The arrival of the new Ordinals Protocol has generated a lot of repercussions, allowing the incursion of NFTs on the Bitcoin network. What are its benefits and the questioning of purists.
The upward trend in the growth of the NFT ecosystem has been in the news in recent months. Its adoption, use cases, and positive effects on a variety of aspects such as commercial, tourism, among others, are some of the characteristics driving its growth.
And this time we can see the arrival of NFTs to the Bitcoin Blockchain. This development has caused mixed opinions from the community. On the one hand, there are those who argue that non-fungible tokens provide a quite requested and usefuluse case, and on the other hand, Bitcoin purists who are intrigued by the fact that this project is moving away from its initial purpose for which it was developed.
On this occasion it is appropriate to recall the importance that NFTs implied for the Ethereum blockchain, which is why Blue Chip collections like BAYC, CryptoKitties, o CryptoPunkshave been very influential in making this network one of the most important in the entire ecosystem.
Although the original objective of the Bitcoin Blockchain has been its native cryptocurrency (BTC), this time the possibility of incorporating non-fungible tokens into the network will become a reality.
This comes after developer Casey Rodarmor announced the launch of the novel Ordinals Protocol, which will allow NFTs to be traded and traded on the Bitcoin network.
One of the main players in the Bitcoin network(miners) welcomes the new protocol in a positive way, as it may increase the network’s fees, which they derive as earnings for their jobs of processing and validating data from the blockchain. But on the other hand, there are critics who argue that it could lead to an increase in the volume of operations, with the consequences that this entails.
The Ordinals Protocol allows you to create NFTs that store jpg images on the Bitcoin network. One of the features is to differentiate from other collections such as Rare Pepeswhose protocol is built on top of Bitcoin but the images are stored on external servers. In contrast, Ordinals keeps the images on the Bitcoin network itself.
This is possible because Ordinals uses the OP_Return function, which makes it possible to enter data in the same transactions carried out in the Bitcoin network. Thanks to the incorporation of SegWit, the costs of using this function have been greatly reduced, which made possible the subsequent emergence of the Rare Pepes collection, which inhabit the Counterparty blockchain.
Although the SegWit update achieved the cost reduction of the OP_Return function, it still had a drawback, which was the limitation of the storage capacity per transaction, the main purpose of which was to prioritize security.
With the 2021 Taproot update, this limitation was eliminated, in addition to having introduced improvements and new issues to the network, such as the inclusion of data, images and text in the transaction data, thus enabling the creation of NFTs to be traded over the Bitcoin network.
One of the features of SegWit.
In addition, the Taproot update prioritizes improved privacy and network efficiency, and introduced the ability to create native Bitcoin network applications.
Nick Hansen, CEO of Luxor Technologies, said that if this protocol gains community support for sustained growth, it will result in a marked improvement in the economics of Bitcoin mining.
One of the characteristics that describe Taproot.
Currently, Ordinals uses both SegWit and Taproot in order to introduce images to the Bitcoin network. Each image is assigned 1 Satoshi (the smallest unit of measure for each BTC). Then, when you want to transfer an NFT, this Satoshi must also be transferred.
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Written by Luciano Garriga (TW:@luchogarriga) for NFT Express