February 19 Bitcoin stamps, what are they?
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Bitcoin Stamps offers a new way to integrate art into the Bitcoin blockchain, leveraging the Counterparty protocol to embed base64-encoded image data directly into the Bitcoin blockchain. This method contrasts sharply with traditional NFTs that are often associated with external images, which may be altered or lost. By encrypting art directly on the blockchain, Bitcoin Stamps ensure that the artwork is permanently recorded and immutable, establishing an immutable existence 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 using the “STAMP:” prefix in its description key. A counterparty protocol is used to propagate this data, which, due to its size, is split across multiple outputs via multisig transactions instead of the more restrictive OP_RETURN method. This approach ensures the permanent inclusion of the artwork in the blockchain. The recommended format for these images, particularly suitable for pixel art such as the popular CryptoPunks, is 24 x 24 pixels at 8 colors depth, in either PNG or GIF format.
Each Bitcoin Stamp is assigned a unique number based on the timestamp of its transaction, ensuring that the directory of Bitcoin Stamps is organized in a sequential manner. For a stamp to be recognizable, it must adhere to specific criteria, such as being associated with a digital asset and being part of the initial transaction to incorporate a valid “STAMP:base64” string into the description key. These stamps can be decrypted from the blockchain transaction itself, using tools such as the counterparty API and various Base64 decoders, facilitating widespread verification and access to the encrypted artwork.
The Bitcoin Stamps ecosystem is growing, featuring a master directory on Stampchain.io and supplemented by third-party directories and marketplaces that facilitate the trading and viewing of these iconic digital collectibles. Expected collaborations and integrations with entities such as Emblem, Hero Wallet, and Token.Art aim to expand the utility and appeal of Bitcoin Stamps. This initiative aims to deepen the integration of NFT technology into the Bitcoin framework, providing a new way for artists and art collectors to transact with digital art securely and permanently.
Why do Bitcoin users love or hate stamps?
Bitcoin Stamps, similar to Ordinals, offer a way to integrate data directly into the Bitcoin blockchain. However, stamps, unlike ordinals, use a method that guarantees permanence by making the data immune to node pruning. However, the concept has sparked controversy among many ideological Bitcoin users, largely because it deviates from the original focus on Bitcoin's financial utility.
The emergence of Ordinals, which leveraged Bitcoin's SegWit and Taproot upgrades to store NFT data on-chain, and Stamps, which leveraged multisig, has reignited discussions about Bitcoin's intended applications. Satoshi Nakamoto, creator of Bitcoin's pseudonym, has historically opposed non-financial uses of Bitcoin, as evidenced by the rejection of the BitDNS project, which sought to integrate the domain name system into Bitcoin and was advised against by Nakamoto due to scalability concerns.
The recent introduction of NFTs such as Ordinals and then Bitcoin Stamps has been viewed by some as an “attack” on Bitcoin, weakening its core function as a digital currency by potentially crowding out block space and raising transaction fees. Proponents of Ordinals argue that Bitcoin's fee market mechanism adequately addresses this issue, allowing users to prioritize transactions based on their willingness to pay higher fees. This perspective asserts that financial and non-financial transactions coexist within Bitcoin's economic model, consistent with its security and incentive structures.
Critics, including prominent figures within the Bitcoin community, express concerns that such practices could harm the fundamental purpose and efficiency of Bitcoin. They advocate for non-financial transactions, if they exist, to occupy an executable and space-efficient domain within the blockchain to maintain its functionality for their view of its core use case. Meanwhile, proponents of integrating NFTs into Bitcoin highlight potential benefits, such as providing an alternative revenue stream for miners through increased transaction fees as block support continues to be halved, which could enhance network security.
This debate highlights the tension caused by a philosophical divide within the Bitcoin community regarding its direction and the balance between maintaining its fundamental freedom-focused principles and exploring new technological capabilities. While some view the integration of NFTs into Bitcoin as an innovative use case that could lead to greater adoption and utility, others remain focused on Bitcoin's original intent and the potential risks of straying away from its roots of financial freedom. The ongoing dialogue reflects the community's focus on examining developments that could impact Bitcoin's future, ensuring that any developments are consistent with its long-term vision and security.
Filtering or censorship?
The unpopularity of stamps and ordinals among a subset of Bitcoin users has led to the development of transaction filters designed to exclude transactions containing excessive non-economic data. This controversy centers on Ocean Mining's implementation of a 46-byte limit on the OP_RETURN function, a reduction from the previous 80 bytes, which Samourai Wallet claims disproportionately affects privacy-enhancing transactions. Samourai Wallet recently claimed that Ocean had been censoring Whirlpool CoinJoin transactions and BIP47 notification transactions since December 6, 2023. Samourai Wallet also involved Investor Jack Dorsey and Ocean founder Luke Dash Jr. In these actions, accusing them of a broader agenda of controlling transactions.
In response, Ocean's Luke Dash Jr., refute These allegations, suggesting that the problem lies with the Samourai Wallet software and not any deliberate policy on Ocean's part. He expressed confusion about the purpose of the data in question and encouraged Samourai Wallet to resolve the issue on their end. This exchange sparked a perfect split within the Bitcoin community, with some rallying behind Samourai Wallet's call for miners to shift their hashing power away from Ocean, while others, including the community InfluencersWhich suggests that the alleged censorship may be an unintended consequence of the new policy rather than a targeted effort.
The debate over filtering Bitcoin transactions, especially those containing stamps and ordinal numbers, versus accusations of outright censorship, is an important point of contention within the Bitcoin community. On the one hand, proponents of transaction filtering argue that it is a necessary measure to prioritize blockchain efficiency and maintain the integrity of financial transactions over non-financial uses, such as data storage such as NFTs that can lead to network congestion, and negatively impact the fee environment, making normal economic transactions prohibitively expensive. They view the inclusion of large chunks of non-financial data as a deviation from Bitcoin's core purpose as a digital currency.
On the other hand, critics of filtering see it as a form of censorship that undermines the principles of decentralization and permissionless innovation that are fundamental to Bitcoin. They argue that the ability to include different types of data within transactions is a feature that enhances Bitcoin's utility and fosters creative use cases beyond just currency. It is also almost impossible to prevent arbitrary data from being included in Bitcoin transactions. Another objection is the slippery slope as to who can determine what constitutes an “economic transaction,” and what types of transactions would be excluded, especially given that stamps and arrangements are valid transactions, pay for block space, and adhere to the existing consensus of the network. rules.
This ongoing debate highlights the broader challenges of balancing network scalability, security, and the open nature of blockchain technology, reflecting deeper philosophical divisions about the future direction of the Bitcoin network and its governance.
On February 15, 2024, the filtering/surveillance debate has escalated and been put front and center, as Carol House, a former FinCEN official and former director of cybersecurity and secure digital innovation at the White House National Security Council (NSC), proposed to Congress . The US government has a policy of using regulation to coerce Bitcoin miners Control transactions For OFAC-branded wallets by implementing so-called compliance features at the protocol level.
This move comes only several months after members of the US Congress Craft a message To the US Environmental Protection Agency (EPA) to express concerns about Bitcoin mining and energy use, led by Senator Elizabeth Warren, and just days after Bitcoin mining companies began receiving… Mandatory scanning This month, from the US Department of Energy's Energy Information Association (EIA), which requests information about energy use in the mining industry. Many see Congress's interest in these “environmental concerns” surrounding Bitcoin mining as a “fishing expedition” and a precursor to upcoming efforts to impose a censorship strategy on Bitcoin under the guise of “compliance.”
The topic of censorship of Bitcoin transactions, for those on both sides of the debate, has now begun to emerge on popular social media outlets frequented by the Bitcoin community. In 2016, Peter Todd, developer of Bitcoin Core, raised the alarm regarding MIT's Chain Anchor, a proposed plan to censor the Bitcoin network by imposing a new regulatory compliance model on the Bitcoin mining industry.
House's testimony at the recent hearing may be the first formally documented announcement by authorities seeking a Chain Anchor-like strategy to control the type of transactions allowed on the Bitcoin network by regulating the Bitcoin mining industry. An industry in which many of the largest players are publicly traded companies that want to remain compliant and do not want to damage their relationships with regulators, also have a fiduciary duty to maximize profits for shareholders. Was Marathon's 2021 attempt to mine only OFAC-compliant blocks a harbinger of what was to come?
What is the way forward for stamps?
The extent to which the Bitcoin and broader cryptocurrency community embraces Bitcoin Stamps will greatly impact their future. This includes accepting artists, collectors, and investors within the space, as well as the platforms and portfolios that support the creation, sale, and display of these works.
Demand for NFTs and digital collectibles, influenced by trends in digital art, gaming, and virtual worlds, is expected to impact the popularity and value of Bitcoin Stamps. Their future will also be intertwined with the overall market dynamics of the cryptocurrency space, including Bitcoin price volatility and the emergence of new platforms for digital art.
Expanding use cases for Bitcoin stamps, beyond digital collectibles into areas such as digital identity, asset tokenization, and proof of ownership, could open new avenues for growth. Innovations that take advantage of the unique properties of Bitcoin stamps, such as their immutability and integration with the Bitcoin blockchain, will be crucial.
While Bitcoin stamps offer a unique approach to digital collectibles, their future will be determined by the complex interplay of technological advances, community engagement, regulatory decisions, and market trends. As the Bitcoin ecosystem continues to evolve, Bitcoin Stamps may find new areas and applications, which could lead to broader adoption and appreciation in the digital art world and beyond. They may simply become too expensive to be worth the novelty they offer, fading away as fees rise, adoption increases, and block space real estate becomes increasingly valuable.
