While blockchain technology is developing with new areas of use every day, there is a concept that is frequently mentioned: Inscription. So, what is inscription in crypto and why has it become so important?
This innovation, which has become popular with the Ordinals protocol in the Bitcoin ecosystem, allows digital content to be processed on the blockchain and stored in an unchangeable manner. Are you ready to discover how inscriptions, which are a revolutionary step in many areas from NFTs to data integrity, work and what opportunities they offer in the crypto world? So, let’s take a look at the details together!
What Does Inscripton Mean?
Inscription in crypto refers to the permanent processing of digital content (text, visual or other data types) on the blockchain. It can also be thought of as a piece of metadata added to a blockchain transaction output. In other words, it can be thought of as a piece of information attached to satoshi, which is considered the smallest unit of BTC. This concept has gained popularity especially in the Bitcoin ecosystem, thanks to the Ordinals protocol.
Ordinals allows custom data to be added to Bitcoin‘s smallest unit, satoshis. This added data is stored in the blockchain in a way that cannot be deleted or changed. In this way, inscriptions ensure the uniqueness and authenticity of digital assets, especially NFTs.
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Thanks to Inscription, NFT-like assets can be created by adding additional data to satoshis, the smallest unit of Bitcoin, without the need for smart contracts. Thanks to the Ordinals protocol, each satoshi gains a unique digital identity and data such as text and images are permanently processed on it. This data is embedded in the blockchain during Bitcoin transactions. Thus, assets are recorded directly and unchangeably without resorting to smart contract mechanisms.
After briefly answering the question of what is inscription in crypto, we can now go a little deeper into the subject.
What are the Differences Between Inscription and Traditional NFTs?
Traditional NFTs are created using smart contracts on the blockchain. These smart contracts are blocks of code that determine the uniqueness, ownership, and transaction history of the NFT. However, the metadata information that forms the core content of the NFT is usually not stored directly on the blockchain. What is done here is that this data is kept in off-chain storage solutions such as IPFS due to larger data sets and high storage costs. This method actually increases transaction speed and cost efficiency. On the other hand, it can also impose some restrictions on the continuous accessibility and decentralization of metadata.
On the other hand, the inscription method allows the creation of NFT-like assets by processing data directly to the blockchain without the need for smart contracts. Thanks to the unique data added to the satoshis, the smallest unit of Bitcoin, metadata is permanently and unchangeably engraved on the chain when inscriptions are created. This direct integration provides significant advantages in terms of data integrity and security, while avoiding the security and continuity problems encountered in traditional NFT models due to off-chain storage.
If we summarize all of these in a table, we can talk about a formation like this:
| Feature | Traditional NFTs | Inscription Method |
| Creation Method | Created using smart contracts. These contracts determine the uniqueness, ownership, and history of the NFT. | Created by processing data directly into the blockchain, without requiring a smart contract. |
| Metadata Storage | Metadata is usually stored in off-chain storage solutions (e.g. IPFS), which is preferred due to large data sets and cost. | Metadata is directly and permanently etched into the blockchain via data added to satoshis in networks like Bitcoin. |
| Security & Persistence | Off-chain storage may impose some limitations in terms of decentralization and continuous accessibility. | Since data is processed directly into the chain, it offers a permanent, immutable, and more secure structure. |
| Transaction Speed & Cost | Off-chain solutions can increase transaction speed and provide cost efficiency; however, there may be risks regarding data integrity. | Although the direct data processing process is disadvantageous in terms of speed and cost in some cases, data integrity and accuracy are at the forefront. |
This table summarizes how traditional NFTs work with smart contracts and off-chain metadata storage methods, while the inscription method stands out with the advantage of scraping data directly onto the chain.
How Does Inscription Work?
If you have been reading our article from the very beginning, you have formed an idea about what the concept of inscription is, the value it adds to Bitcoin, and why it is an alternative to NFTs. In our next section, we’ll take a closer look at how inscription works in crypto.
The Rise of Inscription with Bitcoin Ordinals
The Bitcoin Ordinals protocol brings a whole new breath to the Bitcoin blockchain, offering a revolutionary approach to the creation of digital assets. Thanks to this protocol, the Bitcoin network is now more than just a means of payment, and is also home to the production of digital works like NFTs. Permanently etching different types of data, such as text, images, or code, onto the smallest units of Bitcoin, known as Satoshis, ensures the uniqueness and authenticity of digital assets.
This innovative method allows data to be processed directly into the blockchain without the need for the complexity of smart contracts. The inscription process, performed with the Ordinals protocol, opens up new areas of use in the world of digital art and collectibles by using Bitcoin’s robust and decentralized infrastructure. Thus, Bitcoin’s security and continuity advantages play an impressive role in the creation and protection of digital assets.
Inscription Usage in Other Blockchain Networks
The inscription method, which gained popularity with Bitcoin Ordinals, has begun to be implemented in other blockchain networks over time. Ethereum, Solana, and various Layer-2 solutions integrate the inscription model into their own ecosystems, creating new areas of use. However, since the technical structure of each network is different, inscription mechanisms are also implemented by optimizing them.
In smart contract-based networks such as Ethereum, inscription transactions are usually developed by integrating with existing NFT standards. Due to the cost of on-chain data storage on Ethereum, inscription-based solutions are generally supported by mechanisms that increase efficiency. In high-speed and low-cost networks such as Solana, the inscription method is optimized with special protocols to minimize transaction fees and scrape data directly onto the chain. Different blockchains continue to adapt the inscription model to their own network structures, creating new solutions for decentralized data storage and digital asset management.
Some Inscription Standards
Some well-known standards for Inscription can be listed as follows:
Bitcoin Ordinals allow Satoshis, the smallest unit of Bitcoin, to be sorted and processed on the blockchain and inscribed directly. In this way, each Satoshi can contain unique data and can be transferred individually. This data engraved on the chain is immutable and can represent digital assets such as an NFT or file.
Ethscriptions offers expanded flexibility for more complex data structures compared to Bitcoin Ordinals by using Ethereum’s smart contract infrastructure and the ability to add data during transactions. This system enables the storage and management of different types of content on the chain.
SPL-20 Inscriptions leverage the speed and low cost advantages of the Solana blockchain, enabling digital assets such as artworks to be processed directly on the chain. It minimizes the risk of censorship by eliminating the dependency on external servers. It also enables innovative features such as dynamic NFTs, interactive content, and transforming visuals by supporting on-chain metadata storage.
Dogechain and the DRC-20 standard bring a new breath to fungible tokens in the Dogecoin ecosystem, offering a new perspective for creative NFTs and interactive applications. DRC-20 tokens are created by inscribing sections of Dogecoin called Shibe with customized metadata. This structure provides a different dimension to the digital asset ecosystem by ensuring that each token has its own unique features.
Inscription Pros and Cons
Inscription provides many contributions to blockchain technology, but it also brings some challenges.
Advantages of Using Inscription
Inscription stands out as one of the new and effective ways to store data on the blockchain. Thanks to this method, digital data such as text, images or code can be engraved directly on the blockchain without the need for smart contracts. Thus, it becomes possible to create permanent and unchangeable digital assets on the chain. Unlike traditional NFTs, since the metadata information of assets created with inscription is not kept outside the chain, it benefits entirely from blockchain security without being dependent on any central storage system.
This innovative method adds a new dimension to networks such as Bitcoin, which are traditionally used only for financial transactions. The Bitcoin network is no longer just a means of value transfer, but can also be used in areas such as digital art, collections, and data storage.
Similarly, Ethereum, Solana, and other blockchain networks are creating new areas of use by harmonizing inscription technology with their own structures. In this way, blockchains are evolving into a broader ecosystem, providing a powerful infrastructure not only for financial transactions but also for permanent and decentralized data storage solutions.
Challenges and Criticisms Related to Inscription
While Inscription offers significant innovations in creating permanent digital assets on the blockchain, it also brings with it some challenges and criticisms. Inscription transactions, especially on the Bitcoin network, can fill up the block space and cause transaction fees to increase. Since Bitcoin is primarily designed for financial transactions, the increase in inscriptions containing large amounts of data can increase the density of the network and increase the cost of classic Bitcoin transactions.
In addition, the natural limitations of blockchains also make the inscription process difficult. Because Bitcoin blocks have a certain size, mining data directly on the chain can strain storage capacity and scalability. This has led to debates about how sustainable the network will be in the long term. In addition, some critics argue that inscriptions could threaten Bitcoin’s decentralized structure. Because this model creates new dynamics for how miners use block space, and raises concerns that it could change Bitcoin’s basic purpose of use. Despite all these challenges, work continues to make inscription technology more efficient in the future and contribute to the development of blockchain networks.
The Future of Inscription and Its Impact on Web3
Inscription technology is radically changing data storage methods on the blockchain, creating new areas of use in the Web3 ecosystem. In the future, the role of inscription is expected to expand even further in many areas, from decentralized applications to digital identity management.
Evolution of Inscription Technology
Inscription technology, although gaining popularity with Bitcoin Ordinals, is becoming a constantly developing area in the blockchain ecosystem. This technology, which initially had a limited use on the Bitcoin network, has begun to be adopted by different blockchains over time. Networks such as Ethereum and Solana are trying to optimize the inscription model by developing solutions that will enable direct data storage on the chain.
In the future, more blockchain networks may increase the scalability of this technology by offering inscription support. New protocols are being developed to expand storage capacity, optimize transaction fees, and increase network efficiency. In particular, Layer-2 solutions and sidechains are working to make inscription transactions faster and more cost-efficient. All these developments could lead to inscription becoming more widespread in the Web3 ecosystem in the long term.
Using Inscription in Web3 Applications
In the Web3 world, inscription technology has the potential to revolutionize areas such as metaverse, gaming, and digital collectibles. Unlike traditional NFTs, digital assets created with inscription are directly engraved on the blockchain, so they are immutable and permanent. This allows in-game assets, virtual lands, and digital collectibles to be stored securely and independently in the long term.
Web3 projects can offer their users a more secure and transparent experience by integrating inscription technology. For example, a metaverse platform can develop a fully decentralized ownership model by engrave users’ avatars, special digital items, or virtual properties directly on the chain. Similarly, gaming projects can make unique in-game assets permanent with inscription, allowing players to hold their assets independently of the platform. This use of Inscription can make digital assets more sustainable and reliable in the Web3 ecosystem.
The Long-Term Role of Inscription
Inscription technology can play an important role in the long-term development of Bitcoin and the blockchain ecosystem in general. While the Bitcoin network was initially used only for financial transactions, thanks to Inscription, this network is now evolving into a structure where NFT-like assets can also be stored. This could allow Bitcoin to go beyond being just a store of value and become an ecosystem with wider usage areas.
Inscription’s role in the future of Web3 and the decentralized internet may gradually increase. Inscription technology offers great advantages in areas such as decentralized applications, digital identity management, and censorship-resistant content storage.
This method, which allows users to store data directly and permanently on the chain, can contribute to a more transparent, secure, and decentralized internet infrastructure in the long term. As more blockchain networks adopt Inscription, new standards for digital asset ownership and data security could emerge.
