Opinion: Why Ordinals is a fiat currency scam

The past two years have seen a lot of fruitful activity 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 execute programs via BitVM proofs. These are real innovations in the Bitcoin space, and they are really beneficial to the Bitcoin ecosystem.

But this is 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 fake, stupid, and immoral fiat scams, which are ordinarys. This is not what I like to do, but given the asymmetry of the debate, one side is incentivized to oppose the objective statements of uncapitalized whistleblowers, and it is urgent to pour cold water on the rosy expectations of these people, so I will do it.

For most regular people, the idea of ​​NFTs, unique digital assets, seems pretty clunky on the surface. Whether it’s a jpeg or a short video clip or something else, after explaining the whole concept to people, they ask, “Wait, that’s it? Didn’t I miss something?” I’ve written about NFTs before, and how they’re a scam tool just like altcoins. I even went so far as to say that NFTs are altcoins because they’re an alternative, and the T in NFT means they’re a token. The concept of Bitcoin NFTs or ordinarys is particularly confusing for the average person. Does that mean they’re better or purer than projects on Ethereum or Solana? Not really , but we’re getting ahead of ourselves. Let’s start from the beginning.

1. Trolls are trolls

The whole “craze” started with Rod Armour, who inscribed a skull using a witness discount in late 2022. This wasn’t even really noticed by the network, as it was only 793 bytes, well within the normal transaction size range.

The real push for it was by the Taproot Wizards, a bunch of aggrieved “former” Bitcoin maximalists who wanted to avenge themselves after being humiliated by supporting a bunch of scams like BlockFi, Celsius, and of course FTX. Their intention wasn’t to create a new asset class, they realized that inscriptions were the perfect tool to fill certain blocks with noise in order to get Bitcoiners mad. So they inscribed a 4MB jpeg in early 2023, a new market for angry Bitcoin maximalists opened up, and by August 2023, the number of inscriptions on the Bitcoin blockchain reached 21 million, which is crazy. Although the narrative now is that inscriptions are some new thing “created on Bitcoin,” no one really noticed before.

Also in early 2023, ordinarys appeared, and given the number of degenerate altcoins that would buy and sell just about anything, attention quickly turned to one company. Soon after, BRC-20 tokens appeared, followed by stamps. Trading picked up, and soon, they were showing up on exchanges. They really made a killing, especially from VCs willing to sacrifice the integrity of Bitcoin for a little ROI.

The trolls put on suits and started arguing with Bitcoin supporters, calling themselves a legitimate part of the Bitcoin ecosystem.

2. Ordinals

Ask any ordinarys supporter why they think ordinarys bring benefits to Bitcoin, and they will immediately change the subject to “rights” and “you can’t stop it” and so on. Instead of telling Bitcoin supporters what ordinarys bring, they focus on why the protocol doesn’t stop them . Just like the shoplifters in San Francisco, they don’t bring anything good, so they focus the 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 a car with your foot, but that doesn’t mean it’s a good idea.

That said, they don't really have a good answer. They have terrible answers if you press them though. They give miners money to support them, or they also disrupt other altcoin launch platforms, or they make Bitcoin "fun". All of these are very weak arguments, they don't talk about how their project changes incentives or disrupts currency use cases, which is why they don't argue it 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 Bitcoin?

My beef with NFTs in general is that there is no technical reason for them to be on the blockchain. They are already clearly centralized. They have an issuer. You can't view the ordinal without some other software deciding what it represents. Some other trusted entity decides whether you own the 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 a blockchain? A blockchain is a very large database that holds digital data. It is difficult to develop and scale, expensive to maintain, and difficult to upgrade. So from a purely technical perspective, it doesn't make sense for a centralized project on any blockchain, let alone one on Bitcoin. It's faster, easier, cheaper, and easier to maintain in a centralized database.

Technically speaking, centralized projects are more difficult in every way on the Bitcoin blockchain.

So what is the real reason that Ordinals are on the Bitcoin blockchain? Because there is a huge market for them. Because it is easy to hype them by linking them to the historical success of Bitcoin. Bitcoin represents hope, freedom, self-sovereignty, sound money, and a better world. It is a great and wonderful thing, and even a little association with it can be amazing, just like altcoins have been for the past 13 years. But altcoins have been lethargic for a long time, so Ordinals are a new argument, a new way to sell out old, outdated, failed ideas. In other words, Ordinals are on Bitcoin because the market has become smarter than it used to be, and it is a new way to deceive the market.

4. Prediction of venture capital reaction

Now, ordinarys supporters will no doubt make excuses for why ordinarys need to be on Bitcoin. You can’t manipulate it! Ordinals are less work, but they have real money! Both of these excuses are true. Bitcoin is secured by proof of work, which means that anything embedded in it requires an astronomical amount of hashing power to change. But you don’t need to use Bitcoin to do that. There are timestamp servers, receipts, and backup services, all of which are cheaper and 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 are running an old version? You are not following a centralized “consensus”.

Ordinals, like NFTs and all altcoins, are a glorified spreadsheet that could easily 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 it as something that is “good” for Bitcoin, which is like saying spam helped email adoption.

5. Conclusion

Altcoins have used Bitcoin's hem effect to fool a lot of people over the years. It's getting harder and harder to fool the same people, and in fact, there are only two ways left. The postmodern nihilistic strategy is most fully reflected in meme coins. Altcoins no longer claim to have real world utility. The ship sailed back in 2019. They were forced to turn to meme coins because the market doesn't like being fooled. Meme coins have no utility, they haven't disrupted any industries, they're not innovative, and they have no prospects, but at least they are honest.

Another path is to establish a closer relationship with Bitcoin than other altcoins. It is no longer enough to just be a "cryptocurrency", for scams to work now you have to pretend you are a Bitcoin maximalist.

The actual technical reality of these projects is not new. Colored coins have been around since 2013, as have MasterCoin and Counterparty. But the cultural focus is new. Ordinals, inscriptions, BRC-20, stamps all try to dress themselves up in Bitcoin’s clothing so the public will associate the benefits of Bitcoin with these projects. Of course, the values ​​of these projects are antithetical to Bitcoin. There is no self-sovereignty, financial freedom, decentralization, or any real hope for the future in these projects, just pure gambling. So they borrow the good values ​​from Bitcoin as much as possible.

The word “fiat” literally means something created by decree in English. These new altcoins are, strictly speaking, fiat. They are created by a centralized institution disguised as a decentralized project through an association with Bitcoin.

Meet these new altcoins. Just like the altcoins before them.