Elon Musk recently sparked a debate about NFTs on an episode of the Joe Rogan Experience podcast. His criticism, which suggests that NFT projects should “encode the JPEG into the blockchain,” has drawn a lot of attention to the concept of in-chain storage for digital assets.
Bitcoin Ordinals: The Case for On-Chain NFTs
Musk’s comments highlighted the case for Bitcoin Ordinals, a relative protocol launched by developer Casey Rodarmor. These so-called Bitcoin NFTs inherently store JPEGs on the blockchain, which ties into Musk’s argument.
Bitcoin Ordinals, introduced in January after the Soft fork of the taproot made significant progress in November 2021. With over 38 million Ordinals inscriptions now on Bitcoin’s blockchain, these imprints will persist indefinitely.
NFT makers’ response to Musk’s criticism
Critics have often questioned the off-chain storage of NFTs. In response to Musk’s comment, the creators of the NFT project claim that Bitcoin Ordinals is the most elegant solution to this common criticism. This gives much-needed credibility to storage solutions in the chain.
Contrary to Musk’s generalizations, not all NFT projects operate off-chain. Well-known examples such as Larva Labs have gone the on-chain route and moved their CryptoPunks NFTs on-chain as early as August 2021.
In light of the launch of Bitcoin Ordinals and an increasing interest in secure networks, several Ethereum-native NFT project developers are announcing their plans to migrate to Bitcoin’s blockchain.
Ethereum remains dominant
Despite the rise of Bitcoin Ordinals and increasing support for on-chain NFT projects, Ethereum accounts for the lion’s share of NFT trading volumes. As of June, an astonishing 84% market share was held by Ethereum, indicating its strong position in the NFT market.
Elon Musk’s criticism of NFTs has inadvertently sparked a crucial debate in the crypto world, shifting the focus to the importance of storage in the chain. While Ethereum continues to dominate the NFT landscape, the arrival of Bitcoin Ordinals signals a shift in trajectory.