Bitcoin Gets NFTs, Finally 🥳 (But is this Good or Bad ?)
The Web Three Newsletter | 8th Feb, 2023
Happy Wednesday !
We’re back with three opinion pieces from the world of Web3
This week, we take a look at:
1️⃣ The Big Story : Bitcoin Gets NFTs, Finally 🥳 (But is this Good or Bad ?)
2️⃣ Market Thoughts : 2022 - Crypto’s Dot Com Bust ?
3️⃣ What’s Hot : Cute NFTs are Taking Over the Market 🐧
1️⃣ The Big Story : Bitcoin Gets NFTs, Finally 🥳 ( But is this Good or Bad? )
The man behind the much-talked about Ordinals project and open source Bitcoin developer, Casey Rodarmor, and Bitcoin expert Eric Wall discuss what NFTs may mean for Bitcoin’s future
On the episode, the guests discuss Ordinals, a new protocol for NFTs on the Bitcoin blockchain. They debate the opinions of the Bitcoin community - some view NFTs as spamming the blockchain, while others see it as a valid use of Bitcoin as long as a fee is paid.
‘Ordinals’ and ‘Inscriptions’ - The 2 Layers
There are two layers to the whole thing - the base layer called Ordinals and on top of it are Inscriptions which are the NFTs.
Ordinals is a convention for numbering individual Bitcoin satoshis and tracking them across transactions. It doesn't require any changes to Bitcoin and doesn't take up any data on the base layer. It's simply an opt-in convention that gives a unique identity to every single Satoshi, but doesn't affect Bitcoin's fungibility.
Inscriptions are NFTs that are created on top of the Ordinals base layer. They are essentially pieces of content included in a Bitcoin transaction, in a part called the “witness”.
Inscriptions : NFTs on Bitcoin
The Building Blocks - The content is arbitrary and includes 2 pieces - a content type and a body. The ‘inscription’ is made on the first satoshi of the first output of the transaction, creating a unique digital artifact that is then transferred using the Ordinal protocol.
Inscriptions are not exactly like NFTs on Ethereum - While in Ethereum creating an NFT is creating a digital object as an actual token, in Bitcoin the transferable unit is the individual Satoshi. By assigning a lifespan to an individual Satoshi and appending data to it, it starts to look and feel like NFTs on Ethereum.
Explore Inscriptions 🔎- Use the tool called ORD found at ordinals.com. With this, you can see individual satoshis, where they are, and the content associated with them, giving it the properties of NFTs such as uniqueness, transferability, and content association.
The Origin of Ordinals : Making the Most of Bitcoin's Data Advantage
What's great about Ordinals is that you use normal Bitcoin addresses and transactions, so they work with the existing Bitcoin infrastructure. This means that you don't need a separate wallet or service.
A generative artist created The Ordinals protocol, motivated by the surge of algorithmic and generative NFTs.
However, they felt that the current Ethereum-based NFT tooling ⚒️ was insufficiently secure and the data couldn't be properly stored on the Ethereum blockchain.
That's why they turned to Bitcoin, which uses the UTXO model. This allows wallets to be a collection of coins without any permanent identity, which is perfect for NFTs.
Putting on the “Offended Bitcoiner Hat” - Do Ordinals and Inscriptions Violate Bitcoin’s Philosophy?
The host asks Eric to put on his "offended bitcoiner hat 🎩" to discuss a particular topic that he finds problematic. The topic in question is the use of "ordinal" and "inscription" systems in the context of Bitcoin.
Block space issues… Eric explains that since the beginning of Bitcoin, people have been trying to create non-financial use cases on top of it, which has caused issues with block space and volatility in the system.
Hence, Eric initially didn't like the idea of "ordinal" and "inscription" systems, particularly "inscriptions" because it involves embedding data blobs attached to specific satoshis.
ETH NFTs vs Inscriptions : Eric has grown to appreciate NFTs on Ethereum, because of their programmable parts and the ability to create complex auction logics and ownership incentives. He believes that these programmable parts make NFTs more interesting than ordinal inscription NFTs.
Overall, Eric's concern with ordinal and inscription systems in the context of Bitcoin is that they violate the simplicity and predictability of the protocol. He thinks that while they can be done on Bitcoin, they detract from the potential of programmable NFTs on other platforms like Ethereum.
The podcast also discusses Legitimate & Illegitimate Bitcoin transactions & dives into the Bitcoin Fee Market
2️⃣ Market Thoughts : 2022 - Crypto’s Dot Com Bust?
This post discusses the crypto market downturn of 2022 and argues that it is not the end of the cryptocurrency market. Rather, it is a setback on its path to shaping the future of finance and commerce - similar to the internet after the dot-com bubble burst.
Crypto 2022 vs DotCom Bust…
The crypto market saw a major market downturn in 2022, with several players, such as Terra-Luna, BlockFi, Celsius, Voyager Digital, 3AC, and Alameda-FTX, experiencing significant losses. However, is this the end of the cryptocurrency market?
FUD and Negative News 📰
The crypto community often uses the term “FUD” to describe negative news and articles about the crypto industry. FUD stands for “fear, uncertainty, and doubt.”
While this news may start arguments and increase engagement, it rarely provides a complete picture of the industry, often over-exaggerating threats and weaknesses.
Crypto Critics and Their Doubts
Critics of the crypto industry, both in the traditional finance sector and in journalism, are using these negative stories to paint a picture of the industry as a whole.
However, the crypto industry's inevitable growth is hard to deny for anyone who is informed about the industry and its latest products and techniques.
Comparing Crypto to the Dot Com Era 📉
The crypto industry today looks much like the internet industry did after the dot-com bubble burst in 2000. Back then, the internet faced criticism in the media and was often seen as a passing fad or a toy for computer geeks.
However, over time, it evolved into a critical tool for connecting the world and revolutionizing the way we communicate and do business.
From “Failure” to “Shaping the World”
The internet faced numerous challenges and failures, such as the Y2K bug, but it continued to grow and evolve. Similarly, the crypto industry will likely continue to face setbacks, but its potential to shape the future of finance and commerce cannot be denied.
In conclusion, the crypto bubble burst of 2022 may have caused significant losses for some players in the industry, but it is far from the end of cryptocurrency.
The crypto industry has faced and will continue to face challenges, but its growth and impact on the future of finance and commerce is inevitable.
💡 Takeaway: Just like the internet after the dot-com bust, crypto is just getting started. Don't be discouraged by the negative news and failures, as the crypto industry is here to stay and shape the future.
3️⃣ What’s Hot : Cute NFTs are Taking Over the Market 🐧
Several “Cute” NFT collections have been on fire in the recent months. Here’s an analysis of this ‘cuteness boom’
The NFT space has been in a constant state of evolution, with new trends and meta shifts emerging and taking the community by storm. Last spring, the "Ugliness" meta hit the scene with the launch of the goblintown.wtf project.
But, lately, the pendulum has swung back in the other direction, and cute NFTs have been gaining considerable popularity. In this post, we'll take a closer look at what's behind this cuteness boom! 🐧
The Rise of Cute NFTs 🔥
Since October 2022, there has been a surge in buying activity for NFT projects that are considered cute by PFP (Personify Pixel) NFT enthusiasts.
These collections share a few common qualities - adorable art, bright color schemes, playful names, and cheerful communities. While cuteness is subjective, the projects in question have all been experiencing impressive growth lately.
What to Watch for in the Cute NFT Space 🚀
The recent success of the Pudgy Penguins collection has caught the attention of many and has driven significant interest in similarly cute NFT projects.
However, the uptrend in cuteness is not driven by a single project alone - multiple cute NFT projects have been thriving lately, leading to this PFP niche gaining momentum.
While there is no definitive list of cute NFT projects, one could look to Twitter for references to the cuteness meta. Here, you'll find analysts sharing charts of the cute NFT projects they're personally tracking, and some have even created their own indexes.
For example, a hypothetical "CUTE15" index could include the following projects:
Cool Pets 🐾
Cool Cats 🐱
Doodles 🎨
Dooplicators 🌀
Coolman's Universe 🚀
Tubby Cats 🐾
BEANZ 🍫
Finiliar 🐠
Sappy Seals 💦
Pudgy Penguins 🐧
Froyo Kittens 🍦
Froggy Friends 🐸
Chubbiverse Frens 🐶
Kanpai Pandas 🐼
Lil Pudgys 🐧
Conclusion 💡
Cute NFTs have become the latest trend in the NFT space and are making waves with their adorable designs, playful communities, and impressive growth.
While cuteness is subjective, there's no denying that these projects are capturing the hearts of NFT enthusiasts everywhere. Whether you're looking to invest in the next big thing or just want to collect something cute and playful, the CUTE15 (or your own personal list) is a great place to start! 🐧