Cryptocurrencies February 13, 2023
‘Ordinals Sparked a Fire for Bitcoin NFTs’ but Hardliners Scream Bloody Murder
Ordinals “sparked a fire” for NFTs built on Bitcoin, according to Stacks founder Muneeb Ali. However, fundamentalists criticized the protocol as an affront to Bitcoin’s founding ethos of facilitating peer-to-peer financial transactions.
Software engineer Casey Rodarmor launched Ordinals on the Bitcoin mainnet on January 21. The new protocol uses what he calls “inscriptions” to create and store NFTs on the network. Ordinals are created by embedding things like text, audio or images on the Bitcoin blockchain.
Rodarmor said the inscriptions are made on the smallest Bitcoin unit known as “satoshis”, or “sats,” to create unique and “true digital artifacts [that are] decentralized, immutable, always on-chain, and native to Bitcoin.” The NFTs can be held and transferred across the network.
Inscriptions are finally ready for Bitcoin mainnet.
Inscriptions are like NFTs, but are true digital artifacts: decentralized, immutable, always on-chain, and native to Bitcoin. 🧵https://t.co/a4dK7zdITS
— Casey Rodarmor (@rodarmor) January 20, 2023
Ordinals divide Bitcoin community
The Bitcoin community is split as to whether the Ordinals are well suited for the network. Bitcoin fundamentalists argue that any use of the blockchain outside of financial transactions detracts from the original vision of the pseudonymous Bitcoin founder Satoshi Nakamoto.
They also say the “digital artifacts” could lead to congestion on the Bitcoin network as the new NFTs compete with normal financial payments for block space. This will push up the cost of sending a transaction over the blockchain.
Also read: Hermes’ Win in MetaBirkins NFT Lawsuit Could Spell Disaster for Metaverse Economy
Prominent Bitcoin core developer and Blockstream CEO Adam Back, at one time considered a potential Satoshi (an honor he denied), described Ordinals as “crap” and urged miners to censor the NFT-like items as a “form of discouragement.” That tweet was later deleted.
In yet another tweet he spoke of Bitcoin’s censorship-resistance. But also stated that, “does not stop us mildly commenting on the sheer waste and stupidity of an encoding. At least do something efficient. Otherwise it’s another proof of consumption of block-space thingy.”
In 2010, Satoshi Nakamoto responded to a question on whether Bitcoin should be used for non-financial purposes with an emphatic “No”.
Muneeb Ali, founder of Bitcoin open-source smart contract platform Stacks, is convinced that more improvements should come to Bitcoin.
“Ordinals sparked a fire for Bitcoin NFTs,” Ali wrote on Twitter. “sBTC can do this for Bitcoin DeFi (decentralized finance),” he added, referring to the synthetic Bitcoin token enabled by the Synthetix protocol. “We’re witnessing a revival of Bitcoin builders culture; you love to see it.”
Ordinals sparked a fire for Bitcoin NFTs; sBTC can do this for Bitcoin DeFi.
We’re witnessing a revival of Bitcoin builders culture; you love to see it.
— muneeb.btc (@muneeb) February 10, 2023
Utilizing the Bitcoin Taproot upgrade of 2021, Casey Rodarmor emphasized that his Ordinals protocol posed no threat because it does not require “any changes to Bitcoin” to create a non-fungible token on the network.
The Bitcoin Core network activated Taproot in November 2021, its first major upgrade since the Segregated Witness upgrade in 2017. It is an attempt to catch up with developments happening elsewhere within the crypto industry.
Scaling the Bitcoin network
There has always been questions on how Bitcoin would handle huge traffic if non-fungible tokens and other decentralized applications launched on the network. Writing on Github, developer Danny Huuep said there are “ways to do [Bitcoin] NFTs on-chain in a scalable way.”
“Generative NFTs can create a rich set of NFTs at very small data sizes. These type of NFTs can be great for scalability of NFTs on Bitcoin. For example, OnChainMonkey launched 10k images with Ordinals using less than 20,000 bytes, so it cost only 2 bytes/image,” he said.
Ali, a Bitcoiner since 2013, has previously criticized Bitcoin hardliners, blaming them for the cryptocurrency’s failure to develop as a “productive asset”. He argued BTC needed a new strategy to attract more developers and encourage new functionality layers for scalability.
The computer scientist spoke of how stablecoins like Tether (USDT), which at a certain point utilized the Omni-layer on Bitcoin, had migrated to other blockchains, particularly Ethereum, which now accounts for the bulk of Tether’s “economic activity.”
In addition, Ali pointed out that NFTs started on Bitcoin via peer-to-peer financial platform Counterparty, “and now almost all of the non-fungible token economic activity is on Ethereum and others.” Ali said at the time:
“We need a strategy to attract more developers and encourage new functionality layers for smart contracts or scalability, for example. Instead, the maximalist circles make fun of every new use-case in the crypto industry. Betting against devs is not what bitcoiners used to do.”
Ali pointed to his own project Stacks, and the Lightning Network as “few exceptions” of venture capitalist-funded projects toward improving functionality on the Bitcoin network, but growth continued to lag other competing blockchains.
What drives the value of Ordinals?
The Ordinals protocol has its roots in the ordinals mathemetical numbering theory and system. It allows tracking and transferring of individual satoshis, the native currency of the Bitcoin network.
Satoshis stand out because they are numbered in the exact order they are mined and are normally transferred from transaction inputs to transaction outputs on a first-in-first-out basis.
“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,” said Ordinals creator Rodarmor.
The Ordinals are underpinned and inspired by evidence that humans are natural collectors. As NFTs, the satoshis feed the appetite by providing rare assets and collectibles. Since satoshis are trackable and transferable, they will be collectable.
The value of the satoshis will be linked to key Bitcoin periodic events that are considered frequent, uncommon, and rare.
The Sandbox Unites with Ledger to Boost Metaverse Security
The Sandbox, one of the most patronized decentralized virtual worlds, recently announced that it has teamed up with Ledger Enterprise, a company whose infrastructure solutions safeguard businesses’ crypto assets. As part of the deal, Ledger will provide security integration to all of The Sandbox’s enterprise brand partners.
An ongoing collaboration
The alliance will enable brands to easily and simply secure their LAND, virtual parcels digital real estate within The Sandbox metaverse. LAND allows game designers create digital experiences such as dioramas or games and populate them with assets.
What’s more, enterprise brands will be able to secure wallets that house their Sandbox NFT collections. To be more specific, brands can add The Sandbox as a decentralized application (dApp) on Ledger Enterprise.
Additionally, users of Ledger’s live desktop application will see the integration of a widget for the Sandbox. The Sandbox will recommend Ledger Enterprise to clients, while Ledger returns the favor by recommending The Sandbox to those interested in breaking into the possibilities of the metaverse.
We are partnering with @ledger_business to enhance security for enterprises in the #metaverse! 🔒
Bringing scalable security and treasury management to #TheSandbox, and allowing for seamless integration for brand partners.#LedgerEnterprise @Ledger pic.twitter.com/WELaF0MiXm
— The Sandbox (@TheSandboxGame) March 23, 2023
Lastly, with crypto hacks soaring by 15% from 2021 ($3.3 billion) to $3.8 billion in 2022, the alliance with enable clients to migrate all Sandbox NFT collections to a secure Ledger Enterprise wallet that benefits from additional security.
The latest collaboration between The Sandbox and Ledger comes seven months after the two firms partnered to develop “Ledgerverse” in August 2022.
Ledgerverse was created to educate people about the need for crypto security education, with detailed content on how users of the entire DeFi sector can protect their wallets from cybercriminals.
Tommy Hilfiger partners with the Sandbox
On March 28, Tommy Hilfiger announced via its verified Twitter handle that it has teamed up with several metaverse-related firms including Roblox and The Sandbox. According to the post, this will bring the brand’s lifestyle into multiple digital communities.
The Sandbox remains one of the most sought-after digital collections in the market. As of 09:30 UTC on March 29, the project’s highest seven-day sales ranged from $2,000 to $5,000 despite a sharp decline in the total number of sales, data from Nonfungible.com showed.
Sandbox token up over 60% this year
Unlike other metaverse tokens that have seen mild gains in 2023, SAND is one of the cryptocurrencies that has brought multiple percentage returns to its holders.
Following the market rebound earlier in the year, SAND soared by 114% to a yearly high price of $0.9365 on February 8 after opening the first day with a trading price of $0.3831 amid a substantial rise in investor demand.
As of 09:30 UTC on March 29, SAND was exchanging hands for $0.6455. Overall, this brings the SAND gains year-to-date (YTD) to 68%, data from crypto price tracker CoinMarketCap showed.
Disney Dismisses Metaverse Division, Polygon Feels the Heat
Disney has announced that it is abandoning plans to explore the metaverse, and the news has vibrated through many parts of the Web3 industry including cryptocurrencies.
The animator, together with major fashion brands (Gucci, Louis Vuitton, Rolex, Yves Saint Laurent and Nike), automotive companies Mercedes-Benz and BMW, and fellow media company Warner Brothers, are the pioneer companies that have filed for NFT and metaverse trademarks with the United States Postal and Trademark Office (USPTO).
According to the Wall Street Journal, around 50 employees in Disney’s metaverse division have been dismissed. The layoff in the AR and VR-powered division represents a modest fraction of the company’s downsizing that will see about 7,000 lose their jobs.
While the mass media, multinational, and entertainment conglomerate has been experimenting with several technologies under the metaverse banner, including producing AR films, creating virtual stores, and integrating blockchain technology, the slow adoption of the virtual world has made the sector largely unprofitable for Disney and other firms.
The latest development has not just affected Disney employees. Stakeholders of the crypto economy, particularly Polygon (MATIC) holders, have also seen a substantial reduction in their portfolios amid the layoffs.
Polygon (MATIC) is down by 12% in March
In July 2022, Polygon was selected along with Red 6, Obsess, Lockerverse, Inworld, and Flickplay as the six participants for Disney’s Accelerator Program.
The Program came with a vision of building the future of immersive experiences with a primary focus on artificial intelligence (AI) characters, NFTs, and ARs.
As an integral part of the NFT industry, Polygon ranks 5th on the log of blockchains by all-time NFT sales volume with approximately $764 million from 1.05 million buyers involved in over 6 million transactions.
Disney’s association with Polygon at the time led to a 94% spike in the price of MATIC after opening and closing the month with trading prices of $0.4781 and $0.9283 respectively.
The opposite reaction has been felt in MATIC’s price due to the layoffs. MATIC is down by 12% in March after opening the month strongly at $1.1952 and declining to $1.0470, as of 09:30 UTC on March 28.
NFT and metaverse trademarks continue to be filed
According to USPTO data shared by licensed attorney Mike Kondoudis, a large number of companies have filed NFT and metaverse trademarks.
At a glance, these include Wynn Resorts, Seattle Mariners, Houston Astros, Boston Red Sox, FUJITSU, Nissan, Fallout, Lucasfilm, Samsung, Shutterstock AI, Grammarly, Amazon, Lacoste, and General Motors (GM).
Other firms to have explored opportunities via trademarks are Walmart, Sports Illustrated, Death Row Records, American Music Awards, and Disney. The latter’s latest application is for the new Marvel television TV show.
Bitcoin NFT Marketplace Launches on Magic Eden
A fully-audited marketplace for Ordinals NFTs is now available on Magic Eden. Through the popular platform, NFT traders will be able to list, buy and sell over 70 Ordinals collections, with Magic Eden also integrating support for Bitcoin wallets Hiro and Xverse.
Bitcoin NFTs reach Eden
“Ordinal digital artifacts exist on-chain, never off-chain, and are totally immutable, meaning they cannot be altered in any way,” said Magic Eden.
“Add the security aspect of BTC & the decentralization of its nodes, and you get the ultimate home for true digital collectibles.”
Ordinals has been quite the hit since it was introduced in January by Bitcoin core contributor Casey Rodarmor. The protocol effectively lets users ‘inscribe’ imagery, text and even video games onto individual satoshis, turning currency into NFTs.
According to Dune Analytics there have been 571,384 inscriptions as of March 22, equating to over 107 BTC ($3m) in fees.
Magic Eden, which was valued at $1.6bn last June, now supports trading of NFTs tokenized on the Bitcoin network, Solana, Polygon and Ethereum. The most popular Ordinals collection at the time of writing is BTC DeGods, with a floor price of 1.033 BTC. The collection previously lived on Solana and the public mint on Bitcoin sold out in just three minutes.
This BTC DeGod just sold for 3.52 BTC ($100,000). pic.twitter.com/RxkREokVFb
— Frank (@frankdegods) March 22, 2023
Instead of smart contracts, Magic Eden will facilitate permissionless swaps of Ordinals using partially signed Bitcoin transactions (PSBT) as the core technology. The platform also revealed that it will open source its PSBT signing library to help builders new to the space.
As for royalties, the marketplace acknowledged that “there is very little tooling and no secure and trustless enforcement solutions” in the current ecosystem. Consequently, Ordinals will launch with no royalty support for the time being.
The company confirmed it was “actively looking into the development of an on-chain, permissionless royalty standard” and is “committed to working with creators and the greater community.”
Magic Eden isn’t the only show in town: another NFT marketplace, Gamma.io, has launched its own trustless marketplace complete with a no-code creator launchpad and API infrastructure. In its March 20 press release, Gamma said it had already “assisted creators in producing over 30,000 inscriptions on Bitcoin.”
Other Ordinals marketplaces, such as ORDX and Generative XYZ, have spun up, give traders even more options to participate in the evolving BTC NFT ecosystem.
BTC NFTs: Good or bad for Bitcoin?
The arrival of BTC NFTs has caused some division in the Bitcoin community. While proponents argue that Ordinals brings more financial use-cases to Bitcoin and drives up demand for block space, others are uncomfortable about the financial degeneracy of NFT flipping arriving on the network.
One member of the latter camp is Bitcoin core developer and Blockstream CEO Adam Back, who referred to the “sheer waste and stupidity of an encoding” back in January.
Despite the polarization, Ordinals has been one of the most-talked about NFT projects of the year so far. And fears of skyrocketing transaction fees have proved somewhat unfounded – daily fees peaked in mid-February and haven’t come close to returning to those levels.
Although various media can be embedded in satoshis, including apps, videos, and audio, the vast majority of inscriptions thus far have been text or images, such as memes.
According to Magic Eden, its launch of an Ordinals marketplace “contributes to the culture of trust, security, and decentralization that is synonymous with the blockchain” and remains “true to the principles that underpin the technology.”
Don’t expect the arguments to die down anytime soon. In the meantime, coveted Ordinals NFTs will continue trading hands for appreciable sums. While it’s early days for the project, it shows no signs of slowing down.
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