Bitcoin NFTs Are A Mess

Bitcoin NFTs Are A Mess

Kris Kay
Kris Kay

Groundbreaking Tardiness

The bitcoin community is divided, half of them are not embracing files attached to individual coins, due to unnecessary, extra storage on the blockchain.

The other half seem to be mesmerized by the ability to trade on-chain JPEG pictures.

Ethereum has been doing this for ~6 years already, yet parts of the Bitcoin community find this super exciting and fresh.

After criticizing the NFT movement on Ethereum, some Bitcoiners now seem to have flip flopped and express how this could help increase demand for Bitcoin block space:

(we are not accusing Udi of trashing NFTs prior)

Little late, but hey, as long as people are having fun.

How Do Bitcoin 'NFT's Work?

Since the Bitcoin blockchain is not built for non-fungible tokens or smart contracts like Ethereum is, the community had to get creative:

  • 1 ¬†Bitcoin can be broken down to 100 million satoshis.
  • 1 Satoshi = smallest unit of measure for Bitcoin.
  • Take 1 satoshi, and put a link on it, like engraving words onto steel.
  • This satoshi can now be identified because of its inscription.
  • But this satoshi is still fungible meaning it can be spent.

So They're Not NFTs?

We don't think so.

The Non Fungible Token Standard was created on Ethereum as a separate token, which is unique, remains non-fungible, and cannot be 'accidentally spent'.

You can argue that an "inscribed satoshi" is not fungible to an extent since it cannot be broken down further, but in a wallet of multiple satoshis, it really is no different.

Cryptopunks, a Larva Labs creation dating back to June, 2017, is the first collection to gain traction on Bitcoin's new "NFT" experiment wave.

We know in the world of blockchain, decentralization and cryptography, copyright or infringement is not something that people care for.

However many are criticizing the crypto punks on Bitcoin to be a low effort knock-off which is technically infringing on the current original owners over on the Ethereum chain.

Some say, not only is the Bitcoin community 6 years late to the party with inferior technical infrastructure, but also unoriginal with its efforts.

Growing Pains

The lack of smart contract functionality on Bitcoin's blockchain make it difficult to trade these "NFTs" on an exchange.

So the community has gathered into a discord to trade these knock-off cryptopunks peer-to-peer, and ownership / accounting is kept track of inside a Google Sheets document:

Yes, you read that right, a Google Sheets document.

All Roads Lead to Ethereum?

Because the lack of infrastructure to support an open marketplace for these on Bitcoin, the quick fix for now is to wrap these inscribed satoshis onto Ethereum and sell the mon the popular OpenSea marketplace.

And the icing on the cake is, people are buying and selling these "Bitcoin NFTs" not only on Ethereum, but with ETH as the currency of exchange.

Nothing wrong with a little experimenting, but with lots of people getting scammed due to the lack of infrastructure, and messy organization, maybe this will not be a great experiment after-all.

Will be interesting to watch the Bitcoin community deal with this divide of opinions.

Never a dull moment in crypto!

Happy HODL'ing!