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Bitcoin Ordinals

Proposed Changes to the Bitcoin Ordinals Numbering System: A Walkthrough

Should inscription numbers be unstable? According to the Ordinals creator, maybe so.
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Ordinals Proposed Number System Changes
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Earlier this year, Casey Rodarmor introduced the concept of Ordinals, a protocol giving every satoshi, Bitcoin's smallest unit, its own unique number based on its mining sequence. This numbering system, termed 'Ordinal theory', enables the consistent tracking of satoshis, ensuring that their ordinal number remains constant even with wallet transfers. 

Adding to this is the concept of "Bitcoin Inscriptions." By leveraging the capabilities of Bitcoin's recent soft fork upgrades - Segregated Witness (SegWit) and Taproot - inscriptions enable the infusion of diverse content into satoshis, creating what's known as 'digital artifacts'. While these inscribed files bear semblance to Bitcoin NFTs (and have frequently been referred to as such), they reside directly on the Bitcoin blockchain as Bitcoin transactions, devoid of side chains or external tokens. Contrarily, non-fungible tokens (NFTs) often hinge on smart contracts and centralized blockchains, storing content off-chain. This distinction marks digital artifacts as on-chain, decentralized treasures, epitomizing the essence and security of the Bitcoin network.

Bitcoin Ordinals by the Numbers

The concept of inscribing Ordinals first began in late 2022, but truly started to gain the attention of those in the Bitcoin and wider crypto and Web3 community by February 2023. Since then, the total count of inscriptions has exceeded 34 million, with the all-time high daily number of inscriptions surpassing 440K as recently as September 15. 

In the earlier stages of the Ordinals protocol and Ordinal theory, inscriptions were largely dominated by images. This gave rise to Ordinals collections like we know them with NFTs on Ethereum mainnet. For example, a collection named Bitcoin Punks has amassed over 700 BTC in global transaction volume, with some fetching more than 1 BTC per individual Ordinal. Since then, the majority of daily inscriptions have shifted to text.

In terms of economic impact, since its inception, Ordinals have generated a staggering 2110 BTC or approximately $55M USD in fees for Bitcoin miners. In the last 30 days alone, there were 178 BTC in fees as a result of Ordinals. For the Bitcoin community, this increase in fees generated by the network is a welcomed change.

Ordinals Numbering System

Every satoshi mined receives a unique order-based number, akin to a vehicle's serial number, allowing for precise identification and tracking of Ordinals. Beyond just tracking, this distinct numbering has spurred a fascination for collecting Ordinals with rare numbers. Enthusiasts, for instance, are especially drawn to Ordinals that hold numismatic value, like the inaugural sat in a block or during a halving epoch.

Current System

The initial design of the protocol emphasized the stability of inscription numbers associated with Ordinals, a choice made based on limited experience. Stability here refers to an Ordinal number staying the same in perpetuity. As the system evolved, it became evident that maintaining such stability was more intricate than anticipated. The challenges ranged from appropriately numbering multiple inscriptions in a single transaction to managing inscriptions on identical satoshis and those with even fields.

To address these complexities, the community innovatively introduced "cursed inscriptions." This mechanism assigns a negative number to any inscription that an older protocol version wouldn't recognize, thereby preserving the stability of pre-existing inscriptions while still allowing the identification of new ones. This adaptive approach underscores the community's commitment to evolving and optimizing the system in response to unforeseen challenges.

The cursed inscriptions method, while ingenious in preserving recognition of older inscriptions and accommodating new ones, introduced its own set of challenges. The use of negative numbers for these inscriptions distorted the clarity of the order in which they were made. Furthermore, the logic employed to monitor cursed inscriptions became a potential hotspot for bugs and inaccuracies. The concept of "blessing" these inscriptions—reverting them from their negative status after a specific block height—is not straightforward. It demands substantial coordination, highlighting the complexities inherent in ensuring both adaptability and consistency within the system.

Proposed Changes and Reactions from the Bitcoin Community

Casey has put forth a series of amendments in light of the aforementioned challenges. Central to this proposal is the idea of rendering inscription numbers perpetually unstable and retroactively blessing all cursed inscriptions, a practice that would also continue into the future. Implementing these modifications is expected to streamline the ord codebase, paving the way for smoother protocol alterations down the line and other potential use cases. However, it's essential to acknowledge the implications of this shift. While the change in inscription numbers would be minimal, roughly a 1% deviation, it's significant to collectors who have attributed considerable value to ordinals boasting distinctive numbers.

The community has voiced diverse opinions regarding the proposed changes. While some, like Coinyeezy, believe the alterations might not bring about significant benefits to warrant the efforts needed, suggesting that maintaining the status quo could be just as effective. Others, including Jokie88, express concerns about the unpredictability of the modifications, especially for those invested in the unique numbering of Ordinals. Still, there is a large portion of the community that supports these proposed changes. The reasons for their support include emphasizing the potential advantages in efficiency, organization and the overall sustainability of the protocol. 

The array of reactions within the community underline the multifaceted nature of the debate. While the intent behind the proposals—to enhance the ord codebase and facilitate future protocol evolutions—is clear, the repercussions, especially concerning the stability of inscription numbers, cannot be overlooked. Collectors, who place significant value on unique ordinal numbers, are particularly affected and voices in the community caution against potential downsides, emphasizing the viability of the current system. Conversely, other figures in the community highlight the uncertainty the changes might usher in, stirring anxiety among many stakeholders. Yet a notable segment of the community champions the proposed modifications, pointing to the potential strides in efficiency, structure, and long-term viability of the protocol. Amidst these varied perspectives, one thing remains certain: the fate of Ordinals will be determined collectively, with the community's consensus playing a pivotal role in guiding its trajectory.

The Evolving Discussion

The discussion on the ordinals numbering system has evolved, with recent discourse also encompassing the addition of sequence numbers and the refactoring of inscription parsing through PRs. Many in the community have raised concerns about these PRs being integrated into the core protocol with little prior notification. In response, Casey has clarified that these PRs, contrary to some assumptions, do not aim to phase out inscription numbers. Instead, they strive to enhance the system, potentially even preserving the status quo of inscription numbers.

PR #2461, named 'Refactor Inscription Parsing,' seeks to distinctly separate the processes of detecting inscriptions from that of interpreting them. This differentiation ensures that any modifications to the parsing mechanism won't inadvertently alter the detected inscriptions, thereby offering a robust foundation for maintaining the stability of inscriptions.

Conversely, PR #2460, labeled 'Add Sequence Number,' proposes a shift in the indexer to prioritize sequence numbers over inscription numbers. While initially, this may appear as a step towards the elimination of inscription numbers, Casey elucidates that this change solidifies the argument against making inscription numbers unstable. As things stand, using unstable inscription numbers as primary keys, especially in the presence of negative values, complicates orderly data presentation. To circumvent this, PR #2460 suggests confining the role of inscription numbers to display purposes on inscription pages, while sequence numbers would handle internal organizational operations.

However, this proposition has been met with some pushback. Some community members argue that the coexistence of sequence and inscription numbers might confuse users. They also express concerns about the potential devaluation of current inscription numbers in the eyes of collectors, with the key argument being that two sets of ordering schemes may fragment the community. Overall, the multifaceted views on these proposed changes will most definitely result in continued spirited discussions within the community.

Addressing Today's Challenges with Ordinal Inscriptions

The concept of "Ordinals" in the Bitcoin ecosystem, introduced by Casey Rodarmor, has undeniably captivated the crypto community. This unique approach to tracking and inscribing sats has not only offered a novel perspective on the utilization of Bitcoin's base layer but has also sparked significant economic and social engagement, including about Bitcoin and its capabilities as a digital asset. The rise of 'digital artifacts' through inscriptions, distinct from traditional NFTs, showcases the decentralized potential and security inherent to Bitcoin's blockchain. 

As the protocol matured, the challenges faced in managing inscriptions culminated in innovative solutions such as "cursed inscriptions." Casey's recent proposals, aiming to address these challenges, highlight the dynamic and responsive nature of the community as it grapples with balancing tradition and progress. Despite the varying community opinions, from skepticism to staunch support, the collective focus remains clear: to refine, enhance, and ensure the future sustainability of the Ordinals system, keeping the essence of Bitcoin at its core.