For digital assets such as artwork, videos, music files, and memberships, NFT are blockchain tokens that can prove ownership. However, bitcoin developers have been looking for ways to incorporate NFTs and digital collectibles into the original network for some time.
But is this NFT launch of Bitcoin really necessary? In a way, yes. Here’s why:
Currently, Bitcoin only provides minimal support for smart contracts. One impediment to the proliferation of NFTs on Bitcoin is the demand for smart contracts. Smart contracts assign ownership of the NFT’s digital asset throughout the minting process. When an NFT is purchased or sold, the smart contract updates to reflect the ownership change.
Moreover, projects like Counterparty and Stacks were developed to solve this problem; they use a native token for the contract component yet settle transactions on the Bitcoin network.
How Has This Update Sparked Controversy?
Now bitcoin miners (those responsible for processing and validating blockchain data) are happy about the development because it can increase their fees. Still, critics are worried that the resulting increase in trading volume will make it difficult to conduct other types of financial transactions.
The NFTs will be implemented after a significant Bitcoin blockchain upgrade in November 2021. The improvement, dubbed Taproot, was designed to boost the security and speed of the platform, allowing programmers to create Bitcoin-specific apps more easily. That has allowed people to embed information, such as images and texts, into Bitcoin transaction data, making it possible to create an NFT that can be traded and gifted on the Bitcoin network.
However, some Bitcoin community members aren’t too keen on stuffing blocks with JPEGs, movies, or even live video games because they worry that doing so will increase the cost of transactions on the Bitcoin network.
The adoption of NFTs by blockchain, which may cause a bottleneck for other transactions on the platform, will highly impact the NFT creators and other marketplaces, especially concerning web3 companies that rely heavily on NFTs like Ommniverse, wowTalkies, SleepBe, etc.
The CEO of a crypto infrastructure firm, Adam Back, also called in his tweet the markings “the sheer waste and stupidity of an encoding.” He stated in his tweet:
“you can’t stop them” well ofc! Bitcoin is designed to be censor resistant. It doesn’t stop us from 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.
Conclusion:
Despite the debate, Ordinals is a major step forward in the search for NFTs on Bitcoin because it does not necessitate a sidechain, layer-2 solution, or similar, nor does it necessitate a second cryptocurrency.
Even though Bitcoin still has the largest market cap, developers are exploring new ways to leverage Bitcoin’s decentralized network. Examples like Ordinals and others show this.
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