While deriding nonfungible tokens on a podcast, Tesla’s CEO, Elon Musk, inadvertently turned the spotlight onto Bitcoin Ordinals, the Bitcoin network’s version of NFTs.

In an interview released on Oct. 31 on The Joe Rogan Experience, Elon Musk remarked, “The funny thing is the NFT is not even on the blockchain — it’s just a URL to the JPEG.”

Musk said NFT projects should at least encode the JPEG on-chain:

“You should at least encode the JPEG in the blockchain. If the company housing the image goes out of business, you don’t have the image anymore.”

Elon Musk on The Joe Rogan Experience

 

Crypto community reacts to Elon Musk’s NFT views

The critique by Musk inadvertently drew attention to the concept of Bitcoin Ordinals, a form of NFTs on the Bitcoin (BTC) blockchain. Bitcoin Ordinals began following the Taproot soft fork in November 2021 and were introduced by developer Casey Rodarmor in January.

The Bitcoin community has highlighted that Ordinals inscribe data directly onto the Bitcoin blockchain, addressing the very concern Musk raised about the permanence of digital assets.

Cryptocurrency analyst Will Clemente commended Musk’s remarks, highlighting the existence of over 38 million Ordinals inscriptions that are permanently recorded on Bitcoin’s blockchain.

Rohun “Frank” Vora, known for creating NFT projects DeGods and y00ts, praised the Bitcoin Ordinals for offering a sophisticated solution to a widespread critique of NFTs.

Billy Markus, the co-creator of Dogecoin, also weighed in, supporting Musk’s views on the need for on-chain asset storage. Markus, alongside Musk, who is a vocal supporter of Dogecoin, acknowledged the advantages of Ordinals over traditional NFTs.

A well-known figure in the Ordinals community, who goes by the pseudonym Leonidas, took the discussion further by inscribing the video clip featuring Musk onto the Bitcoin blockchain, only emphasizing the broader community response in favor of the fully on-chain Ordinals.

However, Musk’s comments do not apply universally across the board. Several projects on Ethereum, the leading blockchain for NFTs, have their artwork stored on-chain. Notable examples include CryptoPunks and Moonbirds, as well as the generative art platform Art Blocks, which keeps the artists’ algorithms on the blockchain, allowing the artwork to be replicated.

The discussion also sheds light on a common misunderstanding about NFTs. An NFT is not the artwork itself but a token that signifies ownership of a digital or physical asset. Depending on the project, the associated asset may be stored on a decentralized blockchain, making it immutable and resistant to censorship, or it may be off-chain.

In September, Metagood, the creators of OnChainMonkeys, revealed plans to transition their NFT collection from the Ethereum blockchain to Bitcoin.

While the firm’s CEO, Danny Yang, did not specifically address the issue with JPEG files, he suggested that NFTs will likely be more successful on the Bitcoin network, attributing this to its superior security infrastructure.

“The Bitcoin Ordinal protocol is better designed for decentralization and security than the Ethereum NFT protocol. High-value NFTs will win on Bitcoin.”

Despite the potential of Bitcoin Ordinals and the arguments for on-chain storage, Ethereum continues to dominate the NFT market. Data from CoinGecko as of June indicates that Ethereum (ETH) accounts for 84% of all NFT trading volumes, with Bitcoin and ImmutableX holding 11% and 2.5% market shares, respectively.

Source : crypto.news by Rony Roy / November 02, 2023