Recursive inscriptions: exploring the future of Bitcoin smart contracts

When Bitcoin was introduced in 2009, it revolutionized decentralized transactions by enabling peer-to-peer exchanges without intermediaries. However, with the rise of non-fungible tokens (NFTs), Ethereum’s dominance of the market dominance left Bitcoin enthusiasts seeking ways to incorporate NFTs on Bitcoin. In response, Casey Rodarmor introduced ordinals, allowing NFT creation directly on the Bitcoin network. This innovation expanded the possibilities of the network, but did face some limitations.

Ordinals store data, such as images or code, directly onchain within Bitcoin transactions. However, the 4 MB block size limit limits inscription sizes. This prevents larger files from being stored onchain, which limits the range of Bitcoin-based NFTs compared to other platforms. As a result, ordinals lack interoperability with other NFT platforms, limiting their broader utility.

Opinions on ordinals vary in the Bitcoin community, with some seeing them as deviating from Bitcoin's principles. Concerns include complex scripting, congestion, and potential fee increases. Other members see ordinals as a positive change for the Bitcoin ecosystem.

In June 2023, the ordinal community introduced recursive inscriptions, enabling on-chain software. Complex software can run entirely on Bitcoin's blockchain by daisy-chaining data through calls. Recursive inscriptions enhance scalability, reduce fees, and support efficient onchain storage for software and smart contracts without requiring new cryptography.

In this article, we'll explore the history of ordinals and delve into recursive inscriptions, their workings, and the future of the ordinal community.

TL;DR

• Ordinal NFTs bring non-fungible tokens to the Bitcoin network, allowing for onchain data storage within transactions.

• The 4 MB Block Limit restricts ordinals, limiting the range of Bitcoin-based NFTs.

• Some see many benefits to ordinals, while others have raised concerns about complexity and fees.

• Recursive inscriptions enhance ordinals by allowing complex software to run directly on Bitcoin's blockchain.

• Recursive inscriptions could enable large file storage and advanced contracts on Bitcoin.

What are ordinals?

Ordinals, a concept detailed in our beginner's guide, is a way of numbering and tracking individual satoshis (the smallest unit of Bitcoin). They’re assigned based on the order of satoshi mining and transactions, allowing satoshis to be categorized into rarity levels.

The rarity levels defined in ordinal theory are as follows:

• Common: Satoshis that aren’t the first in their block, encountered frequently in Bitcoin transactions.

• Uncommon: The first satoshis of each block, relatively rare due to the limited number of new blocks added daily.

• Rare: The first satoshi of Bitcoin's difficulty adjustment period, occurring every 2016 blocks or every two weeks.

• Epic: The first satoshis of each halving epoch, happening approximately every four years, or every 210,000 blocks.

• Legendary: Each cycle's first satoshi represents a longer-term Bitcoin market cycle between halvings.

• Mythic: The first satoshis of the Genesis block, the rarest occurring only once in Bitcoin's history. An example is the genesis ordinal inscribed by artist and lead programmer of ordinals, Casey Rodarmor, on December 14, 2022, featuring pixel art of a skull.

Ordinal inscriptions allow users to permanently record digital content on the Bitcoin blockchain, similar to NFTs, without requiring additional tokens or sidechains. Each satoshi's order and value in ordinal theory make sending and receiving inscribed sats possible but necessitate careful adherence to the rules.

A brief history of ordinals

Ordinals have had a significant impact on the Bitcoin community in recent months. Developer Casey Rodarmor introduced the concept in February 2022, and it was officially launched on January 20, 2023.

You can store various digital artifacts (images, videos, or text) on individual satoshis by assigning a unique ordinal number to each satoshi. However, opinions within the Bitcoin community about ordinals vary, with some considering them a valuable use case while others question their necessity and potential impact on transaction fees.

Nevertheless, ordinals have inspired innovative developments, such as dedicated marketplaces and wallets including Gamma and Unisat, which cater specifically to ordinal NFTs. As of March 2024, over 60 million ordinals have been minted, and daily inscriptions are increasing.

What are recursive inscriptions?

Recursive inscriptions take ordinal inscriptions to the next level by offering a potentially groundbreaking method of expanding the Bitcoin NFT network. Ordinals can store up to 4 MB of data directly on the Bitcoin blockchain. However, developers can create a sophisticated network of interconnected data sources with recursive inscriptions, breaking free from the strict 4 MB limit.

It extracts data from existing inscriptions and incorporates it into new ones. Developers can run software entirely on-chain by linking data through a series of calls. This breakthrough opens up immense possibilities for interoperability on the Bitcoin network.

Projects like OnChainMonkey already realize the potential of recursive inscriptions. Projects like OnChainMonkey use recursive inscriptions to create complex NFTs that are both efficient and visually appealing. This is achieved by inscribing different data packages as ordinals on Bitcoin, which allows users to create beautiful 3D art under 1 KB in size.

This innovative approach expands the use cases of ordinals and reduces transaction costs by minimizing the volume of data inscribed on each satoshi. NFT historian and ordinal collector Leonidas is bullish on recursive inscriptions. They see the potential in recursive inscriptions and how it can offer a solution around storage efficiency.

The unique value recursive inscriptions bring to Bitcoin

With recursive inscriptions, it could be possible to host large files like video games, movies, or complex software directly on the Bitcoin blockchain.

But the impact of recursive inscriptions extends beyond entertainment and file storage. It opens up technological opportunities, such as implementing permissionless contracts enforced by Bitcoin's enduring storage, without requiring new cryptographic measures. By referencing previously inscribed data, developers can circumvent the 4 MB cap, leveraging existing inscriptions to build complex, data-intensive applications.

While it's relatively new, only time will tell whether or not those who were initially against ordinals could be won over by the capabilities of recursive inscriptions in bringing together interconnected data, reducing storage duplication, and lowering transaction costs. The technology could pave the way for Bitcoin to host extensive files and implement advanced contracts.

How do recursive inscriptions work?

If you're excited about recursive inscriptions, you've probably already jumped into research on the subject. While we anticipate easier instructions and onboarding processes will be released, we've rounded up some resources to help you produce your first recursive inscription.

Before diving in, it's helpful to have a basic understanding of HTML and a deep comprehension of the ordinal protocol. These foundational knowledge areas will support your journey in creating recursive inscriptions.

Tristan, the developer behind ordiscan, has made it simple for you to find the source code for inscriptions, which you'll want to tweak and turn into recursive inscriptions.

• Paste the inscription address in the search bar and click the 🔎

• Click on "view source code" image

• From here, you can copy the source code into an HTML editor

After you've got your source code in the HTML editor, look at this tutorial video by DoggfatherCrew, inspired by Brandon Marshall, who used recursive inscriptions for his website. And speaking of Brandon Marshall, he's created a template where you can inscribe your own single-page HTML website to use for your landing page, digital business card, or bio.

What's next for recursive inscriptions?

Since its debut on June 10, 2023, recursive inscriptions have garnered considerable attention and revealed some limitations. One notable area for improvement is the availability of comprehensive documentation and tutorials on recursive inscriptions.

Recursive inscriptions are based on Casey Rodarmor's ordinal theory, which, unlike Bitcoin’s core protocols, relies on a specific community-driven framework. This introduces a contradiction to the decentralized principle because it requires a centralized group of developers responsible for maintaining ordinals and potentially altering settings in the future.

Although the promise of reduced storage duplication and lower transaction costs appears appealing on paper, it's too early to determine if the projection will materialize.

What remains certain is that innovation will continue to be seen, and this evolution will hopefully drive greater adoption in the future.

The final word

Recursive inscriptions represent a transformative breakthrough for Bitcoin digital artifacts. By pushing the boundaries of ordinal inscriptions, they offer developers a powerful tool to create networks of interconnected data sources.

This innovative approach liberates Bitcoin from the constraints of the 4 MB storage limit, enabling the storage of extensive files and allowing for the implementation of advanced contracts.While the concept of recursive inscriptions is still relatively new, its potential to combine disparate data, reduce storage duplication, and lower transaction costs is clear. As time progresses, many expect the wider Bitcoin community to gain a deeper understanding of the capabilities of recursive inscriptions.