Non-Fungible Tokens (NFTs) have already reached a trading volume of $35 billion in the Ethereum ecosystem, becoming an important category of cryptocurrency assets. However, due to the block size limitation in $BTC 's earlier days, the NFT market could not be formed in the Bitcoin ecosystem as it requires large amounts of data to be stored on the blockchain, and the 1MB block size of Bitcoin is clearly insufficient. It was not until the implementation of SegWit and Taproot in Bitcoin that the NFT ecosystem on Bitcoin began to develop. However, in the Bitcoin ecosystem, it has an exclusive name called Inscriptions. Let's explore the differences between Inscriptions and NFTs.

#Ordinals #Collectibles

Inscriptions are always immutable

Essentially, the creator and owner of an Inscription cannot make any changes to the inscription's content once it has been minted. This means that once an Inscription is minted, it inherently possesses immutability, a property that is maintained by the entire Bitcoin node network.

The Ethereum ecosystem also has completely immutable NFTs, which require the NFT's metadata to be stored on the Ethereum blockchain, often resulting in high minting fees. Therefore, most NFTs in the Ethereum ecosystem are not immutable, and can even be transferred or deleted by the contract creator, as long as the appropriate permission backdoors are left during development.

To ensure the minting of permanent, immutable NFTs on Ethereum, the relevant NFT contracts need to be audited, which requires a relatively high level of expertise in EVM virtual machines and Solidity language for auditors and developers.

For a non-technical person, it is difficult to determine whether an NFT is immutable or not. Additionally, Ethereum NFT trading platforms do not check whether an NFT has undergone contract auditing or is immutable, but rather allow users to upload and trade NFTs freely. As a result, the Ethereum ecosystem is filled with many NFTs that hold no value.

Inscription content is always on-chain

Content on Inscription cannot exist off-chain and cannot reference off-chain content. This makes Inscription more durable because its content will not be lost easily, but will be stored in the hard drives of all Bitcoin network full nodes, backed up completely redundantly by a distributed and decentralized node network. At the same time, Inscription creators pay a corresponding fee to miner nodes to store data, making it more scarce.

Ethereum NFTs, on the other hand, are somewhat different. Many NFT creators choose to store metadata on Arweave, IPFS, or centralized cloud services. This metadata is not on the Ethereum chain, but the data's hash is stored on the Ethereum chain. This reduces the cost of creating NFTs to a certain extent, but also brings a problem: NFT metadata is easy to lose because it does not exist on-chain but is stored in a distributed storage network. As for storage networks like Arweave, they rely on incentive economic models to encourage miners to store data, but it is very likely that permanent data loss will occur when the economic model fails. This is even more true for centralized cloud service networks. Once the subscription is terminated or accidents occur, user data is permanently lost.

For ordinary people who do not understand the technical principles, if they cannot delve into the design and implementation of NFTs, they will not understand where Ethereum NFT data is stored.

Inscriptions are much simpler

NFTs on Ethereum are based on the Ethereum network and virtual machine, they are very complex, constantly evolving, and introduce upgrades through backward incompatible hard forks.

However, Inscription relies on the Bitcoin blockchain, which is relatively simple and conservative, and introduces upgrades through backward compatible soft forks.

Inscriptions are more secure

Inscription inherits the transaction model of Bitcoin, which allows users to accurately see which Inscriptions are being transferred before signing the transaction. Inscriptions can be sold through partially signed transactions without the need for third-party services such as exchanges and NFT markets to represent users in transferring their NFTs.

In contrast, Ethereum NFTs are plagued by end-user security vulnerabilities. Blind signed transactions and unlimited authorizations for third-party applications expose users' assets to risks, and once a contract goes wrong, the user's on-chain assets will be transferred away. Such security incidents have been seen repeatedly, creating dangerous minefields for Ethereum's NFT users, while Ordinals users do not need to worry about these security issues.

Inscriptions are scarcer

Inscriptions require Bitcoin to mint, transfer, and store. At first glance, this may seem like a disadvantage, but the reason for the existence of Digital Artifacts is scarcity, hence having scarce value.

On the other hand, Ethereum NFTs can be minted with almost unlimited quantity through a single transaction, making them inherently less scarce, leading to a plethora of valueless NFTs on the Ethereum network.

Inscriptions do not pretend to support on-chain royalties

On-chain royalties may be a good idea in theory, but it does not always work out in practice. If there are external forces that are too strong, on-chain royalty payments cannot be enforced. The Ethereum NFT ecosystem is currently struggling to solve the confusion surrounding copyright fees and is working together to tackle the challenges of on-chain royalties.

inscription avoids this situation entirely by making no commitment to support on-chain royalties, thus avoiding the chaos and negativity seen in the Ethereum NFT situation.

Inscriptions unlock new markets

Bitcoin's market value and liquidity far surpass Ethereum's. Most of Ethereum's NFTs cannot achieve good liquidity because many Bitcoin holders are reluctant to interact with Ethereum's ecosystem due to security, simplicity, and decentralization considerations. Compared to Ethereum NFTs, Bitcoin advocates may be more interested in inscription, unlocking a new category of collectibles.

Inscriptions have a richer data model

An inscription consists of a content type (also known as a MIME type) and content (any byte string). This is consistent with the data model used on the web, allowing inscription content to evolve with the web and support any type of content supported by web browsers without changing the underlying protocol.

Summary:

Bitcoin's Inscription has similarities and significant differences compared to Ethereum's NFT. We are excited to see interesting innovations and new things emerging in the Bitcoin ecosystem, and we look forward to Inscription and NFT changing our daily lives!