With NFT hype deep into a downswing that began last year, it’s not difficult to find prominent criticism of the blockchain tokens that represent ownership in unique items, such as artwork. Now Elon Musk has joined the fray—and Bitcoin fans are thrilled about it.
During his latest appearance on the popular “Joe Rogan Experience” podcast, Twitter owner and Tesla and SpaceX CEO Musk called out the idea that many NFTs are not fully stored on-chain. Instead, some ultimately point to artwork that’s hosted on an external server, potentially putting them at risk.
“The funny thing is the NFT is not even on the blockchain—it’s just a URL to the JPEG,” Musk said. “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.”
Musk isn’t wrong about this being a notable pain point around NFTs. It was a common criticism in the early days of the NFT boom, when Bored Ape and CryptoPunks avatars were selling for seven-figure sums in 2021—and especially when Mike “Beeple” Winkelmann sold tokenized digital art for $69 million at a Christie’s auction in March 2021.
We saw a prominent example of this late last year when crypto exchange FTX collapsed. FTX had launched its own NFT marketplace and worked with brands like the music festivals Coachella and Tomorrowland to debut NFT collectibles, but many of them stopped working correctly once FTX’s servers went offline. Separately, there are decentralized storage platforms that let NFT owners “back up” their artwork in case of catastrophe.
But Musk’s assertion isn’t true in all cases. Some projects on Ethereum—the leading blockchain network for NFTs—store their artwork on-chain, including pixel projects like CryptoPunks and Moonbirds. And the generative art platform Art Blocks, for example, puts its artists’ algorithms on-chain so that the resulting artwork can be replicated from the output.
Musk’s statement also plays into a popular misconception around NFTs. The NFT, or non-fungible token, isn’t the artwork or connected item itself.
Rather, an NFT acts like a receipt or a proof of ownership that’s connected to something, whether it’s digital artwork, an interactive video game item, or even a physical wristwatch. In some cases, the artwork is also on a decentralized blockchain network, and thus immutable and censorship-resistant. In other cases, the artwork isn’t on-chain—or the NFT instead represents ownership of a real-world item.
What about Bitcoin?
But there is one prominent NFT-like ecosystem in which all artwork and media is indeed fully on-chain—and it exists on Bitcoin.
Bitcoin’s Ordinals protocol lets users “inscribe” artwork and other media onto the blockchain. The process is different from Ethereum and other blockchains that rely on smart contracts, or code that enables autonomous decentralized apps (dapps) and tokenized assets via NFTs.
With Ordinals, the artwork or media is tied to a single satoshi—or the smallest unit of a Bitcoin, aka 1/100,000,000 of a full BTC—and given a unique inscription number. The Ordinals model ensures that assets are permanently inscribed on the blockchain, and as long as the Bitcoin network remains live, so will those NFT-like assets.
Bitcoin advocates and Ordinals backers seized on Musk’s comments, suggesting that it proved why Ordinals is superior to traditional NFTs on Ethereum and other chains.
.@elonmusk you just laid out the case for Bitcoin ordinals – image/text inscriptions directly on the most secure open source monetary network on the planet. There are currently 38 million of these inscriptions on the Bitcoin blockchain. pic.twitter.com/WASj1qpkz8
— Will Clemente (@WClementeIII) November 1, 2023
“You just laid out the case for Bitcoin Ordinals—image/text inscriptions directly on the most secure open-source monetary network on the planet,” tweeted Will Clemente, co-founder of Reflexivity Research. “There are currently 38 million of these inscriptions on the Bitcoin blockchain.”
“This is why Ordinals will continue to grow. It’s the most elegant solution to one of the most universal criticisms of NFTs,” tweeted Rohun “Frank” Vora, creator of prominent profile picture (PFP) projects DeGods and y00ts, who has minted projects across chains including Bitcoin, Ethereum, and Solana.
“This is why I’ve generally said ordinals are cooler as well,” tweeted Dogecoin co-creator Billy Markus, after affirming Musk’s statements about how NFTs often point to external assets. Musk is a longtime backer of Dogecoin.
And one person—the pseudonymous Leonidas, a prominent Ordinals influencer and supporter—even inscribed the Musk video clip onto Bitcoin, only emphasizing the broader community response in favor of the fully on-chain Ordinals.
“Engage so that this shows up in Elon’s timeline and he learns about how Bitcoin NFTs (Ordinals) are stored fully on-chain forever,” Leonidas wrote.
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Source: https://decrypt.co/204041/elon-musk-blasts-nfts-bitcoin-ordinals
