While publicly mocking non-fungible tokens (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 isn’t even on the blockchain – it’s just a URL to the JPEG,” Musk said in an interview released on October 31 about The Joe Rogan Experience.
Musk said that NFT projects should at least encode the JPEG on-chain:
“You should at least encode the JPEG into the blockchain. If the company that houses the statue goes bankrupt, you no longer have the statue.”
On social media, Bitcoiners argued that Musk’s comments essentially summed up the use case for Bitcoin Ordinals. Bitcoin’s version of NFTs was launched in January by developer Casey Rodarmor and powered by the Taproot soft fork in November 2021.
Cryptocurrency analyst Will Clemente was among those who praised Musk’s comments, noting that there are 38 million Ordinals inscriptions that will exist on Bitcoin’s blockchain forever.
.@elonmusk you just laid out the case for Bitcoin ordinal numbers: image/text inscriptions directly on the most secure open source monetary network in the world. 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,” says Rohun “Frank” Vora, 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 wrote the 19-second video into Bitcoin’s blockchain on block 814,773:
Video of Elon Musk enrolled on the Bitcoin blockchain via the Ordinals protocol. Source: Ord.io
Musk’s criticism of NFTs is not 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
However, Musk’s comments do not apply to all NFT projects on Ethereum.
For example, Larva Labs moved its Cryptopunks NFTs on-chain in August 2021, after living off-chain for the first four years.
“Staging on-chain in this way would further strengthen the long-term survival of the Cryptopunks images and attributes and ensure they are fully accessible to anyone with just an Ethereum client,” Larva Labs said in the explanation.
.@elonmusk is right that it is foolish to have NFT provide just an http link to someone’s domain.
However, with rare exceptions, it is also foolish to insist that NFT content be on-chain,
IPFS links, where the content is supported by whoever owns the NFT, is the natural solution.
— Arthur B. (@ArthurB) November 1, 2023
Related: Are the NFT markets in a death spiral or ready for a revival?
Metagood, the team behind Ethereum native OnChainMonkeys, announced in September that it would migrate its NFTs to Bitcoin.
While the company’s CEO Danny Yang did not directly address the JPEG dilemma, he explained that NFTs “will win against Bitcoin” because it is a more secure network to operate from:
“The Bitcoin Ordinal protocol is better designed for decentralization and security than the Ethereum NFT protocol. High-value NFTs will win against Bitcoin.”
However, according to CoinGecko, Ethereum is still home to 84% of all NFT trading volumes, based on June data. Bitcoin and ImmutableX came in second and third place with market shares of 11% and 2.5% respectively.
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