Mon. Mar 27th, 2023

• This opinion editorial examines the recent Bitcoin transaction that took up an entire block and default mempools (300 MB), focusing on the phenomenon of Ordinals and Inscriptions.
• Ordinals are a made-up way to track sats across transactions while Inscriptions are a way to store arbitrary content, like a kind of Bitcoin-native digital artifact or NFT.
• There is a “pro Ordinals and inscriptions” case, but there are also concerns about reduced accessibility to transact on Bitcoin and illegal material being recorded into the blockchain.

Overview of Ordinals & Inscriptions

This is an opinion editorial by Stephan Livera, host of the “Stephan Livera Podcast” and managing director of Swan Bitcoin International focused on examining a recent Bitcoin transaction that took up nearly an entire block as well as filled up default mempools (300 MB). The article looks at two concepts – “Ordinals” and “Inscriptions” – which are both made-up ways to track sats across transactions.

What Is An Ordinal?

An Ordinal is a convention for numbering sats in the order they’re mined into existence and tracking them across transactions in a first in, first out (FIFO) method. It works by considering the first satoshi in the first input as transferred to the first output of a transaction. There are conventions around which Ordinals are uncommon, rare, epic, etc., however it does not meaningfully impact bitcoin’s fungibility.

What Is An Inscription?

An inscription is another made-up convention where sats can be inscribed with arbitrary content like a kind of Bitcoin-native digital artifact or NFT. However these inscriptions never enter the UTXO set because they are coded such that they are written into transaction witnesses instead.

Pros & Cons Of Ordinals & Inscriptions

The pro case for using ordinals and inscriptions revolves around creating art pieces or items with fun values attached to them while staying within the decentralized system of Bitcoin itself. On the flip side though there have been several criticisms raised including reducing accessibility when transacting due to slow processing speeds; reduced ability for users to run full nodes due more storage/bandwidth requirements; as well as potential illegal material being recorded onto blockchain discouraging some users from using it altogether.

Conclusion

In conclusion, there have been pros and cons raised regarding using ordinals & inscriptions within bitcoin transactions but ultimately this debate may still need further discussion among stakeholders before reaching any conclusions about its use cases moving forward.

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