bitcoin-dev

Combined summary - Purely off-chain coin colouring

Combined summary - Purely off-chain coin colouring

Blockchain standardization is a key topic, with suggestions to treat signature R-values as Taproot-based public keys for consistent protocol interpretation.

Another approach proposes using commitments that can push any data and nest future commitments within previous ones, ensuring they remain off-chain by starting with OP_RETURN and expressing r-values as 256-bit numbers.

Minimal on-chain presence for inscriptions involves hashing the actual data and committing it via sign-to-contract to reduce the blockchain footprint. This technique enhances privacy and prevents issues like blocking or front-running. Sign-to-contract extends to timestamping by including a merkle root but raises concerns about ownership representation. The method requires generating a nonce and its public version, deriving a nonce, creating and verifying a signature, and is compatible with ecdsa and schnorr signatures.

Discussions on the bitcoin-dev mailing list highlight the trade-off between small block sizes for decentralization and the need for valuable block space to ensure Bitcoin's security through transaction fees. Solutions like ordinals or publications may drive demand for block space, while adjusting the inflation subsidy phase-out remains controversial.

The debate on moving inscriptions off-chain considers the scarcity and value of blockspace versus network efficiency. Proposals suggest off-chain protocols for NFTs with proof of work or Lightning fees, allowing tracking without affecting how ordinals are spent. A patron system over Lightning is proposed, and the term "inscription" is debated in this context.

To combat NFT-related scams, theft, and duplication, solutions include requiring proof of work or Lightning payments for hosting NFTs. Nostr relay and proof of work are mentioned as tools for maintaining a clean digital artifact feed. Despite some resistance, the ordinals protocol is preferred for art projects, with an invitation for further input on its development.

Storing off-chain NFT data faces challenges due to third-party limitations. A proposal recommends using reliable parties to store proofs and artwork copies, with full versions released after transactions. Adjusting OP_RETURN size could address current constraints. On-chain data publishing is defended for its indefinite storage capabilities by archival nodes, questioning models like nostr for their data persistence.

The integration of NFTs within Bitcoin involves using ordinals to track satoshis with unique "inscriptions," though linking specific data or rights to an ordinal remains unsolved. Moving inscriptions off-chain could lower costs and overhead, focusing on ownership transfer. RGB protocol and Taro support off-chain custody proofs for NFTs, raising concerns about the longevity of off-chain data compared to on-chain publication's guaranteed persistence.

Further discussions explore semi-fungible tokens on the Liquid network and privacy through zero-knowledge proofs or unobservable transfers via nostr events. In conclusion, developers are considering various approaches to incorporate NFTs into Bitcoin, aiming to balance cost, scalability, and data permanence as they move towards integrating colored bitcoins.

Discussion History

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Anthony TownsOriginal Post
February 2, 2023 09:15 UTC
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