Connect with us
  • tg

Cryptocurrency

Recursive inscriptions: Bitcoin ‘supercomputer’ and BTC DeFi coming soon

letizo News

Published

on

Earlier this year, Ordinals — a unique inscription on the smallest unit of a Bitcoin, called a Satoshi — emerged as a controversial new development. Dismissed by some as spam and embraced by others as a way to bring BRC-20 tokens and NFTs to Bitcoin, the technology stimulated a flurry of developments.

Now there is excitement around “recursive inscriptions,” which is a very confusing yet potentially much more powerful development. Recursive Inscriptions essentially promise to allow more complex functionality to be built on Bitcoin’s blockchain, akin to smart contracts on Ethereum. 

Some believe recursive inscriptions could see Ordinals develop from NFTs and “digital artifacts” to underpin a full-blown DeFi ecosystem on Bitcoin very soon. Others are confident it will enable Bitcoin to take on decentralized storage provider IFPS. One person Magazine spoke to believes it will eventually lead to an interconnected supercomputer being built on-chain.

Danny Yang, a Stanford PhD, creator of OCM Dimensions and Bitcoiner since 2013, says recursive inscriptions unlock the next evolution of Bitcoin:

“People won’t believe it when it’s presented to them now. It’s not going to operate exactly like Uniswap, but other high-value digital assets will emerge on Bitcoin. That’s what Ordinals and recursive inscriptions will evolve into. They will become a new form of programmable assets and code.”

These tech developments — while at a very early and speculative stage — are making Bitcoin interesting again. A Bitcoin maxi friend complained to me that I never write about Bitcoin. In truth, there’s been very little new to write about until recently.

“That’s pretty true,” Yang agrees. 

Recursive support switched on in June

Yang has worked on recursive inscriptions since February in the form of Bitcoin generative NFT collections OCM Dimensions and OCM Genesis. He inscribed both of those innovative collections on Bitcoin in February (along with compression and 3D programming libraries) before anyone understood the significance of what he had done. 

Yet OCM Dimensions was only publicly launched on June 15, the day that recursive inscription support was turned on for Ordinals.com. Yang explains to Magazine:

“You have to show something before people start listening, and finally, after months of beating the drums about the significance of recursive inscriptions on Bitcoin, people are starting to get it after we showed what was possible with OCM Dimensions — the first 3D, high resolution, animated and interactive work on Bitcoin.”

For now, the smart contract-enabled Ethereum blockchain is the home of more developer activity than anywhere else, and it dominates the DeFi sector. Until this year, the idea of building a genuine smart contract — the self-executing code used as building blocks for programmable money ecosystems — was not possible on Bitcoin. 

But some now say Ordinals and recursive inscriptions could see a DeFi ecosystem emerge on Bitcoin fairly soon. It’s not going to be easy, though.

What are Ordinals and recursive inscriptions?

Ordinals allow you to uniquely identify a satoshi or a sat. A satoshi is 100 millionth of a Bitcoin. Identifying a fractionalized part of a Bitcoin means creating NFTs on Bitcoin or creating a provenance certificate on-chain is now possible. The idea of NFTs on Bitcoin, the most decentralized OG chain, is tantalizing for some. 

Recursive Inscriptions are difficult to understand but have heaps of potential
Recursive Inscriptions are difficult to understand but have heaps of potential. (Pexels)

In January 2023, developer Casey Rodarmor released the Ordinals protocol, creating Bitcoin NFTs on the Bitcoin blockchain. Rodarmor found an unintended loophole in the taproot scripts that command lines of Bitcoin code.

The Ordinals’ protocol creator argues that such NFTs are now “complete,” as the token and related images are stored on the Bitcoin blockchain rather than side chains or using off-chain storage systems like most Ethereum NFTs. Digital artifacts on Bitcoin are truly immutable. 

“Now you can own the actual art, not just a contract that points at a piece of art stored on centralized databases,” says Carlo Fox, an “Ordinals OG” since February who created the Nakamoto Whales series. NFTs, as we know them on Ethereum and on other chains, are more like digital ownership certificates than actual on-chain art, and Ordinals change that.  

“I got super excited for Ordinals for a few reasons: for one, we now can create and own on-chain art that is truly immutable. When you understand the ramifications of this, it’s huge.  Half the time, NFTs as we know them are stored on AWS, centralized, and controlled by creators who can turn your art into pictures of turds at any time.” 

Ordinals allow you to store any type of data on the most decentralized blockchain, and no one can modify it. “Ordinal artifacts may be most likely of any on-chain data to exist 2,000 years from now. That’s meaningful, and I think it is particularly relevant when in the context of important works of art, literature and science. I believe that Ordinals will become the premiere destination for the most coveted and important on-chain art. It’s akin to carving a statue out of gold,” says Fox.

So the business case for high-value NFTs minted on Bitcoin makes sense. Using the new tech to create cool 3D art for OCM Dimensions helped Yang’s company Metagood sell the idea of launching tokens on Bitcoin Ordinals to Asprey Studios and the Italian car company Bugatti recently. 

But OG Ordinals could only hold 4MB of data, and that is one reason why recursive inscriptions have emerged.

Fox launched the Nakamoto Whales Ordinals collection
Fox launched the Nakamoto Whales Ordinals collection: (Twitter)

Recursive inscriptions = Bitcoin cloud computing

At its most basic recursive inscriptions let you record stuff associated with a particular Bitcoin and enable smart contract-type functionality — Yang says they could have been called programmable inscriptions. By interlinking data through a series of calls (a contract for a sell order, for example), it’s possible to extract that data to run more complex processes anchored on Bitcoin blocks. 

This enables recursive inscriptions to function like a distributed data repository, like putting AWS cloud on Bitcoin.

Composability — getting disparate projects and protocols to work together seamlessly — is an important part of crypto and one of the main reasons behind the exponential growth of the Ethereum DApp ecosystem.

Recursive inscriptions mean that even the most complex data sets, like video files and audio files, could now technically be hosted on Bitcoin. With a one-time cost to inscribe, data could be hosted forever on the most immutable and decentralized network in the world.

Recursive Inscriptions use data inscribed elsewhere on new inscriptions, cutting down on storage requirements
Recursive Inscriptions use data inscribed elsewhere on new inscriptions, cutting down on storage requirements. (Pexels)

Inscriptions are like data legos, enabling data to be taken from somewhere else and built upon. In computer science, that’s where the phrase recursive comes from, as recursive inscriptions are a mechanism that extracts data from existing inscriptions and utilizes that data within new inscriptions.

Recursion is a fully on-chain process that uses scripts to combine various other on-chain data sources. These can include image layers, audio, code or other data sources. Individual scripts of code merge these layers together through recursion. 

Recursive inscriptions use data inscribed elsewhere on new inscriptions, cutting down on storage requirements.

Fox uses the example of PFP art. Instead of uploading thousands of unique images (which can be prohibitively expensive), you can upload 200 and use scripts to combine them via the fully on-chain recursion process. The possibilities this offers are only just being explored.

This is powerful because recursive inscriptions enable new types of applications that were not possible before it. Applications like on-chain AI couldn’t be done on the base layer of Ethereum, but NewBitcoinCity builder Punk 3700 believes they could now be done on Bitcoin. He’s been playing around with “Perceptrons,” an early on-chain AI experiment on Bitcoin.

He explains that “it wasn’t possible to store the AI neural net models on-chain together with the artworks. So we split the AI models into different inscriptions and compose them at runtime.”

Inscriptions an important development for human freedom?

One of the most fascinating elements of recursive inscriptions is that once the data is on the blockchain once, you can simply refer to it again and again, vastly cutting down storage costs and block space utilization. 

“Inscriptions are now reusable,” explains Punk 3700, “You can inscribe a very large code library like p5.js once, and other developers can reference that p5.js library at run time without inscribing it again.” 

“This is super exciting because we start seeing a community-driven public infrastructure being built out.” This means more complex inscriptions are being created at a fraction of the cost.

“Essentially, any type of data can be an inscription. The most rudimentary use case combines multiple data sources together, and every piece of it can live on-chain. On-chain data might be able to communicate with each other, and data could be realized over time.”

Fox explains further: “The best way to think of it is anything you can do locally on a computer and have all little pieces live together in different files and work together.” 

He gives examples like “open-source libraries, all on-chain,” meaning important research papers on Bitcoin, with citations on recursions on-chain, meaning major discoveries can be published on Bitcoin blocks for time immemorial. Javascript packages can be inscribed on Bitcoin. Essentially, a tiny internet that’s developed to live on Bitcoin can’t be taken down, building and building until one day it has created “an interconnected supercomputer living on Bitcoin.”

The public hasn’t grasped the significance of these developments, says Fox. 

Let’s start with DeFi and AWS first

Long before the supercomputer cranks up, we’re likely to see Bitcoin DeFi and the chain emerge as a data storage competitor. 

Toby Lewis co-founded OrdinalsBot, which automates inscriptions to help expedite development on Ordinals. He thinks that, for now, competing with the Web3 data storage provider IPFS is the best use case for recursive inscriptions. In the short term, both high-end and low-end NFTs can now be more affordably held on-chain.

“The end point of storing data onto Bitcoin will get people excited. That’s because Bitcoin has better name recognition than IPFS […] Bitcoin becomes the ultimate store of truth.”

Decentralized data storage on Bitcoin could disrupt NFT culture by allowing images, text files and audio files to be stored directly with tokens. 

The Ordinals Timeline
The Ordinals timeline. (OrdinalsBot)

Lewis also thinks DeFi on Bitcoin is just becoming a realistic prospect now and that Bitcoin-native DeFi products are inevitable, even if they will be rudimentary for a while.

There is likely a large segment of users who will want to build and do something on Bitcoin, especially if the end state is a multichain ecosystem, posits Lewis. That is, use Bitcoin’s blockchain as the layer-1 base, and use Ordinals and recursive inscriptions to connect to other applications. 

DEXs and automated market makers are starting to emerge. Lewis notes that Bitcoin can link up to other layer-2 applications as another way for smart contracts to emerge on Bitcoin.

This is the kind of DeFi that Punk 3700 has been building on Bitcoin. He launched a new protocol called Trustless Computer that enables writing smart contracts and building DApps on Bitcoin.

“If Ethereum and Bitcoin have a baby, that’s Trustless Computer.”

One of the first DeFi protocols it deployed was a Uniswap fork.

“Now that you could write smart contracts on Bitcoin, it turned out that building an AMM DEX was very simple. It took us just a couple of days.” A month after deploying Uniswap on Bitcoin, Punk 3700 connected it to Ethereum layer-2 network Optimism and says it can trade with two-second latency and low transaction fees.  

“We now have a scalable infrastructure for DeFi to thrive on Bitcoin.” 

Read also


Features

You Say You Want a Revolution: What Blockchain Can Learn from One Man’s Attempt to Save the World


Features

Lines in the sand: US Congress is bringing partisan politics to crypto

Bitcoin maximalists aren’t going to like the use of Ethereum protocols in conjunction with Bitcoin, but Punk 3700 says it’s the future.

“This is the power of having a general-purpose programming language (Solidity) and a general-purpose virtual machine on Bitcoin. Developers can build any kinds of applications they want for Bitcoin.” 

“Bitcoin is now no longer just a currency. It is becoming a DApp store.”

New generation of Bitcoin maxis?

At present, these use cases for recursive inscriptions and smart contracts on Bitcoin are highly speculative, and many Bitcoiners would no doubt argue abstracting it away on layer 2s means it’s no longer really Bitcoin at all.

But Leonidas, the founder of Ordinals marketplace Ord.io, is very excited about the new Web3 experiments on the Bitcoin layer 1 as well. He believes that “the release of the Ordinals protocol earlier this year ended a long period of stagnation” for the chain. He’s seeing a whole new wave of developers flood into the Bitcoin ecosystem, who are “eager to build everything from NFT marketplaces to DeFi protocols.”

“I think people will be pleasantly surprised with how much you can actually do on Bitcoin layer 1,” he says.

“The issue was never that Bitcoin as a technology wasn’t capable of handling Web3 use cases; it’s that a culture of toxic maximalism had driven the most talented developers to other ecosystems where they would be celebrated for their innovations rather than harassed.”

Leonidas firmly believes that through Ordinals, Bitcoin has “entered a new era where developers rather than idealists will dictate its future,” and he is optimistic that Bitcoin’s brightest days lay ahead.

Max Parasol

Max Parasol

Max Parasol is a RMIT Blockchain Innovation Hub researcher. He has worked as a lawyer, in private equity and was part of an early-stage crypto start up that was overly ambitious.

Cryptocurrency

Bitcoin Price Tests $110K as Total Liquidations Near $300 Million

letizo News

Published

on

Bitcoin’s price has managed to completely erase the losses from yesterday and it appears that bulls are on the run again.

At the time of this writing, BTC is trading at around $109,500, preparing to test the pivotal technical and psychological level of $110K, sitting right below the cryptocurrency’s all-time high.

BTCUSD_2025-07-02_19-15-08

Data from Coinglass shows that the total number of liquidations across the derivatives market currently sits at almost $300 million – a 32% increase compared to the previous 24 hours.

BTC leads the way with around $50 million in liquidations, where the majority of positions were short. In total, $190M out of the $300 million in forced-closed traders were betting on the price to go down.

Naturally, the altcoins are following suite and are also recovering and most of them are now trading in the green. It’s interesting to see if this will transition into a more sustained upward movement in the next few days.

Screenshot 2025-07-02 at 19.18.06
Source: Qunatify Crypto
SPECIAL OFFER (Sponsored)
Binance Free $600 (CryptoPotato Exclusive): Use this link to register a new account and receive $600 exclusive welcome offer on Binance (full details).

LIMITED OFFER for CryptoPotato readers at Bybit: Use this link to register and open a $500 FREE position on any coin!

Continue Reading

Cryptocurrency

Ripple (XRP) Price Outlook: 2 Bearish and 2 Bullish Factors to Watch

letizo News

Published

on

TL;DR

  • XRP’s recent dip comes alongside a drop in key on-chain metrics – like active accounts and executed transactions – hinting at declining user engagement and a potential short-term correction.

  • Despite the concerns, optimism remains high as Polymarket gives a 92% chance for a spot XRP ETF approval by end-2025, while negative exchange netflows suggest reduced immediate selling pressure.

Pullback on the Horizon?

Ripple’s XRP started July on the right foot, with its price rising to as high as $2.30. The uptrend, however, was short-lived, and it currently trades at around $2.17 (according to CoinGecko’s data).

Meanwhile, the decline of certain XRP metrics suggests the asset’s investors may have to endure a more substantial correction in the near future. Data shows that the number of active accounts, the number of executed transactions, and the number of newly activated accounts have headed south in the past few days.

This development points to reduced user engagement and utility in XRP’s ecosystem, which may lead to price stagnation or even a pullback. 

Interest in Ripple’s cross-border token has also waned over the past several months. Google searches involving the asset are currently far below the peak levels registered in December last year. This could mean that fewer new buyers are entering the market.

XRP Google Searches
XRP Google Searches, Source: Google Trends

The Bullish Signals

Every coin has two sides, so let’s also observe the factors that suggest Ripple’s native token might be on the verge of a renewed rally.

To begin with, XRP investors could gain significantly if a spot ETF receives regulatory approval in the United States. A growing list of major firms – such as Grayscale, Bitwise, Franklin Templeton, 21Shares, and others – have already expressed interest in launching such a product.”

According to Polymarket, there’s a 92% chance that a spot XRP ETF will be greenlighted in America before the end of 2025.

XRP ETF Chances
XRP ETF Chances, Source: Polymarket

The surge in odds follows the SEC’s recent approval of Grayscale’s request to convert its Digital Large Cap Fund (GDLC) into a spot ETFa fund that holds multiple cryptocurrencies, including XRP.

Next on the list is XRP’s exchange netflow, which has been predominantly negative in the last several weeks. This indicates that investors have switched from centralized platforms toward self-custody methods, reflecting a reduced immediate selling pressure.

XRP Exchange Netflow
XRP Exchange Netflow, Source: CoinGlass
SPECIAL OFFER (Sponsored)
Binance Free $600 (CryptoPotato Exclusive): Use this link to register a new account and receive $600 exclusive welcome offer on Binance (full details).

LIMITED OFFER for CryptoPotato readers at Bybit: Use this link to register and open a $500 FREE position on any coin!

Continue Reading

Cryptocurrency

Who is Selling Their BTC at These Prices? Glassnode Reveals Bitcoin Profit Takers

letizo News

Published

on

About a month ago, market analysts noted that profit-taking on the Bitcoin network was modest. However, that has changed.

The on-chain insights provider Glassnode has revealed that profit-taking on the leading digital network is ramping up again. This comes as Bitcoin (BTC) remains in a consolidation phase following weeks of upward movement.

BTC Holders Take Profits

According to Glassnode’s tweet, bitcoin’s realized profits hit $2.46 billion on June 30, while the network’s seven-day Simple Moving Average (SMA) spiked to $1.52 billion.

The SMA, which identifies trends by averaging prices over a specific period, is currently above its year-to-date (YTD) average of $1.14 billion. However, the metric is still below its November-December 2024 peak of approximately $4.5 billion.

The spike in Bitcoin’s seven-day SMA indicates that coin distribution on the network is on the rise. Mid-to-long-term BTC holders have been leading this profit-taking spree; Glassnode said investors aged three to five years have realized at least $849 million in profits. This cohort of market participants is followed by those aged seven to ten years, with $485 million in profits, and investors aged one to two years with $445 million.

Short-term BTC holders, those holding for under one year, have been cashing out the least gains, at less than $6 million.

Interestingly, older BTC holders have been leading the profit-taking for this cycle. CryptoPotato reported a rise in spending by this cohort in late May, which drove the aggregate volume for the one- to five-year cohorts to $4 billion, its highest level since February. While older investors take the lead, the bulk of the volume is coming from this particular group of Bitcoin holders.

Whales Are Redistributing Too

Glassnode’s latest report is further substantiated by an analysis from the institutional decentralized finance (DeFi) analytics platform, Sentora (previously known as IntoTheBlock).

The firm disclosed that wallets holding more than 1,000 BTC have been steadily reducing their balances. This indicates that although institutional money is flowing into Bitcoin, whales are still offloading their holdings.

It is worth mentioning that Sentora sees the redistribution by whales as a sign of a maturing market rather than weakness. Older whale coins being dispersed could become a dynamic that would strengthen Bitcoin’s long-term potential.

Meanwhile, BTC was still consolidating at the time of writing, hovering under $110,000 – a level, which it has remained confined to in the last few weeks.

SPECIAL OFFER (Sponsored)
Binance Free $600 (CryptoPotato Exclusive): Use this link to register a new account and receive $600 exclusive welcome offer on Binance (full details).

LIMITED OFFER for CryptoPotato readers at Bybit: Use this link to register and open a $500 FREE position on any coin!

Continue Reading

Trending

©2021-2024 Letizo All Rights Reserved