Gold jewelry has been popular throughout the world since before records began. In the modern world many see jewelry as an artistic adornment, but historically it was a way of storing wealth and keeping it safe upon your person. Gold coins can be picked from your pocket if you are not paying attention, but when it is around your finger or your wrist, it is much harder to secretly remove.
An interesting emergence with Bitcoin growing in acceptance as a monetary asset is that it too can be used as an artistic asset in the form of Ordinal inscriptions. These are small media files stored on the Bitcoin Blockchain, making use of the immutable record of history that can never be changed. The main use case of Bitcoin is for decentralized money that can’t be censored or confiscated, but there are some people that are willing to pay the price to mint a tokenized version of a digital media file and have it recorded forever. In order to better understand the analogy of how Ordinal Inscriptions are similar to gold jewelry it is interesting to explore how Gold evolved into money.
Gold has been a very good store of value due its durability and the fact that it is in scarce supply. The time and energy required to mine and refine gold makes it very useful as a token that represents the work that has been done by people. Gold has served as a savings technology using a proof of work system as it acts as a proxy for goods and services through time and effort invested by people’s work. Goods and services generally have a shelf life as they don’t hold their value over time, but if you store value in gold, then it will not perish over time.
Over the centuries, gold became the base asset of the monetary system, with much of it stored in vaults where it was held to back the value of the paper IOUs that were traded on a day to day basis as money. The irony here is that a huge amount of energy and resources are expended to dig gold up out of the ground, only to shape into bars and then put it back in the ground again. If aliens were to visit the earth, they might find this endeavor a little odd.
Using gold as jewelry is a competing use case, but it does not detract from the use case of an asset to back the monetary system. The existence of jewelry might mean that there is a little less available to be stored in the vaults and that the price of gold might be a bit higher to compensate for that, but the two use cases can happily exist alongside each other.
We are now building a new monetary system that is backed by Bitcoin instead of gold. Lighting channels are digital IOUs that take the place of paper notes in representing the Bitcoin secured in digital wallets. This is a major upgrade to the system of money because gold has been held in centralized vaults controlled by banks and the government, whereas Bitcoin can be securely held by anyone that wants to take the time to learn how to self custody. Anyone can run a lightning node and become a part of this new and exciting decentralized monetary system. They no longer have to rely on trusted authorities who may be quietly stealing from them by practicing fractional reserve banking.
In many ways Ordinal Inscriptions are the equivalent of digital jewelry, as they are using the money system base asset as a form of artistic expression. Their existence may increase the price of Bitcoin, but they don’t stop it from fulfilling the function of being the base asset of the monetary system. Bitcoin is an open permissionless network that delivers the most secure immutable record of history that has ever existed. Previously, records were held on paper or on centralized databases and therefore they had the possibility of being changed. Bitcoin is an amazing innovation in providing a record of monetary ownership that cannot be changed and a means of transacting that cannot be stopped. By the same virtue, it is not possible to stop people storing information other than money on the blockchain as long as they are willing to pay a sufficient price for the space that they use.
There is an argument to say that this use of the Bitcoin blockchain has been questioned as it uses block space that could be used for peer to peer money transactions. Block space is limited in size in order to keep the network as decentralized as possible. If we were to increase the block size, then higher speed computers would be required to participate in bitcoin mining. It could be argued that competing use cases on the Bitcoin blockchain will put pressure on the community to move to a larger block size, thereby reducing the decentralization of the network. However, Bitcoin is going to face scaling issues regardless of whether or not it is used just for money or for other information storage. If we are to have everyone in the world using Bitcoin and lightning as the monetary system, then there is a lot of work to do. The existence of Ordinals may just mean that we have to get started sooner.
We are just beginning to explore the multitude of utilities that can be built on top of this new technology and it would be a real shame if we were to prevent experimentation in any one particular area. A good example has been demonstrated by Freddie New from Bitcoin Policy UK who recently put the inscriptions use case to work by hashing two James Bond novels into the Bitcoin blockchain as Ordinal Inscriptions. He did this because there has been some effort from those that seek to change history by re-writing certain parts of the original novels. Thanks to Freddie’s efforts, a copy of the original texts is now held in a form that will be accessible to everyone forever.
There is also an exciting possibility that these digital assets can be used to demonstrate a certification of completing a course of study. Ownership of the asset can act as an emblem which signifies membership of a guild. Members can gain access to exclusive digital spaces where they can communicate and collaborate with other members knowing that they are in good company. The digital emblem of achievement could also be used by employers to confirm that applicants have sufficient levels of knowledge to do a job. It is even possible that a Nostr NIP could be created to enable a profile to include digital emblems on a profile giving anonymous posters an indication of credibility in a specific area.
In conclusion, the concept of digital jewelry, as exemplified by Ordinal Inscriptions on the Bitcoin blockchain, offers a fascinating intersection of artistry and monetary innovation. This phenomenon draws parallels with the historical role of gold jewelry as a means of wealth storage and personal adornment.
Ultimately, Bitcoin's potential extends far beyond its role as digital money. The technology opens doors to a myriad of utilities and innovations, including securing original texts from tampering, certifying educational achievements, and signaling membership in exclusive groups or guilds. These digital assets could even serve as indicators of credibility in various fields.