Bitcoin zealots fighting on social media are about as rare as the torrent of Taylor Swift-Super Bowl stories we’re fated to endure for the next 12 days, so I typically ignore them. But one long-running feud has caught my attention because tribes of Bitcoin warriors are not attacking other blockchains, which is their usual thing, but instead are going after each other. So I figured it was finally time to figure out what the fuss was about.
The beef in question is over a new thing called Ordinals, which arrived last year following an update to Bitcoin’s core code. The invention is a clever one and involves ascribing a number to each satoshi (0.00000001 of a Bitcoin) that is minted on every new Bitcoin block, thereby creating a new type of record system on the world’s preeminent blockchain.
This new numbering system also provided an opportunity to inscribe media on each Ordinal, meaning Bitcoin has a new use case in addition to its original one as a financial ledger. And so Bitcoin’s version of the NFT was born. The Ordinal regime can be used to inscribe any piece of text or small image (here’s an example), and so the most popular applications have become compilations of great artworks and passages from the Constitution to inspire others. Just kidding. This is crypto, so people are rushing to inscribe images of wizards and cats and god knows what else in hopes of flipping them for a profit.
The flood of Bitcoin NFTS—there are already millions of them—seems harmless but has infuriated segments of the Bitcoin old guard, who dislike the idea of using the blockchain for anything but financial transactions, and who are irked that a wave of digital crap has led to higher transaction fees. “Another civil war is brewing between a laser-eyes faction who thinks money is the only use case, and another faction that wants NFTs and to open up more uses cases,” explains Hong Kim, a cofounder of the Bitcoin-focused firm Bitwise.
I spoke to Kim to get an honest broker’s take on what the Bitcoin feud is all about and who is likely to prevail. He says the laser-eyed purists have a point because Ordinals have caused Bitcoin transaction costs to spike at times. This has led to proposed countermeasures, including a Jack Dorsey-backed mining pool that warned it would refuse to process Bitcoin blocks containing Ordinals.
Kim added, though, that he and others might not be especially fond of “people degen-ing with Ordinals,” but that very few support the idea of censoring transactions based on their content. He also says that, like them or not, Ordinals are here to stay. A big reason for this is that, unlike the bitter block-size wars of 2015—when Bitcoin was in a full-blown schism over whether to increase blocks by two or even eight times—the blockchain’s influential core developers are willing to put up with Ordinals. Some even like the idea of opening Bitcoin up to new use cases.
This doesn’t mean the current feud is over, especially as so many Bitcoiners can’t seem to get through the day without beefing with someone on X. In the longer term, though, Ordinals will likely come to be seen as one of the most interesting things to happen to Bitcoin in years.
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
DECENTRALIZED NEWS
Franklin Templeton removed "Laser Eyes Ben Franklin" as its social media avatar, saying the profile pic was always intended to be temporary for its Bitcoin ETF launch. (WSJ)
SoFi, which recently ended crypto sales, saw its share price jump after posting its first quarterly profit based on increased cross-selling and new member growth. (PYMNTS)
A new Baltimore pilot program is using blockchain as a means of solving the city's long-time vacant housing problem. (Marketplace)
A JPMorgan report pointed to "a perhaps more normalized flow environment" for crypto inflows and outflows as the hype over Bitcoin ETFs has abated. (Bloomberg)
Coinbase Ventures and others invested $34 million in Portal, a startup that seeks to enable swapping of Bitcoin across a range of blockchains without risky intermediate technology like wrappers and bridges. (Fortune)
MEME O’ THE MOMENT
“Do as I say not as I do,” terror finance edition:
This is the web version of Fortune Crypto, a daily newsletter on the coins, companies, and people shaping the world of crypto. Sign up for free.
