New Bitcoin NFTs Cause Rift in Community

Bitcoin is now home to NFTs, and not everybody is happy about it.

The NFTs, known as “Ordinals”, were officially launched by software engineer Casey Rodarmor on January 21st.

The Ordinals enable the existence of “digital artifacts” (a fancy word for NFTs) on the bitcoin blockchain. These digital artifacts can be JPEG images, PDFs, videos, or audio recordings.

It’s a pretty cool and definitely a novel use of bitcoin, but it is also extremely controversial.

The Ordinal Bull Case

On the one hand, we have those who like Ordinals. These people believe that Ordinals are good for bitcoin because it gives bitcoin another use-case and drives more demand for block space, earning the protocol more fee revenue.

It’s a sound argument.

Bitcoin, as it stands, doesn’t exactly rake in fees. This is a problem because fees are how miners will be paid until all 21 million bitcoins are mined. If these fees can’t cover the lost revenue from the bitcoin emissions, then it’s likely that miners will stop securing the network, which would leave bitcoin vulnerable to an attack.

So, if we want to keep bitcoin safe, it needs to start earning some damn fees. Projects like Ordinals just could be the key.

The Ordinal Bear Case

Needless to say, the fee argument isn’t compelling to those who aren’t fans of Ordinals.

These people argue that NFTs are a waste of bitcoin blockspace.

The theory is that because fees are more expensive when the blockspace is congested, these NFTs are pricing out people from using bitcoin for what it was meant to do, sending payments.

This debate over how to use the bitcoin blockspace is nothing new. The most famous example is the 2015-2017 blocksize wars, in which the bitcoin community was split over how large bitcoin blocks should be. Ultimately, the people who favored keeping the blocks small won out, leading the large blockers to create Bitcoin Cash.

Overall, it was a pretty similar situation to the current debate over Ordinals and block space.

So, Who Is Right?

Honestly, it’s hard to say.

To date, bitcoin hasn’t found enough success as a currency to earn the fees necessary to pay its security budget. Will this happen in the future? Maybe, but right now, this is an existential risk to bitcoin.

However, one of bitcoin’s great strengths is the community’s devotion to its original mission of providing the world with permissionless and censorship-resistant money.

On the one hand, this is one of the most exciting and controversial things to happen to bitcoin in quite some time. On the other, it may be an illegitimate use of a technology that should be used to democratize money.

We’re excited to see what the bitcoin community ultimately decides.