose. I was shocked that it was filled with pictures of asian infants / children, when I realized it is a BSV page! They link to CSW as the original creator of Bitcoin, to their software that requires top-grade hardware to run a full node and list CoinGeek as a 'Trustworthy source of Bitcoin news' What I'm trying to say: this garbage is what happens when you allow people to store any data on your blockchain. Fucking disgusting.

There's no need to create new side-chain. RSK and Liquid could do that. In fact, i would recommend those people to use RSK which is decentralized and secure thanks to merge mining with BTC network.

Or https://rgb.info/ on Lightning!

I just personally don't think that this is right. I believe the availability of a reliable, decentralized, worldwide payment network and digital currency is much more important to civilization than NFTs.

Honest question: what would happen if instead of NFTs, we had actual transactions of the same size, that were made in favor of the Bitcoin adoption? Wouldn't regular users still have to pay lots in fees? Does this reasoning conflict rather the 1 MB block instead of bitcoin being a currency-exclusive network?

They would pay more if Bitcoin got more usage, but at least it was the usage it's indended for and the usage that is actually needed in this world i.e. censorship-free money transfers.
Of course, it would be optimal if many of those transactions were Lightning channel openings instead, for even more payments instead of working against 'more payments'.

The bottom line is:
Higher Bitcoin adoption / regular usage / Lightning channels = more payments
NFTs on-chain = less payments

While I don't hate the idea of NFTs, the problem is that they're just glorified contracts that nobody can / does enforce.

I do believe there is no point in owning an NFT, for the reasons you outline. But I can't force this view to anyone who believes otherwise. I can try to convince him to not buy dumb and pointless things, but I can't forbid him from doing so. You don't go well with freedom if you follow that route. It's similar to saying "I personally don't recognize point in Bitcoin, so let's forbid energy from being spent in Bitcoin mining".

Sure, but as me and others said before: Bitcoin already isn't maximally free and already has some rules that may be against 'the market' in favor of keeping it suited for its original purpose. As said before, I personally deem it more important for Bitcoin to maybe be a bit less 'free' in this regard (by discouraging on-chain NFTs) if this ensures we can maximize the number of payments on it while keeping it maximally decentralized.

[pooya87]

They're already discouraged from the main layer, as it's too expensive.

It is more accurate to say it can become too expensive otherwise the 1 sat/vbyte fee that is paid most of the times is not expensive at all and that's the problem. They can abuse this very cheap cost (cheaper than ETH fees) to spam and increase it.

[BlackHatCoiner]

They would pay more if Bitcoin got more usage, but at least it was the usage it's indended for and the usage that is actually needed in this world i.e. censorship-free money transfers.

And expensive fees, which would discourage them to use it as currency. Again, what's the problem? The fact that someone decides to play by the rules and pay for stuff you don't approve of, or that the Bitcoin network can't handle lots of on-chain transactions cheaply?

Sure, but as me and others said before: Bitcoin already isn't maximally free and already has some rules that may be against 'the market' in favor of keeping it suited for its original purpose.

I don't believe the rules we have (besides the consensus) limit an activity with high demand. As said by pooya87, standard rules are soft rules. If someone desperately needs to make a non-standard transaction, he will. And theoretically, miners should allow any transaction that's in favor of their pocket, which means to follow minimum to no standard rule.

[tromp]

They would pay more if Bitcoin got more usage, but at least it was the usage it's indended for and the usage that is actually needed in this world i.e. censorship-free money transfers.

The ordinals experiment has clearly shown that you can't stop non-transfer uses within the existing consensus rules. As long as there's script, and as long as there are addresses, then there are straightforward ways to encode arbitrary data within them. Only a script-free blockchain without adresses, such as Mimblewimble, can strongly limit the amount of arbitrary data, to about 2% of chainsize (using lock heights in the past).

[ABCbits]

Since Luxor mint NFT with 3.94 MB on their block which has Ordinal ID/number 652[1], now current highest Ordinal ID/number is 6681[2]. While not all of them have transaction size >300KB or ~3.9MB, it's clear 1 sat/vB isn't enough to discourage people to mint BTC on main layer.

actually having hard consensus rules again that are set to, for instance: limit witness to 80 bytes is a solution

Why 80 bytes? I expect some multi-signature address which use P2SH or P2WSH would unable to spend their Bitcoin if this limit is enforced on protocol level.


[1] https://ordinals.com/inscription/0301e0480b374b32851a9462db29dc19fe830a7f7d7a88b81612b9d42099c0aei0
[2] https://ordinals.com/inscription/d5c8c24efbbea3239acb93dfe1b0cc45dc419b76cd22690bfb5aff43abec34cci0

[n0nce]

They would pay more if Bitcoin got more usage, but at least it was the usage it's indended for and the usage that is actually needed in this world i.e. censorship-free money transfers.

And expensive fees, which would discourage them to use it as currency. Again, what's the problem? The fact that someone decides to play by the rules and pay for stuff you don't approve of, or that the Bitcoin network can't handle lots of on-chain transactions cheaply?

As I said before, I'm all about maximizing the amount of monetary transactions while keeping blockchain size low, since that's directly correlated with decentralization staying high.
I know that right now, if you want to spam the blockchain, as long as you pay for it, you can. But I personally believe it is desirable that the extremely limited blockchain space (total blockchain from 2009 to 2023 is smaller than any one of all of my personal HDDs and SSDs) is used in the most efficient way possible.
That is my personal opinion, of course. I can't force it on anyone.

Bitcoin: A Peer-to-Peer Electronic Cash System

The title mentions electronic cash specifically. There is no other such uncensorable p2p electronic cash system with the same amount of decentralization and security as Bitcoin, so it would be foolish 'sacrificing' it for NFTs (even though they may be ready to pay a lot of money).

[BlackHatCoiner]

As I said before, I'm all about maximizing the amount of monetary transactions while keeping blockchain size low, since that's directly correlated with decentralization staying high.

I'm all about that too. I want from the overwhelming majority of the Bitcoin users to compress their transactions best. I neither want them to store trash, but I want that less than I want Bitcoin to be a completely pro-freedom and censorship resistant protocol.

And since the only manner to disincentivize storing arbitrary data on-chain without discarding these principles is the transaction fee, I like better leave it there. In the end, a fool and his money are soon parted.

[serveria.com]

Developed by Casey Rodarmor, he built Ordinals to give its users the ability to transfer individual Satoshis between each other by taking advantage of the Taproot upgrade, which can also store NFT data in Taproot script-path spend scripts.

I'm still learning about it by reading and rereading this blog, https://read.pourteaux.xyz/p/illegitimate-bitcoin-transactions

n0nce, pooyah, and others who are technical/high IQ, please ELI-5 for the newbies and the plebs like me. Haha.

Plus what's everyone's opinions/thoughts about Ordinals?

This handbook is a guide to ordinal theory. Ordinal theory concerns itself with satoshis, giving them individual identities and allowing them to be tracked, transferred, and imbued with meaning.

Satoshis, not bitcoin, are the atomic, native currency of the Bitcoin network. One bitcoin can be sub-divided into 100,000,000 satoshis, but no further.

Ordinal theory does not require a sidechain or token aside from Bitcoin, and can be used without any changes to the Bitcoin network. It works right now.

Ordinal theory imbues satoshis with numismatic value, allowing them to be collected and traded as curios.

Individual satoshis can be inscribed with arbitrary content, creating unique Bitcoin-native digital artifacts that can be held in Bitcoin wallets and transferred using Bitcoin transactions. Inscriptions are as durable, immutable, secure, and decentralized as Bitcoin itself.

https://docs.ordinals.com/introduction.html

Oh noes, please keep that NFT nonsense off Bitcoin network. Puuuuleeeeeeaaaz. I think Ethereum is a perfect blockchain for that NFT crap and they should stay there. 

I must admit I've read this handbook but I still don't understand why Bitcoin and bitcoiners would need these "ordinals". Humans are collectors is a very vague description. I wouldn't pay 0.5btc for a satoshi, just because somebody called this satoshi "satoshi" or assigned a number to this sat. I'm sorry but that's stupid.

[goatpig]

There is a pretty straight forward solution to this, albeit a somewhat brutish one:

The Ordinal protocol sets out to identify single satoshis. It therefor generates outputs that are provably self-unspendable: their value isn't enough to cover for the fee to spend them. To redeem a 1 satoshi output, you would have to create a 0 fee tx, or bring in coins from another output.

If a majority of nodes reject these transactions, this whole ordinal idiocy goes tits up overnight. This can be done without any changes to consensus rules: set your node to a reasonably s/B fee rate. This would limit the propagation of these transactions in the mempool.

A stronger iteration of this approach would be a UASF where nodes would reject transactions that create such outputs. If 2/3rd of the nodes were to enforce such rule, this would force miners to upgrade their nodes as well, as they would rather stay on the main chain than mine ape jpegs. Then the damage can be undone by evicting these outputs from the mempool with a subsequent update.

In general, I'm not too worried. Ethereum has demonstrated that NFTs will move to the next chain down the road when fees get too high for data usage. In general the whole concept of NFTs on chain is dumb, as you need a centralized party to enforce consumption rules. I don't see this fad developing on chains with scarce block size as a consequence.