bitcoin-dev
Purely off-chain coin colouring
Posted on: February 2, 2023 13:46 UTC
The email thread on the Bitcoin-dev mailing list revolves around the use of non-fungible tokens (NFTs) and their impact on the blockchain network.
The discussion highlights that NFTs can cause problems with the ordering of transactions in blocks, as they are non-fungible and cannot be sorted easily. However, it is noted that this problem can be solved by writing a patch to ord and composing a new message.The email then discusses the use of single-use seals for tracking assets anchored to Bitcoin. The RBG Protocol Project and Taro are mentioned as using the same principle. Keeping actual application data off-chain with a commitment to a UTXO and using Bitcoin only as a proof-of-publication system to prevent double-spends is seen as a good idea, making it cheaper and more scalable. There are many implementations of this idea in progress.The email also delves into the use of ordinals to track the identity of individual satoshis throughout their lifetime. The proposed BIP doesn't document any method for associating data or a right with an ordinal, but the "ord" tool defines "inscriptions" to fill this gap. It's possible to move inscriptions entirely off-chain, allowing all the "inscription" data to be entirely off-chain, transferring ownership to someone else on-chain.The discussion also touches on the topic of semi-fungible tokens and how they differ from stable coins. It is explained that if one has a utxo with 1M sats, 500 of which represent rights to $1 worth of USDT, then the value of that utxo would not be fixed at $500, but rather would change as the value of bitcoin changes. This is in contrast to stable coins, which are pegged to a fixed value.In summary, the email thread provides insight into the potential issues and possible solutions related to the use of NFTs on the blockchain network. It also sheds light on the differences between semi-fungible tokens and stable coins, as well as the use of single-use seals and ordinals for tracking assets on Bitcoin.