Elon Musk’s Critique of NFTs Unintentionally Bolsters Bitcoin Ordinals

Tesla’s CEO, Elon Musk, voiced skepticism about nonfungible tokens (NFTs) during a podcast appearance, which inadvertently cast a spotlight on Bitcoin Ordinals, a feature of the Bitcoin network that enables NFT-like functionality.

On an episode of The Joe Rogan Experience released on Oct. 31, Musk quipped about the reality of NFTs, “The funny thing is the NFT is not even on the blockchain — it’s just a URL to the JPEG.”

He suggested a more robust approach to digital art tokens:

“You should at least encode the JPEG in the blockchain. If the company housing the image goes out of business, you don’t have the image anymore.” – Elon Musk on The Joe Rogan Experience

Reactions from the Crypto Community to Musk’s Take on NFTs

Musk’s critique unintentionally highlighted Bitcoin Ordinals, which embed data directly onto the Bitcoin blockchain, hence addressing Musk’s concern about the persistence of NFT-linked assets.

Cryptocurrency analyst Will Clemente endorsed Musk’s sentiment, pointing to the over 38 million Ordinals that are permanently inscribed on the Bitcoin blockchain.

.@elonmusk you just laid out the case for Bitcoin ordinals - image/text inscriptions directly on the most secure open source monetary network on the planet. There are currently 38 million of these inscriptions on the Bitcoin blockchain. pic.twitter.com/WASj1qpkz8
— Will Clemente (@WClementeIII) November 1, 2023

Rohun “Frank” Vora, an NFT developer, applauded Bitcoin Ordinals for addressing what he considers a foundational flaw of many NFTs.

This is why Ordinals will continue to grow.

It's the most elegant solution to one of the most universal criticisms of NFTs. https://t.co/feVYFbv7eL
— DeGod #2505 (@frankdegods) November 1, 2023

Billy Markus, co-creator of Dogecoin, concurred with Musk on the importance of on-chain storage of assets. Markus, and Musk, a well-known Dogecoin advocate, recognized the merit in Ordinals’ method.

Taking Musk’s critique as an opportunity, a prominent member of the Ordinals community, known as Leonidas, inscribed Musk’s podcast clip onto the Bitcoin blockchain, highlighting the community’s favor toward the on-chain approach of Ordinals.

I just inscribed the video of @elonmusk saying that NFTs are "not even on the blockchain" into the Bitcoin blockchain!

Engage so that this shows up in Elon's timeline and he learns about how Bitcoin NFTs (Ordinals) are stored fully on-chain forever.

→ https://t.co/hHRr3AYtxj pic.twitter.com/qAdhS7GXCZ
— Leonidas (@LeonidasNFT) November 1, 2023

Nonetheless, Musk’s point isn’t applicable to all projects. For instance, Ethereum-based projects like CryptoPunks, Moonbirds, and the Art Blocks platform maintain their artwork or generative code on the blockchain, ensuring artwork reproducibility.

The discourse also clarified a common misconception about NFTs: they represent ownership rather than being the asset itself. The actual asset might be stored on-chain, ensuring its permanence and resistance to alteration, or it could be kept off-chain.

In a move related to this conversation, Metagood, the creators behind OnChainMonkeys, announced plans to migrate their Ethereum-based NFT collection to Bitcoin.

Metagood’s CEO, Danny Yang, didn’t directly comment on the JPEG issue but implied Bitcoin’s blockchain might be a more secure and decentralized option for NFTs.

“The Bitcoin Ordinal protocol is better designed for decentralization and security than the Ethereum NFT protocol. High-value NFTs will win on Bitcoin.”

Despite the growing interest in Bitcoin Ordinals and the case for on-chain asset storage, Ethereum remains the powerhouse of the NFT marketplace. As of June, according to CoinGecko, Ethereum commands 84% of the NFT trading volume, significantly overshadowing Bitcoin and other platforms like ImmutableX.