⚠ About real and fake NFTs
For some time now, the “ordinals” pandemic has been hitting the NFT space, leading to an irrational rush for fake NFTs and technically ending in a long-lasting attack on the Bitcoin network. Once more the question arises about real and fake NFTs and the technical solution of writing hexadecimal raw data to the blockchain
While Bitcoin was created to liberate finance, Namecoin was created to liberate the Internet, as the very first fork of Bitcoin back in 2011,
in cooperation with Satoshi Nakamoto to draft the concept of a decentralized DNS. A blockchain that stores data immutably on-chain that can be accessed from anywhere in the world, with write access secured by Bitcoin's cryptographic functions. Now, about a decade later, the entire NFT community has been hit more and more by a long-term marketing strategy called “Ordinals”, promising
non-fungible assets (NFTs) on the Bitcoin blockchain.
Downright a kind of ordinals pandemic came over the crypto community and countless “inscriptions” were bursting
the 300 MB limit of the standard Bitcoin mem-pools, “bribing” the miners with exorbitant high fees. As consequence, thousands of regular Bitcoin transactions had to wait even days to be confirmed. It generally deals with the technical, legal and/or ethical question how the recipient of a transaction could gain ownership of a transaction's input, which technically belongs to the previous transaction output. So somehow (in abuse of the
Taproot-features) a third hex string is written to the witness data field of the transaction's input (at position 2) where the payload data is placed. This way, the Bitcoin blockchain is abused as a distributed data storage. But, in comparison e.g. to Namecoin, this is not an asset. Even if it were considered a cryptographic asset, it would not be unique because it can be written to the blockchain countless times in subsequent transactions. Even assigning quadrillions of illusory 1-sat “serial numbers” (“ordinals”) to Bitcoin's transaction stream does not make these data non-fungible, transferable or in any way financially valuable.
The key/value pairs of the Namecoin assets, on the contrary, are unique and their data is written generally to the transaction's output. So the owner of a Namecoin asset obtains the real cryptographic ownership of the spendable and transferable output. The community member Leonidas recently
proudly announced to have bought ordinals inscription #53, assuming to have somehow obtained ownership of Satoshi Nakamoto's very first original Bitcoin logo. Therefore he paid 57 ETH. Unfortunately, in fact Leonidas didn't “buy” Satoshi's original. What he “bought” is nothing more than
a single layer copy in .png format of the original Windows icon (see
the 4 kB hex data of his“inscription” starting with
2024e951...). In comparison the hex-data of the first data snippet of the real Bitcoin icon, Namecoin NFT
nft/Bitcoin.ico.000.part (starting with
00000100...), live from the blockchain:
The Windows icon from the Bitcoin v. 0.1.1 Alpha release is in fact a multilayer icon in .ico format with 16/32/48 px 8 bit/32 bit colors, see here the cryptographically real NFT
nft/Bitcoin.ico on the Namecoin blockchain with the real Bitcoin icon:
Of course, the “Ordinals” project would most likely not even be able to write these data formats to the blockchain. So in summary, someone created a Bitcoin transaction worth $2.50 USD and received incredible $86,000 USD for it three weeks later. This was just one example of thousands and it's just a matter of time until the speculative bubble collapses with a huge bang.
To summarize the “Ordinals” principle: Someone gets an (of course) unspendable input into the wallet, which is nothing more than an extract from the blockchain. Beside this he gets an almost worthless output ($2.50) without any cryptographic access to the data written to the input's witness data. And this is then hyped and sold for horrendous sums. It has already been a marketing strategy for a long time: linking the NFT hype to Bitcoin, even if it's cryptographic nonsense. This has reached a new dimension.
February 21, 2023