💰Do you want a chance to win 100,000 sats (~$28 in BTC), paid straight into your wallet? Entry is easy so don’t miss your chance to win!💰
The Ordinals protocol is a new way to store data on the Bitcoin blockchain. It uses a loophole in the Taproot upgrade to allow users to store any type of data, from pictures and videos to PDFs, as long as it doesn't exceed the maximum block weight.
This development has some people concerned that it will clog the Bitcoin network and make it too expensive to use for financial transactions. However, I believe that Ordinals are unlikely to pose a serious threat to Bitcoin's ability to function as a global monetary network:
- Ordinals are a niche use case. Most people who use Bitcoin will be interested in using it for financial transactions, not for storing data.
- The cost of using Ordinals is likely to be high. The Bitcoin network is already congested, and the cost of transactions is already high. Adding the ability to store data on the blockchain is likely to make transactions even more expensive.
- There are other, more efficient ways to store data. Normal data centers benefit from economies of scale in ways that a decentralized network simply can’t compete with. So Bitcoin’s one-of-a-kind decentralization will be used for its most high value proposition, which I believe is as money.
I believe that Ordinals will be used by a small number of people who are willing to pay the high cost of storing data on the Bitcoin blockchain. However, in the long run, I believe that Bitcoin's value will come from its ability to be used as a decentralized, uncensorable form of money.
Ordinals may be a fun novelty, but they’re unlikely to have a major impact on Bitcoin's long-term value or use case.
Subscribe to The HiFi Bitcoin Letters to get the latest news about Bitcoin and the people, groups, and businesses that build on top of it!
