Opinion: Why Ordinals is a fiat currency scam

Author: Jimmy Song, Bitcoin Core developer; Translation: Golden Finance 0xxz

The past two years have seen a series of productive activities in the Bitcoin space. Taproot brings many new and interesting possibilities, from Schnorr signatures enabling smaller on-chain Lightning channel transactions to TapScript Merkle trees bringing innovative ways to prove program execution through BitVM. These are real innovations in the Bitcoin space, and they are really beneficial to the Bitcoin ecosystem.

But that’s not the whole story of Bitcoin over the past two years. As much as I want to write about real innovation, I have to deal with the false, stupid, unethical fiat scams that are ordinarys. It’s not something I enjoy doing, but given the asymmetry of the debate, where one side is incentivized to oppose the objective rhetoric of unfunded muckrakers, and the urgent need to pour cold water on these people’s rosy expectations, I’m here to do it. .

For most ordinary people, the idea of ​​NFT, a unique digital asset, seems rather unwieldy on the surface. Whether it's a jpeg image or a short video clip or something else, after explaining the whole concept to people, they'll ask, "Wait, is that just that? Did I miss something?" I've written about NFTs in the past, explaining them How it became a scam tool like altcoin. I even think NFTs are altcoins because they are a substitute, and the T in NFTs shows that they are a token. For ordinary people, the concept of Bitcoin NFTs or ordinals is particularly confusing. Does this mean they are better or purer than projects on Ethereum or Solana? Not reallybut we were a little ahead of our time. Let's start from the beginning.

1. Trolls are trolls

The whole "craze" started with Rod Armor, who used the witness discount to engrave a skull at the end of 2022. This isn't even really noticed by the network, as it's only 793 bytes, well within normal transaction sizes.

What’s really driving it is the Taproot Wizards team, a group of aggrieved “ex” Bitcoin maximalists who were humiliated after supporting a bunch of scams like BlockFi, Celsius, and of course FTX, I want to avenge my shame. Their intention was not to create a new asset class, they realized that Inscription was the perfect tool to flood certain blocks with noise, with the aim of making Bitcoiners angry. So they inscribed a 4MB jpeg in early 2023, a new market opened up that made Bitcoin maximalists angry, and by August 2023, the number of inscriptions on the Bitcoin blockchain reached 21 million, which is crazy. Although the current narrative is that the inscription is something new "created on top of Bitcoin," no one has really noticed this before.

Also in early 2023, ordinals emerged, and attention quickly turned to one company given that there were many corrupt altcoins buying and selling just about everything. Soon after, BRC-20 tokens appeared, followed by stamps. Trading was active and soon they were appearing in trades on various exchanges. They do make a fortune, especially from VCs who are willing to sacrifice Bitcoin's integrity for a little ROI.

Trolls put on suits and started arguing with Bitcoin supporters, calling themselves legitimate members of the Bitcoin ecosystem component.

2. Focus on Ordinals

Ask any ordinals supporter why they think ordinals will bring benefits to Bitcoin, and they will immediately change the topic to " rights” and “you can’t stop it” and so on. Instead of telling Bitcoin supporters what the ordinals brought to the table, they focused on why the protocol didn't stop them. Like the shoplifters in San Francisco, they don't bring anything good, so they focus their discussion on how no one can stop them from doing what they want. Of course, just because you can do something doesn't mean you should do it. To paraphrase Chris Rock, you can drive with your feet, but that doesn't mean it's a good idea.

In other words, they don’t have a good answer. But if you press them, they give terrible answers. They give miners money to support them, or they disrupt other altcoin launch platforms, or they make Bitcoin “interesting.” All of these are very weak arguments, and they don't talk about how their projects change incentives or undermine monetary use cases, which is why they don't defend them often. What they want to discuss is that they "can" inscribe or place ordinals or stamps on the Bitcoin blockchain, which as mentioned above is very confusing.

3. Why on Bitcoin?

In general, my dissatisfaction with NFTs is that there is no technical reason for them to appear on the blockchain. Their degree of centralization is already evident. They have issuers. You can't view an ordinal without other software deciding what it represents. Other trusted entities decide whether you have ordinal. If they change the rules in the future, you're out of luck. They are no different in terms of centralization than the forgotten altcoins of 2011.

So, if they are centralized, why are they on the blockchain? Blockchain is a very large database used to store digital data. It is difficult to develop and extend, expensive to maintain, and difficult to upgrade. Therefore, from a purely technical perspective, it makes no sense to have a centralized project on any blockchain, let alone one on Bitcoin. It's faster and easier, cheaper and easier to maintain in a centralized database.

Technically speaking, centralized projects become more difficult in every aspect on the Bitcoin blockchain.

So , what is the real reason why Ordinals appear on the Bitcoin blockchain? Because there is a huge market. Because it’s easy to hype it by tying it to Bitcoin’s historical success. Bitcoin represents hope, freedom, self-sovereignty, sound money and a better world. It's a great and wonderful thing, and even having a little connection to it would be awesome, just like altcoins have been for the past 13 years. But altcoins have been dormant for a long time, so ordinarys are a new argument, a new way to sell old, outdated, failed ideas. In other words, ordinarys appeared on Bitcoin because the market has become smarter than in the past, and it is a new way to deceive the market.

4. Prediction of venture capital reaction

Now, ordinals supporters will undoubtedly make excuses for why ordinals need to be in Bitcoin. You can't manipulate it! Ordinals have less work but real money! Both excuses are true. Bitcoin is secured via proof-of-work, meaning anything embedded in it requires astronomical amounts of hashing power to change. But you don’t need to use Bitcoin to do this. There are timestamping servers, receipts, and backup services, all of which are cheaper but provide the same service without bloating the Bitcoin blockchain. The Bitcoin blockchain offers no real protection. You have to use other software to figure out whether you have an ordinal or an inscription or something else. This software can change the rules at any time, just like all altcoin software. These software are generally not backwards compatible. So what if you're running an older version? You are not following a centralized "consensus".

Ordinals, like NFTs and all altcoins, are a glorified spreadsheet that can easily be run on a $500 website while providing cryptographic proof that it has not been manipulated. Likewise, the only reason ordinals are on Bitcoin is to create more demand by marketing them as something "good" for Bitcoin, which is like saying spam helps email adoption.

5. Conclusion

Over the years, altcoins have used the coattails effect of Bitcoin to deceive many people. It's getting harder and harder to deceive the same people. In fact, there are only two ways left. Postmodern nihilistic strategies are most fully reflected in meme coins. Altcoins no longer claim to have real-world utility. The ship returned in 2019. They are forced to switch to meme coins because the market doesn't like to be scammed. Meme coins have no utility, they don’t disrupt any industry, they have no innovation, and they have no future, but at least they are honest.

Another path is to develop closer ties to Bitcoin than other altcoins. It’s no longer enough to be a “cryptocurrency”, for scams these days you have to pretend you’re a Bitcoin maximalist.

The true technical realities of these projects are not new. Colored coins have been around since 2013, as have MasterCoin and Counterparty. But the cultural centerpiece is new. Ordinals, Inscriptions, BRC-20, and stamps are all trying to put themselves in the clothes of Bitcoin, so the public will associate the benefits of Bitcoin with these projects connect together. Of course, the value of these projects is antithetical to Bitcoin. In these projects there is no self-sovereignty, financial freedom, decentralization or any real hope for the future, just pure gambling. So they borrow as much good value from Bitcoin as possible.

The word "fiat" in English literally means to create something by decree. Strictly speaking, these new altcoins are fiat currencies. They are created by a centralized body masquerading as a decentralized project through association with Bitcoin.

Let’s meet these new altcoins. Just like altcoins before.