February 19th Bitcoin Stamp, what is it?
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Bitcoin Stamps introduces a new way to embed art within the Bitcoin blockchain by leveraging the Counterparty protocol to integrate Base64-encoded image data directly into Bitcoin’s blockchain. This method stands in sharp contrast to traditional NFTs, which are often linked to external images that can be altered or lost. By encoding works of art directly on the blockchain, Bitcoin Stamps ensures that works of art are permanently recorded and immutable, establishing a fixed presence within the blockchain’s historical record.
The process of creating a Bitcoin stamp involves converting an image to a base64 string and attaching it to a transaction with a “STAMP:” prefix in the description key. The Counterparty protocol is used to propagate this data. This data is split into multiple outputs via a simple multi-signature transaction instead of the more limited OP_RETURN method. This approach ensures that works of art are permanently included in the blockchain. The recommended format for these images, especially suitable for pixel art like the well-known CryptoPunks, is 24×24 pixels with an 8-color depth in PNG or GIF format.
Each Bitcoin stamp is assigned a unique number based on the transaction timestamp, forming a sequential Bitcoin stamp directory. For a stamp to be recognized, it must meet certain criteria, including being part of the initial transaction to be associated with a numeric asset and incorporating a valid “STAMP:base64” string within the description key. These stamps can be decoded from the blockchain transaction itself utilizing tools such as the Counterparty API and various base64 decoders, facilitating widespread verification and access to the encoded artwork.
The Bitcoin Stamps ecosystem is growing, featuring Stampchain.io’s native directory and supplemented by third-party directories and marketplaces that facilitate the trading and display of these unique digital collectibles. Expected collaborations and integrations with entities such as Emblem, Hiro Wallet, and Token.Art aim to expand the utility and appeal of Bitcoin Stamps. The plan is poised to deepen the integration of NFT technology within the Bitcoin framework, providing new avenues for artists and collectors to safely and permanently engage with digital art.
Why do Bitcoiners love or hate stamps?
Bitcoin Stamps, similar to Ordinals, provide a way to insert data directly into Bitcoin’s blockchain. However, unlike ordinal, stamp uses a method of ensuring persistence by creating data so that it is not pruned across nodes. However, the concept has sparked controversy among more ideological Bitcoin users, primarily due to differences from Bitcoin’s original financial utility focus.
The launch of Ordinals, which leverages Bitcoin’s SegWit and Taproot upgrades for on-chain storage of NFT data, and Stamps, which leverages multi-signatures, has reignited debate about Bitcoin’s intended applications. Satoshi Nakamoto, the pseudonymous creator of Bitcoin, has historically opposed non-financial uses of Bitcoin. This can be seen in the rejection of the BitDNS project, which attempted to integrate a domain name system into Bitcoin and was advised by Nakamoto due to scalability issues.
The recent introduction of NFTs, such as Ordinals and later Bitcoin Stamps, has been perceived as an “attack” on Bitcoin, potentially diluting its key function as a digital currency by overcrowding block space and raising transaction fees. Proponents of Ordinals argue that Bitcoin’s fee market mechanism adequately addresses this problem, allowing users to prioritize transactions based on their willingness to pay higher fees. This perspective maintains that financial and non-financial transactions coexist within Bitcoin’s economic model, consistent with its security and incentive structures.
Detractors, including prominent figures within the Bitcoin community, express concerns that such practices could undermine Bitcoin’s core purpose and efficiency. They advocate occupying a cleansable and space-efficient domain within the blockchain to preserve functionality for basic use cases when there are non-financial transactions. Meanwhile, proponents of incorporating NFTs into Bitcoin highlight their potential benefits, including providing miners with an alternative revenue stream through increased transaction fees as block subsidies continue to be halved, and potentially enhancing network security.
This debate highlights the tensions caused by philosophical divisions within the Bitcoin community regarding direction and balance between preserving fundamental freedom-centered principles and exploring new technological capabilities. While some see NFTs as an innovative use case that could be integrated into Bitcoin to drive further adoption and utility, others remain focused on the potential risks of straying from Bitcoin’s original intent and roots in financial freedom. there is. The ongoing dialogue reflects the community’s focus on scrutinizing developments that could impact the future of Bitcoin and ensuring that all developments are aligned with its long-term vision and security.
Filtering or censorship?
Due to the unpopularity of stamps and ordinal numbers among Bitcoin users, transaction filters designed to exclude transactions containing excessive non-economic data were developed. This controversy is related to Ocean Mining’s implementation of a 46-byte limit for the OP_RETURN function, up from the previous 80 bytes. Samourai Wallet argues that this restriction disproportionately affects privacy-enhancing transactions. Samourai Wallet recently claimed that Ocean has been censoring Whirlpool CoinJoin transactions and BIP47 notification transactions since December 6, 2023. Samourai Wallet also implicated Investor Jack Dorsey and Ocean founder Luke Dash Jr. accused the company of having a broader agenda of censoring transactions through these actions.
Ocean’s Luke Dash Jr responded: refute These claims suggest that the problem lies with Samourai Wallet’s software and not Ocean’s intentional policies. He expressed confusion about the purpose of the data in question and encouraged Samourai Wallet to resolve the issue. This exchange sparked an idealistic divide within the Bitcoin community. While some support Samourai Wallet’s call for miners to divert their hashing power from Ocean, others, including the community, rallied. influential peopleThis suggests that the alleged censorship may be an unintended consequence of the new policy rather than a targeted effort.
In particular, the controversy surrounding accusations of filtering and outright censorship of Bitcoin transactions involving stamps and ordinal numbers represents a significant point of contention within the Bitcoin community. Some proponents of transaction filtering prioritize the efficiency of blockchain and the necessary measures to maintain the integrity of financial transactions over non-financial uses, such as storing data such as NFTs, which could potentially congest the network and have negative impacts. It claims. The fee environment makes regular economy transactions prohibitively expensive. They see the inclusion of large amounts of non-financial data as a departure from Bitcoin’s main purpose as a digital currency.
Critics of filtering, on the other hand, see it as a form of censorship that undermines the principles of decentralization and permissionless innovation that underpin Bitcoin. They argue that the ability to insert different types of data within a transaction is a feature that increases Bitcoin’s usefulness and fosters creative use cases beyond just being a currency. Inserting arbitrary data into Bitcoin transactions is also nearly impossible to prevent. Another objection is the slippery slope of who gets to decide what constitutes an “economic transaction” and what kinds of transactions are excluded. Especially considering that Stamps and Ordinals are valid transactions, pay for block space, and adhere to the network’s current consensus. rule.
This ongoing debate reflects a deeper philosophical divide over the future direction and governance of the Bitcoin network, highlighting the broader challenge of balancing network scalability, security, and the open nature of blockchain technology.
As Carole House proposed to Congress, February 15, 2024 The debate surrounding filtering/censorship has intensified and come to the forefront. As Carole House, a former FinCEN official and former director of the Cybersecurity and Secure Digital Transformation Division on the White House National Security Council, suggested to Congress. The US government is pursuing a policy of using regulation to coerce Bitcoin miners. censor a transaction For OFAC flagged wallets, we implement so-called compliance features at the protocol level.
The move comes just months after members of the U.S. Congress came forward. drafted the letter It comes just days after Bitcoin mining companies began receiving warnings from the U.S. Environmental Protection Agency (EPA), led by Senator Elizabeth Warren, citing concerns about Bitcoin mining and energy use. Required Survey This month, we requested information on the mining industry’s energy use from the U.S. Department of Energy’s (DOE) Energy Information Institute (EIA). Many see Congressional attention to these “environmental issues” surrounding Bitcoin mining as a “fishing expedition” and a harbinger of future efforts to impose Bitcoin censorship strategies under the guise of “compliance.” there is.
The topic of Bitcoin transaction censorship for both sides of the debate has now been heavily discussed on popular social media frequented by the Bitcoin community. In 2016, Bitcoin Core developer Peter Todd launched MIT’s Chain Anchor, a proposed plan to enforce censorship on the Bitcoin network by imposing a new compliance model on the Bitcoin mining industry. I warned you about (Chain Anchor).
House’s testimony at a recent hearing could be the first documented public declaration from authorities pursuing a Chain Anchor-like strategy to control what kinds of transactions are allowed on the Bitcoin network through regulation of the Bitcoin mining industry. there is. Many of the largest companies are publicly traded companies seeking to comply with regulations and avoid compromising their relationships with regulators, an industry with a fiduciary duty to maximize shareholder returns. Was Marathon’s 2021 attempt to mine only OFAC-compliant blocks a harbinger of things to come?
Which direction will stamps take in the future?
The extent to which the wider Bitcoin and cryptocurrency community embraces the Bitcoin Stamp will have a major impact on their future. This includes acceptance of artists, collectors and investors within the space, as well as acceptance of platforms and wallets that support their creation, sales and exhibition.
Demand for NFTs and digital collectibles, influenced by trends in digital art, gaming, and virtual worlds, can be expected to influence the popularity and value of Bitcoin stamps. Their future will also be intertwined with overall market dynamics in the cryptocurrency space, including fluctuations in the price of Bitcoin and the emergence of new platforms for digital art.
Expanding the use cases of Bitcoin Stamps beyond digital collectibles and into areas such as digital identity, asset tokenization, and proof of ownership could open new avenues for growth. Innovations that leverage the unique properties of the Bitcoin Stamp, including immutability and integration with the Bitcoin blockchain, will be important.
Bitcoin stamps offer a unique approach to digital collectibles, but their future will be determined by the complex interplay of technological advancements, community engagement, regulatory decisions, and market trends. As the Bitcoin ecosystem continues to evolve, Bitcoin Stamps will discover new niches and applications, potentially gaining wider adoption and recognition in the digital art world and beyond. They may also be too expensive to be worth the novelty they offer, so they may fizzle out as fees rise, adoption grows, and block space real estate becomes more and more valuable.