While publicly mocking non-fungible token (NFTs) during a podcast, Tesla CEO and billionaire Elon Musk appears to have inadvertently highlighted the case for Bitcoin Ordinals, also known as Bitcoin NFTs.
“The funny thing is the NFT is not even on the blockchain — it’s just a URL to the JPEG,” said Musk in an Oct. 31 released interview on The Joe Rogan Experience.
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.”
On social media, Bitcoiners argued Musk’s comments actually summed up the use case for Bitcoin Ordinals. Bitcoin’s version of NFTs launched in January by developer Casey Rodarmor, which was made possible by the Taproot soft fork in November 2021.
Cryptocurrency analyst Will Clemente was among those that praised Musk’s comments, noting there are 38 million and counting Ordinals inscriptions that will forever exist on Bitcoin’s blockchain.
.@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
“This is why Ordinals will continue to grow,” said Rohun “Frank” Vora, the creator of NFT projects DeGods and y00ts. “It's the most elegant solution to one of the most universal criticisms of NFTs.”
Ordinals developer known as “Leonidas” liked Musk’s comments so much that they inscribed the 19-second video into Bitcoin’s blockchain at block 814,773:
The criticisms from Musk toward NFTs aren’t new. In December 2021, he mocked NFTs as a sign of mental illness in a meme showing a patient lying on a therapist’s couch.
pic.twitter.com/Wv6iJDuTge
— Elon Musk (@elonmusk) December 16, 2021
Musk’s comments however don’t stand true for all NFT projects on Ethereum.
For example, Larva Labs moved its Cryptopunks NFTs on-chain in August 2021 after they lived off-chain for the first four years.
“Storing them on-chain in this way would further cement the long-term survival of the Cryptopunks images and attributes, and ensure that they can be fully accessed by anyone with only an Ethereum client,” Larva Labs in the statement.
.@elonmusk is correct that having NFT merely provide an http link to someone's domain is silly.
However, with rare exceptions, it's also silly to insist NFT content be on chain,
IPFS links, with the content backed by whoever owns the NFT is the natural solution.— Arthur B. (@ArthurB) November 1, 2023
Related: Are NFT markets in a death spiral or ready for a resurgence?
Metagood, the team behind the Ethereum-native OnChainMonkeys, announced in September that it would migrate its NFTs to Bitcoin.
While the firm’s CEO Danny Yang didn’t directly address the JPEG dilemma, he explained that NFTs “will win on Bitcoin” because it is a more secure network to work from:
“The Bitcoin Ordinal protocol is better designed for decentralization and security than the Ethereum NFT protocol. High-value NFTs will win on Bitcoin.”
However, Ethereum still remains home to 84% of all NFT trading volumes, according to CoinGecko, sourcing data from June. Bitcoin and ImmutableX came in second and third with market shares of 11% and 2.5% respectively.
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