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Elon Musk, the CEO of Tesla, recently voiced criticism of nonfungible tokens (NFTs) on a podcast, which unintentionally spotlighted Bitcoin Ordinals, the Bitcoin NFT version. But what did Musk's comments mean for the crypto world?
Decoding Musk’s Views on NFTs
During a recent episode of The Joe Rogan Experience released on October 31, Musk quipped, “The funny thing is the NFT is not even on the blockchain — it’s just a URL to the JPEG”.
He further suggested that NFT projects should “encode the JPEG in the blockchain” to ensure its longevity. If the company linked to the image fails, then the JPEG would essentially be lost. Musk's comments were swiftly followed by Bitcoin enthusiasts advocating for Bitcoin Ordinals.
This version of NFTs for Bitcoin was introduced in January by Casey Rodarmor, enabled by the Taproot soft fork from November 2021. Will Clemente, a cryptocurrency analyst, lauded Musk's views, mentioning the ever-growing 38 million Ordinals inscriptions indelibly inked on Bitcoin’s blockchain.
Rohun “Frank” Vora, renowned for his NFT projects DeGods and y00ts, added, “It’s the most elegant solution to one of the most universal criticisms of NFTs”. A developer using the pseudonym “Leonidas” was so influenced by Musk’s words that they permanently etched a 19-second video of the statement into Bitcoin's blockchain at block 814,773.
Yet, Musk’s derision of NFTs isn't fresh. In December 2021, he humorously associated NFTs with mental illness using a meme depicting a patient on a therapist’s couch.
Ethereum NFTs: Not All Created Equal
However, it's vital to note that not all Ethereum-based NFT projects mirror Musk’s criticisms.
Larva Labs, for instance, transitioned its renowned CryptoPunks NFTs on-chain in August 2021, having existed off-chain for its initial four years. They emphasized, “Storing them on-chain… ensure[s] that they can be fully accessed by anyone with only an Ethereum client”.
Another pivotal move came from Metagood. Behind the Ethereum-centric OnChainMonkeys, the group declared its decision to transition its NFTs to Bitcoin in September. While not directly addressing Musk's JPEG issue, Metagood’s CEO, Danny Yang, projected a brighter future for NFTs on Bitcoin, citing its superior design for “decentralization and security”.
In the evolving world of cryptocurrencies and NFTs, opinions and strategies differ. Yet, as industry leaders like Musk share their thoughts, the dialogue only gets richer, steering the crypto community towards more robust solutions.